James Frogue

The problem of fraud in public-assistance programs is far bigger than most people realize. Fortunately there is an easy and cheap solution.

While food stamp fraud is significant, especially with a record-high 47 million Americans now on food stamps, it pales in comparison to what is stolen from Medicare and Medicaid.

Those two programs now serve more than 100 million Americans at a combined annual cost in excess of $1 trillion. It is widely accepted across the political spectrum that upwards of $100 billion of that amount is fraud and abuse.

Recently, a report from the Oversight and Government Reform Committee in the US House of Representatives outlined many billions of dollars being wasted every year just in New York’s Medicaid program. Grossly inflated payments to intermediate care facilities and excessive salaries were just the tip of the iceberg in a $53 billion program that easily bleeds  more than $10 billion annually to criminals.

The US Senate Finance Committee, with bipartisan enthusiasm, released a similar report at the end of January offering dozens of solutions to combating the growing problem of Medicare and Medicaid fraud.

South Florida has more than its share of theft from government programs, often because information that would immediately indicate a fraudulent claim is not shared across state agencies.

The easiest and most cost-effective solution to identifying and stopping fraudulent activity in real time is by utilizing advanced analytics across all government agencies. Gov. Rick Scott’s new budget proposal includes $2.5 million to fund a pilot for a new Public Benefits Integrity Data Analytics and Information Sharing Initiative. The goal of the initiative is to use “advanced and predictive data analytics” to “detect and deter fraud, waste and abuse in Medicaid and other public benefit programs in the state.” This is a start that the Legislature should consider fully funding and making permanent.

If you have ever traveled to another city and been asked to show ID while making a large purchase with your credit card, that is advanced analytics in action. In seconds, the system recognizes you in an unusual location, raises a flag, and has the clerk ask for your ID. If it is indeed you making the purchase, you show your driver’s license and complete the purchase with no further hassle. Similar analytics are used by websites you visit to suggest alternative music, restaurants or vacation destinations that you might like based on your previous patterns.

The problem of fraud in public-assistance programs is far bigger than most people realize. Fortunately there is an easy and cheap solution.

Unfortunately, that kind of technology which has been in place in other industries for years, is not used aggressively enough to instantly find and stop fraud in Florida’s public assistance programs.

Florida’s Medicaid budget for 2011, for example, was more than $21 billion. Improper payments occur at a rate of 8.1 percent, as estimated by the U.S. Center for Medicare and Medicaid Services (CMS). Using that estimate, Florida taxpayers lost more than $1.7 billion in 2011 just to Medicaid fraud, waste and abuse.

If we add in the cost of food stamps, unemployment insurance and other assistance programs with prevalent amounts of fraud, a $2.5 million investment in best practice solutions long used in other industries is less than one-tenth of one percent the estimated annual cost of fraud in those programs.

It is worth noting that American consumers spend $2.5 trillion using credit cards every year with a fraud rate well below 1 percent. This success is attributable to constantly evolving analytics.

Originally published by Tallahassee.com