Adam Gartenberg's Blog

Business Analytics and Optimization, IBM and Social Marketing

Tackling healthcare fraud leads to sweeping reforms for North Carolina


The new Institute for Business Value/MIT Sloan Management Review study I just blogged about includes a number of case studies, one of which hits close to home for me, as it involves using analytics to identify fraudulent Medicaid claims here in North Carolina (emphasis mine):

IBM Case Study:  Tackling healthcare fraud leads to sweeping reforms
In a time when spiraling healthcare costs frustrated many, the North Carolina Department of Health and Human Services resolved to curb the fraud and abuse that erodes a scarce resource. After an analytics pilot of the state’s Medicaid records revealed numerous anomalies, the state moved quickly to deploy an advanced mathematical model to detect Medicaid fraud and abuse within its system of two million users.  A new “Medicaid SWAT team” of special investigators is beginning to review cases flagged as suspicious by the analytic models.

Legislative budget officials estimated that the state could recoup $37 million in the program’s first year which easily offset its initial investment several times over. While most of the money would be reimbursed to Medicaid, the penalties would add needed dollars to North Carolina public schools.

The state is now mobilizing resources to pursue the unexpectedly large volume of fraud and abuse cases uncovered. Prompted by the results, the governor announced plans for a full suite of anti-fraud moves, including tougher laws to stop medical company kickbacks to providers who refer patients for Medicaid services, a public awareness campaign to encourage people to report fraud and abuse, and funding to increase the state’s staff of investigators.


You can find this case study and many more in the new study: Analytics: A new path to value.