New Medical Billing Software Mandated Under Small Business Lending Act

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According to reports, the Small Business Lending Act signed into law this past June includes an anti-fraud provision that will require Medicare to do more to prevent fraud.

"Medicare fraud has been a problem for far too long," notes Alan Weinstock, insurance broker at www.MedicareSupplementPlans.com. "CMS uses an outdated billing system which I understand actually helps to facilitate over $60 billion in Medicare fraud annually."

Under the new provision, the Centers for Medicare and Medicaid Services (CMS) will be required to stop its long-held policy of approving claims without first verifying them.

Medicare Billing Software

Part of what the law implements is new Medicare billing software with a predictive modeling component, a type of analytical technology that already has been adopted in the credit card industry to identify potentially fraudulent bills. Medicare billing contractors will be required to use the new technology for hospitalization and outpatient services, which make up the bulk of Medicare's spending. It is estimated that predictive modeling could save the government more than $20 billion a year.

CMS is required to launch a competitive bidding process by January 2011 for predictive modeling software contractors and then begin actually implementing the technology by July in the 10 states with the highest Medicare fraud rates. U.S. Senator George LeMieux (R-FL), who coauthored the Small Business Lending Act and wrote the Medicare anti-fraud initiative, has a personal interest since Florida is one of the states where Medicare fraud rates are the highest.

After the first year of implementation, Health and Human Services will be required to submit a report to Congress detailing the actual savings on Medicare fraud. If the savings are substantial, some of that money could be used to implement the technology in 10 more states.