Skip to content

Healthcare fraud: Why your tax dollars should be spent updating state IT systems

Debra Casey  Executive Editor / Thomson Reuters

· 5 minute read

Debra Casey  Executive Editor / Thomson Reuters

· 5 minute read

The U.S. Department of Justice (DOJ) recently won its largest healthcare fraud case against a medical facility owner in South Florida for Medicare and Medicaid fraud. Florida isn’t the only state facing such issues as a recent federal audit uncovered nearly $5 million paid in Illinois through the Medicaid program for the medical treatment of deceased individuals.

Symptoms of a Broken System

How can the Medicaid program be manipulated into paying for treatment of people who have already died? In this case, it was separate systems lacking cross reference beneficiaries to death certificates. Billions of tax dollars are spent each year providing healthcare for the aged and infirm through Medicare and Medicaid. The Office of Management and Budget (OMB) estimated improper payments for Medicaid was nearly $40 billion in 2017.

Enrollment, claims and payment, and fraud control tend to be separate departments with separate information systems. Furthermore, the systems are antiquated for the most part and require maintenance by part-time retirees, as the older and highly manual programming languages are no longer supported by the original developers. While there are reasons why it occurs, there are also preventative measures that can be taken to efficiently and effectively use taxpayer dollars.

Efforts vary from state to state in terms of an incentive to prevent healthcare fraud. States with a smaller number of recipients receive a higher percentage of reimbursement in terms of funding, and thus, have a lower incentive to prevent fraud. So, what can be done besides using taxpayer dollars to update systems and ensure that these systems talk to one another?

Mining the data and analytical reviews

Some of the state computer information systems may require new technology or development work; however, simple trend analysis, comparisons between years by population served, and the use of advanced analytics to predict where fraud may occur as a result of historical data can accomplish the goal of mining data.

Look and Listen

Simple comparisons can circumvent and prevent fraud. For example, matching death certificates to current Medicaid and Medicare rolls can prevent fraudulent payments related to individuals who have died or catch duplication of Food Stamp (SNAP Food Benefits) recipients. Looking at lists of issues by other agencies or even comparing different states for the same agency may uncover issues. This cross referencing can be successful because fraudsters take advantage of state IT system inefficiencies in systems and lack of communication between agencies and/or states. The same fraud may occur in different states by the same person in the same agency but due to lack of communication, the perpetrator can potentially get away with it twice.

Anti-fraud playbook

Because this isn’t a new issue for municipalities, the Program Integrity: The Antifraud Playbook was issued in 2018 by the Department of Treasury, the Chief Financial Officers Council, and the Bureau of Fiscal Service. The playbook is designed to help advance the goal of safeguarding public resources, for use by all federal, state, and local agencies. The free practical guidance shares leading practices, and helpful resources for agencies to establish or enhance their antifraud programs and meet the requirements of the Fraud Reduction and Data Analytics Act of 2015 and OMB Circular A-123. It also clarifies actions needed to streamline program integrity initiatives and helps reduce the amount of money lost through improper payment.

For more on analytical reviews, the anti-fraud playbook, and courses on detecting and preventing fraud, visit

More answers