Blog

FraudCast Blog

rss

Pondera FraudCast

Welcome to the Pondera FraudCast, a weekly blog where we post information on fraud trends, lessons learned from client engagements, and observations from our investigators in the field. We hope you’ll check back often to stay current with our efforts to combat fraud, waste, and abuse in large government programs.

Analytics are more than Numbers and Stats – It’s About People by Tammy Marple, VP - Special Investigations Unit

Analytics are more than Numbers and Stats – It’s About People by Tammy Marple, VP - Special Investigations Unit

During my time as a fraud analyst, I realized that my work was so much more than just numbers and statistics. I worked in State Government for many years and a few years ago, my manager asked me to conduct a study on Opioids. I lived that assignment for 18 months.

After the Opioid study was completed, I traveled the state and shared what I had learned with our regulatory and law enforcement partners. That assignment really stuck with me. The overall impact of the Opioid epidemic on healthcare costs, society, and the family unit is devastating. It is a sad truth when we can say “everyone knows someone addicted to these types of drugs,” regardless of how they got there. An even worse reality is the impact on the family as a whole: newborn babies born addicted to drugs, children being raised by their grandparents or in foster care because the parents are either dead or in jail as a result of their addiction and drug diversion activities, and families living with the daily possibility of overdose.

One of the most eye-opening documentaries regarding this epidemic was created by Vanguard and is titled “The OxyContin Express.” Although the video is many years old, the story it tells is still very real today and it is no longer just a Florida issue. I often suggest that our interns and new employees in Pondera’s Special Investigations Unit watch the video. It explains drug diversion schemes from drug seeking patients to the cash operations of those that prescribe the drugs, as well as the overall human element. It’s been years since I conducted the study on Opioids, and yet Opioid abuse is still on the rise and growing fast with the introduction of illicitly manufactured fentanyl.

An in-depth analysis conducted in 2016 by the Centers for Disease Control and Prevention (CDC), stated that drug overdose deaths were spreading not only geographically but also across demographic groups. Listed below are some of the stats from the CDC analysis:

• Drug overdoses killed 63,632 Americans in 2016.
• Nearly two-thirds of these deaths (66%) involved a prescription or illicit opioid.
• Overdose deaths increased in all categories of drugs examined for men and women, people ages 15 and older, all races and ethnicities, and across all levels of urbanization.
• CDC’s new analysis confirms that recent increases in drug overdose deaths are driven by continued sharp increases in deaths involving synthetic opioids other than methadone, such as illicitly manufactured fentanyl (IMF).

Pondera’s technology can identify these areas of risk in a variety of programs. This is the reason behind what we do to make a difference and potentially effect change for the better. Certainly, our goal is to detect fraud, waste, and abuse in government programs, but it really does come down to people. Sure, technology is always a cool thought when it comes to smart phones, cars that drive themselves, video games, and other advancements, but technology can also be used to detect certain behaviors within large data sets and identify highly suspect activities, patterns, or hot spots of concern. Pondera leverages technology to identify suspect activity and protect vulnerable populations within a program to make a significant difference, not only from a government budget point of view but also in the lives of our fellow citizens.

Cited Sources
Van Zeller, Mariana. “The OxyContin Express.” YouTube, Current TV - Vanguard, 19 October 2009, https://www.youtube.com/watch?v=wGZEvXNqzkM

Researchers for the Centers for Disease Control and Prevention (CDC). “U.S. Drug Overdose Deaths Continue to Rise; Increase Fueled by Synthetic Opioids.” www.cdc.gov, 29 March 2018, https://www.cdc.gov/media/releases/2018/p0329-drug-overdose-deaths.html
The Irreplaceable Human Mind

The Irreplaceable Human Mind

At Pondera, we are often asked whether fraud detection algorithms will ever completely replace human investigators. And while I can’t address the “ever” part of the question, I can confidently state that it will not happen in the foreseeable future. One of the major reasons for this? Prediction models, like many people, struggle to distinguish between cause and effect.

A Stanford University professor recently shared her studies on this topic which support many of our own findings. She noted that while prediction algorithms are excellent at finding patterns in large data sets, their effectiveness is limited because they struggle with determining causation. An example she used is that algorithms have been shown to help identify patients who should not receive hip surgery because they would likely die of other causes. However, the algorithms are unable to prioritize those patients who should receive the surgery.

In several cases, the professor notes that correlation can be as low as 50%. And she properly notes that while this may be fine in certain situations, governments simply cannot conduct such high-risk experiments with social welfare, economic policies, and other important matters. And unlike controlled environments, such as those that use placebos to test medications, the real world is simply too messy and unpredictable to control all factors.

This problem of causation identifies an important intersection between human reasoning and prediction algorithms. We believe that in complex, rapidly changing environments like fraud detection, effective detection systems combine the power of modern detection algorithms with experienced human reasoning.

By leveraging the individual strengths of both machine and human learning, we can analyze massive data sets and make sense of the findings. We regularly use the system to find the problem and ask the human experts to help explain the problem. This makes the results actionable, which ultimately is what our government partners require.
Fraud, Waste, and Abuse Standards

Fraud, Waste, and Abuse Standards

One of my colleagues recently returned from a conference on government program integrity with an interesting anecdote. He recounted a vendor presentation where the speaker was touting a 52% accuracy rate in their fraud lead generation system. So… nearly half of the system’s leads generated false positives. Not so sure I’d brag about that.

High false positive rates lead to wasted investigative time and money and unwarranted intrusions into the lives of legitimate program beneficiaries and service providers. Ultimately, they lead to a lack of confidence in the system itself and investigators revert back to more manual detection methods. When one considers all the important services governments deliver and the immense political pressure they endure, this is obviously not acceptable.

Shortly after hearing this story, we were asked to respond to a question about false positive rates and any existing industry standards or even benchmarks. While every vendor, including Pondera, makes claims about our system efficacy, very few standards actually exist. Conversely, our clients (the government program administrators) generally are subject to improper payment standards placed on them by the federal government.

I think there is a great opportunity, even responsibility, for governments to create these standards. Fraud detection standards would challenge the vendor community to “put up or shut up”, leading to more innovation. They could also be adjusted as the standards are met and surpassed leading to constant improvement. And they would provide governments with a uniform method for measuring vendor performance.

It is true that fraud detection systems still rely on quality program data and can suffer from the old adage "garbage in, garbage out”. So government would still share in the responsibility of meeting any new standards. But clearly, there is more we can do. And this would benefit all parties involved… except, of course, the fraudsters.

Newsletter

Interested in viewing a live demonstration? Enter your email below and a member of our Sales Team will contact you to schedule a demo.

Email:

About Our Company

Pondera leverages advanced prediction algorithms and the power of cloud computing to combat fraud, waste, and abuse in government programs.



Get in touch

  • Sacramento Address: 80 Blue Ravine Road, Suite 250, Folsom, CA 95630

  • Phone: (916) 389-7800

  • Email: info@ponderasolutions.com