Defense giant Northrop Grumman has signed a nearly $92-million contract with the Centers for Medicare and Medicaid Services to build the second phase of a computer system that’s currently focused on reducing fraud but down the road will play a greater role in anticipating beneficiaries’ medical disorders.
The story in the Los Angeles Times says it’s the most prominent example of how public and private insurers are spending millions of dollars on “big data” – using advanced technology to predict people’s future healthcare needs based on their interactions with doctors, hospitals and pharmacies, as well as information gleaned from other sources, such as social media.
Such systems, known as predictive analytics, aim to make healthcare more efficient and effective by opening the door to addressing medical issues before they become serious problems.
“There are tremendous advantages to big data in healthcare,” said Gerard Magill, a professor of healthcare ethics at Duquesne University in Pittsburgh. “It’s about creating a comprehensive approach to using medical information.”
The trade-off: Say goodbye to individual privacy.
“Big data requires that information; it’s nonnegotiable,” Magill said. “Individual privacy is gone for the common good.”
Medicare’s contract with Northrop Grumman is one of the largest efforts underway to create a healthcare crystal ball capable of looking into patients’ futures.
“The use of data in healthcare is absolutely critical,” said Dr. Shantanu Agrawal, director of Medicare’s Center for Program Integrity, which is tasked with lowering costs. “Having it be predictive of various issues is extremely important.”
Medicare has been criticized in the past for using a “pay and chase” approach to fraud – that is, paying all 4.5 million claims that are submitted daily and then attempting to determine which ones may have been bogus and trying to reclaim the funds.
Rep. Peter Roskam (R-Ill.), chairman of the House Ways and Means Oversight Subcommittee, said at a hearing on healthcare fraud last month that the agency needs to move faster in implementing “better data analysis and predictive analytics.”
Medicare says the first phase of its Northrop-designed fraud-detection system produced more than $1 billion in savings over the last two years.
Amy Caro, vice president of the health solutions division of Northrop Grumman Technology Services, told me it’s clear that sophisticated algorithms are the best way to spot and crack down on fraudulent medical claims. They’re capable of sifting through millions of submissions and recognizing signs and patterns that indicate a claim may not be on the up and up.
The next step, she said, will be using big data capabilities to get ahead of Medicare and Medicaid beneficiaries’ healthcare needs.
“You have all types of data out there and available,” Caro said. “You’re able to drill down and look for signs of certain diseases or conditions.”