Health care fraud is one of the government’s costliest problems. It’s a hall of mirrors where billions of dollars are lost to swindlers looking to cash in on the millions of transactions generated by insurance-paying agencies every day.
Last year, the federal government lost $124.7 billion in fraudulent or improper payments through 124 programs, according to the House Ways and Means Committee’s Oversight Subcommittee. Medicare fraud accounted for about half, or $60 billion, of the losses.
Behind that backdrop, for the past three years officials at the Centers for Medicare and Medicaid Services (CMS) have been working on a system designed to scan for clues to fraud in aggregated claims data. The Fraud Prevention System (FPS) flags anomalies before a payment is made, much like credit industry systems can spot a potentially fraudulent charge and withhold payment while the transaction is investigated.