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Audit (A-17-12-53000)

12-17-2012
The Department of Health and Human Services Has Implemented Predictive Analytics Technologies But Can Improve Its Reporting on Related Savings and Return on Investment

Executive Summary

In the first year of its implementation of requirements of the Small Business Jobs Act of 2010 (the Act), the Department has implemented predictive analytics technologies, but it did not fully meet the requirements for reporting actual and projected improper payments recovered and avoided in the Medicare fee-for-service program and its return on investment related to its use of predictive analytics technologies. The Act requires the Office of Inspector General (OIG) of the Department to certify the actual and projected improper payments recovered and avoided and the return on investment related to the Department's use of predictive analytics technologies in the Medicare fee-for-service program. OIG must also recommend whether the Department should continue, expand, or modify its use of predictive analytics technologies. In its first implementation report, the Department has described its plans to expand and enhance the FPS. This report is incorporated into the Department's Report to Congress Fraud Prevention System First Implementation Year 2012.

Reporting such amounts in accordance with the requirements is inherently challenging because, primarily, it is a new venture and because of the decentralized nature of the business processes of the Fraud Prevention System (FPS), which were developed to implement predictive analytics technologies. The Department did not report some of the amounts required and had inconsistencies in its data; in addition, its methodology for calculating other reported amounts included some invalid assumptions that may have affected the accuracy of those amounts. In these cases, we could not determine the accuracy of the Department's information, which impeded our ability to quantify the amount of the inaccuracies noted in this report.

We made five recommendations to the Department to help the Department refine its methodology for gathering data and its use of that data to enhance the precision of the actual and projected savings and return on investment numbers disclosed in its report. The Department concurred with our recommendations and noted it is committed to working with OIG to ensure that the recommendations are incorporated into future FPS reports.

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