News Headlines Article

How About Fraud Alerts for Health-Care Charges?
The Wall Street Journal

As I approached the counter at Burberry’s store in Midtown Manhattan almost eight years ago, I knew I was about to splurge. The purchase was a cashmere scarf, a Christmas gift for my wife, who had lovingly put up with another year of my work travel. I was a federal prosecutor at the time and not exactly living on a Madison Avenue salary, but it was the holiday season and who doesn’t love a nice scarf?

The gentleman at the counter swiped my credit card and carefully folded the scarf, placing it into the iconic plaid box. A moment later, he smiled smugly and said, “Sir, your card has been declined.” My initial embarrassment later turned to surprise when I discovered why: Based on my purchasing history, the credit-card company didn’t think I would shop at Burberry. Rather than allow a potentially fraudulent purchase, the transaction was blocked.

The federal government, one of the largest payers of health-care claims in the world, should adopt this technology if it hopes to beat back fraud. Each year the Centers for Medicare and Medicaid Services pays more than $853 billion in health-care claims, amounting to almost 25% of the federal budget. But an estimated 10% of the claims paid are fraudulent. This year alone, the federal government will pay about $85 billion in fraudulent claims. That is more than the combined earnings of Exxon, Wells Fargo and Microsoft.