Building a Smarter Planet. A Smarter Planet Blog.

by Secretary Al Delia, North Carolina Department of Health and Human Services 

Twelve billion dollars.

That’s the price tag for providing vital Medicaid services to 1.5 million North Carolinians. That kind of money is crucial for so many of our citizens in need, but the complexity of the system combined with such large sums of money also present an unwelcome opportunity for fraud, waste and abuse. Every year, Medicaid suffers losses at the hands of people intent on defrauding the system, and it’s potentially costing us millions in taxpayer dollars.

As governor during the worst economic crisis North Carolina has seen since the Great Depression, Governor Bev Perdue made it her mission to fix state government – making it work smarter for our citizens by doing more with less. Hundreds of millions in state dollars were cut from our Medicaid budget in the last three years, and that meant making choices that were almost unbearable. Do we deny coverage of prosthetic limbs, or dentures? Do we cancel payment of vaccinations for children, or eye care for the elderly?

With Governor Perdue’s leadership and unwavering commitment to accountability in state government, we made the tough choices while protecting services for as many as possible. But even as we stretched every dollar and pinched every penny, we knew unscrupulous people were still finding ways to game our system, and it added insult to injury. Every dollar wasted or defrauded could be used to provide much-needed care to a child or a disabled person. Something had to change.

So in 2010, under the governor’s direction, the state Department of Health and Human Services partnered with IBM for a software system designed to ferret out fraud, waste and abuse in our Medicaid system. North Carolina is the first state to use IBM’s advanced analytics in this way, and now, two short years later, we are on the cusp of a dramatic crackdown on what appears to be widespread defrauding of Medicaid.

In just our first phase of data analysis, we’ve flagged hundreds of providers who have submitted bills for hundreds of millions of dollars in suspicious claims. The beauty of this system is that it recognizes patterns of billing behavior that don’t fit in with the norm – and then takes it a step further by looking for relationships among providers that can point us to a web of suspicious accounts. With some 88 million Medicaid bills coming in every year, there’s no way we could connect these dots through manpower alone. Analytics makes it possible to sift through tens of thousands of documents and hundreds of millions of pieces of data to identify strange behavior in a matter of minutes.

This summer DHHS investigators are fanning out across the state to put together criminal cases, and the state attorney general is ready to prosecute. Word is getting out to unscrupulous Medicaid providers: the state is watching your every move.

It’s about to get a whole lot harder to steal money from the state of North Carolina.

Now that’s smarter government.