Texas Uses Integrated Medicaid Fraud System

Texas Uses Integrated Medicaid Fraud System

By Andrea Novotny
Staff Writer

Texas officials expect to recover $14 million annually by 2000 in illegally or improperly spent funds using a new, integrated system for detecting Medicaid fraud and waste.

Electronic Data Systems Corp., Plano, Texas, leads the team responsible for the Texas Medicaid Fraud and Abuse Detection System, which went into service late last year.

Subcontractors on the $5.8 million effort include HNC Software Inc., San Diego, and Intelligent Technologies Corp., Austin, Texas. Silicon Graphics Inc., Mountain View, Calif., provided the platform, an Origin2000 server, for the Texas system. The effort runs for 21 months and includes three one-year options.


  • EDS, Plano, Texas. Integrating the Medicaid Fraud and Abuse Detection System.

  • HNC Software Inc., San Diego. Providing the underlying neural network platform and technical and consulting support.

  • Intelligent Technologies Corp., Austin, Texas. Providing software support.

  • Silicon Graphics Inc., Mountain View, Calif. Provided the platform, an Origin2000 server, for the Texas system.
The system uses neural network, or data-mining technology, to identify patterns in Medicaid claims, payment and history data. Such technology learns to recognize suspicious data that could help analysts and state investigators uncover fraud, abuse and waste, such as the overbilling of patients or the filing of multiple claims for the same procedure.

"As the system matures, we anticipate the number of suspects and recoveries will grow," said Aurora LeBrun, associate commissioner for the investigative arm of the state's Health and Human Service Commission.

The new system will generate the names of more than 2,000 health care providers suspected of fraud or abuse in addition to the 1,800 suspects the state pinpoints each year, state officials said.

The Texas Health and Human Service Commission began using the Medicaid Fraud and Abuse Detection System late last year.

The new, integrated system devised by the EDS-led team is being used in addition to the state's Medicaid Management Information System. That management information system extracts data from processed claims, which are then reviewed by workers to detect possible fraud, abuse or waste.

Health care fraud makes up 10 percent of the nation's total health care spending, according to the U.S. General Accounting Office. In fiscal 1995, Texas spent $7.3 billion in state and federal funds on Medicaid services and $522 million to pay for health insurance benefits for state employees.

"With the old technology we missed the greatest portion of fraud and abuse," said Diane Davis, who manages the integrated system for the Health and Human Service Commission.

Said Davis: "The patterns and behaviors involved in fraud, abuse and waste change over time and it was essential that Texas build a system with the future in mind."

Although Texas is the first state to use the integrated system devised by the EDS team, a handful of states has expressed interest in a similar system, said Drew Beckley, Texas state executive for EDS. EDS technology for Medicaid management information systems is used in 17 states.

Silicon Graphics' role in this effort is part of a broader push into the state and local market started about a year ago, said Bert Wakeley, manager of state and local government for the company. Before then, most of the company's business had been in the federal marketplace.

Silicon Graphics officials expect to sell the platform technology now used in Texas to several states, including California, Ohio and New Jersey, Wakeley said.

"We're the $4 billion new kid on the block in the state and local market," Wakeley said. "We are aggressively pursuing solutions that we can then sell - either individually or with partners - in the state and local market."

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