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How to Stop Medicare Fraud: From Artificial Intelligence to Senior Crime Stoppers

Medicare is the federal health insurance program for 65 million people in the United States. In year 2021, Medicare benefit payments totaled $829 billion. As a nation, Medicare spending accounts for 10% of total federal spending, and at the current pace, the trust fund supporting the program is projected to be depleted in 2028. Over time, the cost of Medicare will only increase as the number of people turning age 65 and aging into Medicare are projected to increase from 17.3% of the U.S. population to 22% by year 2040. Some 10,000 people per day are now turning 65 and starting Medicare.

In addition to the intended but huge demands on our Medicare system by an aging population is the issue of Medicare fraud. Medicare and Medicaid fraud is estimated to cost $60 billion a year according to estimates by the National Health Care Anti-Fraud Association. There is no dispute that Medicare fraud is an unnecessary threat to our Medicare system the needs to be stopped.

A recent news article in The Washington Post sheds light on the major threat that fraud has to our Medicare system, and where we might look to stop it. The February 9, 2024 article is entitled: U.S. Investigates Alleged Medicare Fraud Scheme Estimated at $2 Billion. It explains how seven companies may have conspired to submit fraudulent claims for a simple medical device called a urinary catheter. Investigators contend that over the course of a two year period, these seven companies used real patient information to bill Medicare for the catheters that were neither prescribed by the doctors for these patients nor were the catheters ever provided to or used by any of the patients.

So how does a conspiracy to defraud Medicare of such a humongous amount not get stopped before the crooks get their hands on so much money? One answer is offered by technology expert Saryu Nayyar who is a member of the Forbes Technology Council. In her article entitled “How Medicare And Other Fraud in the U.S. Can Be Prevented”, she explains that one of the reasons why Medicare is the target of so much fraud is because the program is both big and complex. She cites an April 2023 report from the Congressional Government Accountability Office (GAO) which designated Medicare as a high risk program due to its size, complexity, effect on the federal budget and healthcare sector, and susceptibility to mismanagement and improper payments. According to the GAO, the Medicare program has more than 1.4 million providers and more than 20 different payment systems. Further, Medicare processes more than 1 billion claims each year. Her answer to the risk created by Medicare’s size and complexity is “a modern cloud-based fraud prevention system that can aggregate every claim into a single data base, normalize and correlate the data, an analyze it in real time using machine learning, anomaly detection and artificial intelligence.” By having modern technology in place and with billions of legitimate claims as comparative data points, the fraudulent claims would stand out as anomalies to be investigated before any payment is ever made by Medicare.

But back to The Washington Post article. What is very enlightening about it for you and me as ordinary citizens is the account given by one of the “real patients” whose information was used in the massive fraud scheme. Her name is Aileen Hatcher, a 74 year old former certified public accountant in Ponte Vedra Beach, Florida. Hatcher saw a $12,000 claim on her Medicare paperwork for catheters that she neither ordered nor received so she called both Medicare and her Medicare supplement insurance plan. But as Hatcher further explained, she worries that her peeprs do not bother to look at their Medicare statements like she did. The most likely reason for this is because seniors covered by Medicare generally do not have to pay much out of pocket for the supplies and services they receive. To quote Hatcher “I mentioned it at a luncheon yesterday, and every lady there said we never look at those statements.” She concluded with the rather convicting comment, “Well, that’s the problem.”

In somewhat stark contrast to the use of complex technology like artificial intelligence to battle Medicare fraud is the simple efforts of you and me. All we need to do is care enough to take the time to read our Medicare statements and call the Medicare fraud hotline if we see a claim for something we did not receive or request to have done. Who knows, that simple effort might lead to busting a $2 billion fraud scheme and turn us into successful crime stoppers that help save Medicare.

For a detailed overview of how Medicare plans work, read our blog on Medicare Enhancement Options.

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