Agency taps two contractors in fight against fraud

Under pressure to reduce fraud, the Center for Medicare & Medicaid Services is turning to local contractors to manage a two-pronged approach to rooting out sham claims.

Last year, CMS hired Falls Church-based Northrop Grumman and Rockville-based TurningPoint to help the agency move past a “pay and chase” practice — meaning it would pay the claim, later recognize it as fraudulent and then seek to recover the lost money.

Instead — as mandated in the Small Business Jobs Act of 2010 — the agency is now trying to prevent fraudulent payments from ever being made through predictive modeling, according to David Nelson of CMS.

To make the switch, CMS opted for a fraud prevention system and an automated provider screening system. The fraud prevention system, handled by Northrop, uses predictive technology to look for suspicious billing patterns. The automated provider screening system, run by TurningPoint, is meant to root out ineligible providers before they enroll or submit a claim.

The fraud prevention system contract, worth up to $77 million over four years, was awarded in late April last year. That gave Northrop just two months to get the system up and running, said Erik Buice, vice president of health care systems management in Northrop’s information systems unit.

The system Northrop built with its partners looks for problematic claims “in a real-time basis as the claims come through,” Buice said. Suspicious billing patterns trigger alerts so that employees can evaluate the claims.

TurningPoint’s system, for which the company received its contract in late September, uses sources from credit history to criminal records to come up with a risk score that considers how likely providers are to be fraudulent. In its first 30 days of deployment, the system identified about 3,000 high-risk providers who have since been removed from the system, said Bangalore S. Shivacharan, the company’s chief executive.

TurningPoint’s contract is worth up to $41 million over five years.

Nelson said the two systems, working in concert, are meant to dramatically reduce the number of suspected fraudulent claims that are processed and weed out bad providers.

CMS is working closely with both companies to refine the systems as they go forward, said Nelson.

Later this summer, the Center for Medicare & Medicaid Services plans to report its results to Congress, which has been monitoring the program’s success.

“Certainly there’s additional pressure there, but it’s actually been quite helpful in a lot of ways,” Nelson said. “With the mandates ... also came the funding for this issue, [and] with that of course comes the transparency and the wish to know exactly what’s going on and looking for results.”

 
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