IBM, New York county team up to fight Medicaid waste, fraud

Erie County has decided to take part in a program developed by IBM and the New York State Association of Counties (NYSAC) to detect Medicaid fraud using advanced mathematical algorithms developed by IBM researchers.

The algorithms, which are math equations that simplify complex tasks into useable information, can detect fraud much more accurately than current methods, IBM and the agencies said Wednesday in announcing the program. Erie County is the first county in New York to take part in the antifraud effort.

Called Verify NY, the new county-specific data-mining computer system flags irregular billing practices and procedures that could cost New York taxpayers billions of dollars in fraud, waste and abuse, said Erie County Executive Joel Gambria.

The new system, which can spot dubious Medicaid claims, will help Erie County officials "peel back the onion" so they can look at the type and amount of medical procedures provided to Medicaid recipients, and the costs health care providers bill Medicaid for those procedures, he said.

"Medicaid is an essential public program that provides for the health care of millions of New Yorkers who otherwise couldn't afford quality care. Unfortunately, there is fraud and abuse in the program that has been eating up county budgets," said Chautauqua County Executive Mark Thomas, who is also a NYSAC vice president. "This program with IBM ensures that taxpayer dollars are not being wasted on outrageous or illegal billing practices."

Verify NY will allow member counties to run their Medicaid claims through an IBM supercomputer on demand. The hardware powers IBM's Fraud and Abuse Management system, which has been used by large insurance companies to eliminate millions of dollars in fraudulent insurance claims, IBM said.

Using a secured connection, counties upload Medicaid provider data to the supercomputer, where the advanced mathematical algorithms comb through the information for patterns of behavior that are suspicious. Those items are then flagged for further investigation, said Stephen Lafleche, IBM's northeast government client director.

"Our counties have had this data for several years, but they have not had the necessary tools to review for irregularities in health care service costs and procedures," said Stephen Acquario, the executive director of NYSAC. " Verify NY [gives] counties the tools needed to make sure taxpayer dollars are used wisely."

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