Austin Company Leads Medicaid Fraud Crackdown

AUSTIN (KXAN) — Medicaid fraud is a multibillion dollar scam and a new computer system hopes to help spot the crooks.

Texas pays out $28 billion a year to some 4.8 million people, according to Kaiser.

The state picks up one-fourth of the tab, and the feds pay the rest. The FBI estimates that 10% of Medicaid claims are fraudulent, which comes out to $2.8 billion a year in Texas alone.

On Monday, Austin company 21CT launches a new computer system called “Torch” to help the state bring scammers to justice.

Torch will collate state data around the clock. The system will monitor frequency of claims, the size of claims and any funny patterns or anomalies.

21CT has grown to over 100 employees, most of them devoted to the crackdown. Company officials say what they are finding is eye opening.

“You know it’s there,” said Kyle Flaherty, Vice President of Marketing for 21CT. “What’s so surprising is how complex and entrepreneurial the fraudsters can be. This is a business for them and we need to disrupt the business they are creating.”

Torch will eyeball providers: businesses, medical supply companies, doctors, therapists, dentists, ambulance firms, hospitals and more. The system will make it easier to sort out.

“In my old job as a healthcare fraud investigator for the state I would have eighteen browser windows open with tabs in them,” Ross Worden, 21CT Director of Data Science said. “I had no idea what was going on. Now, it’s all in one place. I can click through and see who is connected to what… what they are doing… what they are going to do potentially. It’s a fantastic tool.”

Cheats use patterns to pull off their scams, but they can be spotted if you know what to look for. However, Torch isn’t talking.

“The reason I won’t tell you what they are is they may be listening,” Flaherty said. “The last thing I want a fraudster to know is the techniques we can pick up on.”

Those could include suspicious associations, peculiar transaction accounts and unsavory networks.

A little modest bill padding, or honest mistakes are to be expected in Medicaid. Torch looks for the big boys.

“There’s always something where you say no, you knew it,” Worden said. “It was bad and you tried to hide it. Those are the things that really interest us. We want the bad people.”

When the red flags fly, they are passed along to state investigators to pick up the trail.

If you are busted, it could mean a fine, paying restitution or even jail time.