CMS Working to Enhance Its Fraud Detection Capabilities
Key Points:
- Systems used to detect fraud since 2011 are now being upgraded
- What this means for Compliance Officers
CMS under Dr. Mehmet Oz is advancing its fraud detection capabilities with the use of real-time, AI-driven tools and inter-agency collaborations. CMS uses predictive analytics to flag suspicious Medicare claims before they are paid. In 2025, CMS began working with the Department of Government Efficiency (DOGE). The goal is to flag questionable expenditures for further review through a real-time fraud detection program, using advanced technology to increase capabilities. These predictive modeling techniques are similar to those used in the private sector and analyze Original Medicare claims and detect suspicious activities before payments are made. CMS has also engaged CGI Federal to implement an Application Programming Interface (API) Gateway. This technology facilitates improved data sharing across various systems, aiding in the detection and prevention of fraud by enabling more comprehensive analysis of disparate data sources. What all this means is that CMS is collecting huge volumes of data, including Claims data from providers and suppliers (Medicare Part A, B, C, D); beneficiary information (e.g., age, geography, medical history); provider information (e.g., license, NPI, billing history); and external datasets (e.g., public records, sanctions lists, historical fraud cases).ย They identify suspicious patterns, such as high billing amounts compared to peers, abnormal procedure frequency, geographic anomalies (e.g., services provided far from beneficiary residence), and unusual billing times or combinations of codes (e.g., mutually exclusive procedures on the same day). CMS uses several methods to flag claims based on known fraud indicators (e.g., billing for deceased patients), identifying provider or beneficiary rings (shared addresses, phone numbers, IPs). Employing both technological advancements and inter-agency collaboration to detect fraud, waste, and abuse in the Medicare program; and is expected to result in significant improvements in program integrity. CMS refers to its findings of suspicious activity with the OIG and DOJ and it can be expected there will be an increase in investigations and enforcement actions.
For the Compliance Officer, this means it is important as part of the ongoing auditing process to ensure that claims processing has a quality assurance program that includes, as part of ongoing monitoring, quality control review (daily random testing of claims for accuracy). Noteworthy is all this data mining involves claims submitted for payment; and does not address arrangement with referral sources where there is no data or information with the government.
