Paper calls for expanded use of predictive modeling in Medicare and Medicaid

Predictive modeling software could be applied in programs such as Medicare and Medicaid as tools to prevent fraud and facilitate care management, according to a newly released working paper from UnitedHealth Group’s Center for Health Reform and Modernization.

The National Health Care Anti-Fraud Association conservatively estimates that about three percent of U.S. healthcare spending is lost to fraud or payment and billing errors — and healthcare fraud is a fairly established criminal market, like financial fraud and retail theft. The Association estimates that about 70 percent of payers use some form of an anti-fraud system, many still using the “pay-and-chase” methodology.

Minnetonka, Minnesota-based UnitedHealth, one of the largest managed care companies and the parent company of the healthcare technology firm Optum, noted that payers are starting to embrace predictive analytics for fraud prevention, with Medicare and Medicaid increasingly adopting the pre-claims adjudication process used by commercial insurers. 

The predictive modeling systems can pre-score claims prior to payment and identify billing irregularities. The Centers for Medicare & Medicaid Services (CMS) has a new fraud-tracking system currently being integrated with its payment-processing system. As part of UnitedHealth’s broader proposals for modernizing Medicare and Medicaid, the company’s think tank says that predictive modeling could also go a long way toward helping reduce repeated hospitalizations and for improving continuity of care.

Already used in Medicaid and private insurance and also being used in Washington State’s managed fee-for-service dual eligible demonstration projects, predictive modeling can identify patients at risk for hospitalization and patients “who might benefit from higher levels of care coordination or other interventions,” UnitedHealth’s report said.

“Based on our experience operating Medicaid managed care plans, those programs are most effective when they deploy critical interventions such as comprehensive care plan development, ongoing care coordination, home visits, management of high-risk patients and case management of care transitions and discharges to prevent hospital readmissions,” the report said. Predictive analytics, the report added, “enables those services to be targeted most effectively, and integrating proven delivery reform models such as patient-centered medical homes into plan services also improves care for enrollees.”

Predictive modeling fits in with the type of community-based care models being used in several state Medicare-Medicaid dual eligible demonstrations, and UnitedHealth said the technology is particularly useful in helping people with chronic health conditions. Care managers focus on transitions of care — between hospitals, family caregivers, nursing facilities, primary care doctors and community services — and they can also engage patients and help them manage or improve their conditions.

According to UnitedHealth’s report, “Bringing this type of targeted intervention to the Medicare fee-for-service population would require establishing a mechanism to identify the individuals who might benefit most and then to engage them through outreach programs. Medicare could develop a reimbursement approach for the kinds of nurse manager, care coordinator and community health worker services provided through the program — for example, by paying a service fee to entities that engage those health professionals.”

Washington State’s PRISM software, developed by the Department of Social and Health Service’s research and data division and being used as part of the state’s dual eligible demonstration, aggregates and analyzes claims, billing and service data, and the plan is to incorporate electronic medical record data sometime before 2017.

Aiming “to break down barriers that prevent service integration," the software “synthesizes the extensive intelligence we have gathered from beneficiaries, providers and multiple levels of government into strategies that will improve clinical coordination and care statewide,” Department of Social and Health Services Secretary Robin Arnold-Williams said in the agency’s proposal to CMS.