Of the $515 billion spent on Medicare in 2010, the Government Accountability Office (GAO) estimated that $48 billion – nearly 10 percent – went to fraudulent or otherwise improper payments. Recent events – namely, the federal crackdowns on Medicare scams that amounted to nearly $830 million in alleged false or fraudulent billings – illustrate why addressing fraud, waste and abuse must remain a top priority if Medicare is to remain viable.  

Fraudulent payments, Medicare 2010
Shown as share of total Medicare spending


At Humana, we take our stewardship of federal payments under Medicare very seriously.  Our investments in detecting and preventing fraud, waste and abuse reflect our strong commitment to ensuring that Medicare dollars are spent according to federal laws and regulations.

Our Special Investigations Unit (SIU) employs 200 physicians, nurses and other investigative professionals who use advanced data analytics – such as predictive modeling – along with in-person audits to attempt to uncover issues and prevent inappropriate payment of claims.  An investigations consortium works across all our departments to help proactively address complex cases and foster best practices in investigative techniques.

On the pharmacy side, Humana developed what we call the 333 report.  If a claims review shows a member has gone to three or more prescribing doctors, filled prescriptions at three or more pharmacies and has received three or more prescriptions for a narcotic medication, we investigate further to ensure the patient is not engaged in “doctor shopping.”  We also investigate the providers to ensure no wrongdoing on that end, and in cases of prescription drug abuse, we refer plan members to treatment programs. 

Humana is also working to go beyond “pay and chase.” We employ a pre-pay fraud detection system designed to help detect problems before claims are paid.  Our fraud, waste and abuse analysts examine provider billing and member utilization histories, and if a claim does not pass those screens, we will not pay it until further investigation resolves the issue.  The SIU held back nearly $60 million in fraudulent or abusive Medicare claims in 2011 and $15 million in the first quarter of 2012. 

In recent years, the Centers for Medicare and Medicaid Services (CMS) has strengthened its efforts to reduce fraud, waste and abuse and is working to move away from the pay and chase approach.  Although it might be tempting in these tight budgetary times to reduce funding, I hope Congress will ensure that CMS has the resources it needs to further the adoption of state-of-the art strategies long embraced by the private sector to combat fraud, waste and abuse.