DOJ and OIG Use Complex Data Analysis To Find Medicare Fraudsters

Monday, September 12, 2016
By Miles O. Indest, J.D./M.B.A.; Law Clerk, The Health Law Firm

Since the 1990s, the credit-card industry has successfully used predictive analytics to find suspicious patterns and protect consumers from fraudulent charges. The health care industry has found a similar success in recent years, as federal agents use data mining, predictive analytics, and other modeling approaches to catch Medicare fraud.

Medicare Strike Force Enhanced to Reduce Billion-Dollar Losses.

In 2015, the Centers for Medicare and Medicaid Services (CMS) estimated that nearly $60 billion in taxpayer money was lost to fraud, abuse, waste, and improper payments. One factor contributing to this large figure was that Medicare’s contractors have to process 4.5 million claims every day—many false claims seem to slip through the cracks.

In order to analyze such a large number of claims, the Affordable Care Act appropriated $350 million to the Medicare Strike Force over the past few years to enhance investigations with advanced data analytics.

Three Main Analytic Models Support Fraud Detection.

Over the past few years, the U.S. Department of Justice (DOJ) and the Office of the Inspector General (OIG) have used three main analytic models: (1) rules-based; (2) anomaly; and (3) predictive.

First, rules-based models will automatically alert the government to certain charges linked to an account, such as a charge from a stolen Medicare identification number.

Second, anomaly models will alert the government to charges that involve suspicious claims. For example, one Dallas doctor was caught in a $400 million home health care scam after reporting almost 10,000 patients per month, because the average patient volume for that practice was only 100 patients per month.

Third, predictive models use past fraudulent trends to predict future behavior. These models will alert the government to charges that are similar to a pre-determined fraud profile.

Mixed Reviews: Supporters and Skeptics.

The DOJ and OIG have expressed unwavering support for these innovative systems. For example, Attorney General Loretta E. Lynch credited these models with helping the DOJ with the “largest criminal healthcare fraud takedown” in Medicare Strike Force history.

“We obtain and analyze billing data in real-time. We target hot spots—areas of the country and the types of healthcare services where the billing data shows the potential for a high volume of fraud—and we are speeding up our investigations. By doing this, we are increasingly able to stop schemes at the developmental stage, and to prevent them from spreading to other parts of the country.”

Still, some critics remain skeptical of blind trust in the new technology. “Sometimes there's too much focus on technology for technology's sake,” said Andrew Asher, a senior fellow at Mathematica Policy Research. Because health care data is more complex than credit card data, artificial intelligence must be balanced with human oversight, he warned. People should not ignore the significant costs of false positives in the health care industry.

The Road Ahead.

The new method of fraud detection has certainly made health care fraud and abuse investigations more efficient: the government has recovered $6.10 for every dollar spent on these investigations, according to the Health Care Fraud and Abuse Control Program report. Nevertheless, fraud schemes are also becoming more innovative and complex, and fraudsters do not face the same limits of bureaucratic borders and red tape.

For now, it appears that the DOJ and OIG are winning several battles against Medicare fraud. Ultimately, as federal investigators and fraudsters both become more technologically advanced, only time will tell which side wins the war.
Don't Wait Until It's Too Late; Consult with a Health Law Attorney Experienced in Medicare and Medicaid Issues Now.

The attorneys of The Health Law Firm represent healthcare providers in Medicare audits, ZPIC audits and RAC audits throughout Florida and across the U.S. They also represent  physicians, medical groups, nursing homes, home health agencies, pharmacies, hospitals  and other healthcare providers and institutions in Medicare and Medicaid investigations, audits, recovery actions and termination from the Medicare or Medicaid Program.

To contact The Health Law Firm, please call (407) 331-6620 or visit our website at

About the Author: Miles Indest, J.D./M.B.A., graduated in May 2016 from Tulane University Law School and the Freeman School of Business. He has served three years as a member of Tulane Law Review and served one year as the Writing Skills Chair of Tulane Moot Court.


Manatt Phelps & Phillips LLP. “Real-Time Data Analytics in Government Investigations and Reducing Exposure.” Lexology. (June 23, 2016). Web.

Tahir, Darius. “Predictive analytics play new role in fraud detection, but critics want more.”Modern Healthcare. (Feb. 25, 2015). Web.

Wing, Terry. “Advanced data analysis helping to nab Medicare cheaters.” Federal News Radio. (Aug. 26, 2016). Web.

KeyWords: false claims, Medicare false claims, false claims act, qui tam suits, qui tam relator, false billing, false certifications, Medicare, Medicare fraud, Medicare audit, Centers for Medicare and Medicaid Services (CMS), pharmacy, Florida pharmacy investigation,  Office of Inspector General (OIG), U.S. Department of Health and Human Services (HHS), defense attorneydefense lawyer, The Health Law Firm, The Health Law Firm reviews, reviews on The Health Law Firm lawyers, defense lawyer, Florida defense attorney
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