How CMS stepped up its payment fraud detection

One of the big guns in the government’s battle to reduce improper health care claims is the Fraud Prevention System (FPS),  a nearly four-year effort by the Centers for Medicare and Medicaid Services to help automate the review of health care claims before, during and after they are filed. FPS is critical to CMS’ plan to move away from “pay and chase” to a prevention model of claims management in its fight against fraud.  

In the past, CMS typically paid a claim, then checked its validity before making a decision to try to recover the funds if it discovered they had been paid improperly. That approach has made it easy for fraudsters to elude regulators by sending up a smoke screen of false claims and counter-claims during the payment process.

FPS uses predictive analytics to flag providers and other players in the health care supply chain who might have participated in payment fraud.

As in anti-fraud approaches in the credit card industry, FPS enables CMS to assign risk scores to specific claims and providers, thereby establishing a starting point for analysts to pursue a potential fraud case.

When FPS identifies irregular activity, it automatically generates potential investigative leads for program integrity contractors — the teams of experts and data scientists who can help identify actions that can be taken immediately, such as suspending payment or launching a case review.

CMS officials say the success of FPS often depends on quickly detecting fraudulent payments, a goal for which it is enhancing some of its response systems. Responding to a suggestion by the Government Accountability Office, CMS has improved the integration of FPS with its claims-processing system, giving FPS the ability to stop payment of improper claims by transmitting a claim denial message directly to the payment system.

“What this means is that FPS can identify billing patterns and claim aberrancies that would be undetectable or difficult to detect by CMS’ current claim edit modules or a single contractor reviewing on a claim-by-claim basis,” Shantanu Agrawal, director of the CMS Center for Program Integrity, said during a hearing held earlier this year by the House Ways and Means Committee’s Oversight Subcommittee.

Industry players say FPS shows promise but is still young. Louis Saccoccio, CEO of the National Health Care Anti-Fraud Association, told the subcommittee that “it will take time to effectively refine and adjust the models for such a large and complex system as Medicare in order to realize the full potential that these powerful technologies offer.”

About the Author

Paul McCloskey is senior editor of GCN. A former editor-in-chief of both GCN and FCW, McCloskey was part of Federal Computer Week's founding editorial staff.


  • business meeting (Monkey Business Images/

    Civic tech volunteers help states with legacy systems

    As COVID-19 exposed vulnerabilities in state and local government IT systems, the newly formed U.S. Digital Response stepped in to help. Its successes offer insight into existing barriers and the future of the civic tech movement.

  • data analytics (

    More visible data helps drive DOD decision-making

    CDOs in the Defense Department are opening up their data to take advantage of artificial intelligence and machine learning tools that help surface insights and improve decision-making.

Stay Connected