Combating Medicare and Medicaid Fraud with Ephesoft

Specifically, Medicare and Medicaid fraud, abuse and waste has turned into a multibillion-dollar problem for American taxpayers and the United States government. Medicare and Medicaid, which cover over 100 million people, is deemed as a high-risk program because of its size, complexity and vulnerability to improper payments. In fact, according to the Center for Medicare & Medicaid Services (CMS), the FY 2015 improper payment rate was 12.1%, representing $43.3 billion in improper payments. Another report says that more than $2.77 billion of Medicare and Medicaid recoveries are expected from audits and investigations during the first half of FY 2016 (October-March). The 2016 fraud costs are expected to be lower at around 10%.

The fraudulent cases of improper payments typically fall into three categories: (1) intentional deception or misrepresentation, (2) the overuse or inappropriate use of services and resources and provider practices that are inconsistent with sound fiscal, business or medical practices, such as providing medically unnecessary services, or (3) beneficiary practices resulting in unnecessary Medicaid costs. Some examples of Medicare abuse include: billing for unnecessary medical services, charging excessively for services or supplies and misusing codes on a claim, such as upcoding or unbundling codes.

Therefore, CMS began implementing many forms of ways to prevent and stop fraud, abuse and waste, while maintaining their true goal of ensuring that public funds are given to paying legitimate entities for allowable services or activities on behalf of eligible beneficiaries of federal healthcare programs. This included setting up auditing and fraud prevention services such as Zone Program Integrity Contractors (ZPIC), Recovery Audit Program, National Benefit Integrity Medicare, Drug Integrity Contractor (NBI MEDIC), Outreach & Education MEDIC (O&E MEDIC) and Medicaid Integrity Contractors to cover services nationally. In addition, they also implemented new technology, including the use of Ephesoft’s platform that uses patented, machine learning technology to classify, extract and export data, so CMS can easily access patient claim data and act quickly to prevent fraudulent claims.

Previously, CMS was manually reviewing millions of patient records per year for accuracy and fraud. This required a significant amount of time to manually find, enter, organize and file records. Most of the records were kept in file cabinets or stored in various places. The agency needed to determine whether the claims have been paid properly based on the coverage, coding and billing rules, which required a large amount of staff and time.

With Ephesoft’s advanced document capture platform, CMS could expedite their fraud prevention process with help from the software’s machine learning algorithms, which learned to recognize the type of documents, extract the right data, digitize the data, and organize it properly. This allowed employees to spend less time doing tedious audit searches and more time positively impacting healthcare programs. In fact, in the first 14 months after implementation, headcount was reallocated and reduced by about 33%.