Big Iron Vs. Medicaid Fraud

Erie County in New York hopes to uncover Medicaid fraud and waste with the help of on demand computing from IBM. Tapping into an IBM supercomputer running software developed for the private sector, the county aims to curb up to $80 million a year in dubious claims.

The program, VerifyNY, allows the county to upload local Medicaid provider data to a supercomputer, where advanced algorithms sort through the information and flag suspicious claims. The program will soon be available to all New York counties.

“It’s a data mining tool that allows us to peel back the onion,” said Erie County Executive Joel Giambra at Buffalo news conference. “We are one of the first participants in the country to use the program.”

Private companies use the same system to ferret our fraud and abuse in health insurance programs. IBM’s Center for Business Optimization (CBO) developed the solution, which pairs IBM’s research mathematicians with business consultants.

Stephen Acquario, executive director of the New York State Association of Counties, said the program has approximately 7,000 questions it asks the data uploaded from the counties.

“The questions are very sophisticated and really let you dive into the data,” Acquario said. “The counties want to take matters into their own hands and help the state auditing of provider programs.”

Officials estimate Medicaid fraud at approximately 10 percent throughout New York with another 30 percent bordering on abuse. Other abuse estimates range as high 40 percent.

“The current system is really just an open check book,” said Mark Thomas, chief executive of adjoining Chautauqua County. “When the bills come in, they are paid. It’s very obvious a lot more work needs to be done.”

IBM’s Stephen Lafleche called the program the “most advanced fraud detection system in the world. It’s proven to save millions and we are confident it will save millions in the private sector.”

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