A new report suggests that using modern technology like predictive analytics, behavioral economics and collective intelligence can help to prevent fraud, waste and abuse in a holistic way.
What’s worse than not having enough funding in public service and government agencies? Unnecessarily losing funds due to waste, fraud and abuse. In fact, estimates show that billions — even trillions — of taxpayer dollars are lost without the backing of any sustainable prevention strategies.
But Deloitte Public Sector Research aims to change that with its new report, which outlines key strategies to prevent and correct this growing national challenge for years to come.
Developed by a collective group of experts across technology, statistics, data management and fraud, Deloitte compiled existing research on fraud, waste and abuse to highlight the scope of this issue. Through that research, one thing is undeniably clear — huge amounts of money are being consistently lost. Case in point: In 2015, $137 billion was reportedly lost to improper payments by government benefit programs. Ironically, as a result of tight budget constraints, many state government agencies have not been able to update their fraud prevention strategies to adequately manage this problem.
To address this issue in a sustainable way, the report suggests using modern technology like predictive analytics, behavioral economics and collective intelligence. The authors outline five key strategies that prevent fraud, waste and abuse in a holistic approach, including:
As co-author Brien Lorenze notes, these strategies take a “big picture” approach when looking at data related to fraud, waste and abuse.
“A lot of the ways that governments today look at fraud is reactive: pay and chase. That doesn’t work very well in many cases because the person who got the benefit already spent it, “ he said. “The other element is trying to move to proactive approaches — to be able to move very quickly through risk-based modeling and identify high-likelihood fraud. One thing the paper talks about is nudges — the concept that you don’t have to be 100 percent sure that fraud has occurred. You can be probabilistically sure and say, ‘These things don’t add up,’ and the person will usually correct it.”
That holistic approach is being proposed as a simple, effective way to identify and prevent issues across many areas.
“For example, if one agency just found a case of Medicaid fraud, it would make sense if that same person is also applying for food stamps or Social Security disability, that you would be able to check across those stovepipes,” Lorenze explained. “You would think that if there was someone abusing in one area, you’d want to check quickly to see if they’re doing it in another area.”
While fraud, waste and abuse are only likely to increase, this systemic problem has been in the national spotlight for years — from presidential dedication to fight the issue to the federal Fraud Reduction and Data Analytics Act of 2015, which mandates agencies in upholding prevention processes.
At the end of the day, fraud, waste and abuse are growing national issues that demand a long-term solution — a solution that Deloitte hopes to deliver.
“We’re dealing with trillions of dollars. Can you imagine what that means? You can either plow through that money into better quality care and more benefits, or you can reduce the burden on the taxpayer. No matter where you come from on the political scale, there’s something of high value here,” Lorenze said. “The fact that demand for benefits is increasing on an unsustainable track and we now have the technology, process and methods to deter a great deal of this cost is a tremendous opportunity for our nation.”