"Medical data is in lots of different pots," Sebelius said at a news conference after the announcement at a summit on health-care fraud that is being held at the University of the Sciences in Philadelphia. "We wanted to be able to spot the doctor claiming to be in the six cities billing for the same procedure on the 16th of June."
U.S. Attorney General Eric Holder joined Sebelius and others involved in fighting health-care fraud at the summit. This is the sixth such gathering, following ones held in Miami, Los Angeles, Brooklyn, Boston and Detroit.
The Obama administration has pushed for fighting fraud as part of its much-discussed health-care plan. The two cabinet-level departments joined forces in May 2009 and tried to better deploy people and resources to fight Medicare and Medicaid fraud for its own sake but also because the federal budget is under greater duress.
Holder said that using the investigative units of the FBI, U.S. Attorneys' Offices, Medicare and Medicaid, and the FDA, the government has obtained nearly $8 billion in judgments, settlements, fine, restitutions and forfeitures in the last two years.
Those cases have involved multinational companies and individuals. The U.S. Attorney's Office in Philadelphia has been one of the most active, given the pharmaceutical companies in the area, but individuals have been caught and prosecuted.
"We were inspired by our common cause - and by common sense," Holder told the approximately 320 summit participants.
The computerized tracking system is part of that cause. Sebelius said the real-time hope for the system is akin to when a credit card company "can alert you to 12 flat-screen televisions being billed to your card from a town you've never been to."
Donald Berwick, the chief administrator for the Centers for Medicare and Medicaid Services, said that the contract was put out for bid and that Northrop Grumman, National Government Services and Federal Network Systems, a subsidiary of Verizon, are combining on the system. The contract is for one year, with options for two years of extensions, but the government will own the algorithms so, in theory, the system could survive if any of the companies departs.
"This helps CMS to move beyond the pay-and-chase recovery operations to an approach that focuses on preventing fraud and abuse before payment is made," said Donald Berwick, the chief administrator for the Centers for Medicare and Medicaid Services.
Peter Budetti, like Berwick a doctor by training, is the deputy administrator for program integrity for CMS. He said the system will sort the many kinds of information derived from Medicare and Medicaid claim forms in a way that generates a risk score for the claim. If the score reaches a certain level, investigators from CMS and the Office of the Inspector General will look into the claim more carefully.
The geographic distance between provider and beneficiary and whether a beneficiary's identification has been compromised previously are factors that might be teased out and signal a problem. Budetti said that the database will "build on itself" as various law enforcement agencies contribute bits of information.
Medicare is supposed to pay claims quickly, with interest if it goes beyond 30 days. But the health reform act gives the HHS secretary authority to waive those provisions if a claim is kicked out as suspicious. Providers won't automatically have a risk score, but the system will be able to track trends about who is providing what to whom. Home health-care businesses and durable medical goods providers have been specific problem areas for fraud, so they will start with a higher risk assessment than doctors and hospitals.
"Protecting legitimate providers is a very big concern," Budetti said. "We respect the fact that the vast majority of providers and suppliers are legitimate people who are critical to taking care of Medicare beneficiaries."
While Northrop Grumman is known for making war-fighting machines, it has an information branch that already does work for CMS. Through a separate contract signed last year, Northrop Grumman was helping CMS increase the use of electronic health records. The company also handles computer operations for state child support enforcement in Delaware, California, Montana and Rhode Island.
Contact staff writer David Sell at 215-854-4506 or email@example.com.