CMS awarded defense contractor Northrop Grumman a $91 million contract to develop and implement a second generation advanced analytics system, called the Fraud Prevention System2 (PFS2), to help identify so-called “high-risk” claims in Medicaid and Medicare. Funding comes from a provision in the Small Business Jobs Act of 2010.
According to the Statement of Work included in the contract documents, the new system will capture and detect patterns and anomalies through the development of provider and beneficiary “profiles” in order to flag potential fraud, waste and abuse, using scans of provider billing patterns and beneficiary utilization patterns. Predictive analytics algorithms will scan CMS claims by beneficiary, provider, service origin or other patterns to identify potential problems, and assign an “alert” and “risk scores” for those claims. Those results then allow CMS to prioritize claims for additional review and assess the need for investigative or other enforcement actions.
The first version of the fraud prevention system, also developed by Northrop Grumman in 2010-2011, identified or prevented $820 million in inappropriate payments in the program’s first three years, according to the Modern Healthcare. Northrop Grumman brought in two other companies as partners in that first version: National Government Services and Federal Network Services, a Verizon subsidiary. We are unable to confirm whether those firms are also involved in this newest contract.