The state could achieve its budgeted savings from preventing fraud and overpayments in state assistance programs under a new contract with a Texas-based tech security company, Gov. Dannel P. Malloy announced Monday.

The biennium budget counts on a reduction in Medicaid expenditures by $169 million over the next two years. The projected savings are based on the state and its contractors identifying “patterns of waste, fraud, and abuse in government programs.”

In a Monday press release, Malloy said the state has entered into a three-year contract with the security firm 21CT to implement a program designed to detect waste and abuse within medical assistance programs administered by the Department of Social Services. The company will be paid about $24 million for its three-year contract.

OPM Secretary Benjamin Barnes said 21CT will help state agencies identify fraud schemes within the billions of dollars the state spends on Medicaid services. 

“21CT is the right company for the task. They are technologically advanced, innovative, and by far brought the most value to the state for the cost of the contract,” he said. “Our eight million dollar annual investment in this effort will likely bring us tens of millions of dollars in savings and recoupments.”

Asked about the savings earlier this year, Barnes said outright fraud by people abusing the system will only represent a piece of the puzzle. He said there are a number of other “inappropriate payments” the state can avoid to save money.

“Obviously people committing fraud against the state and submitting false claims in order to get rich should be addressed. On the other hand there are duplicate bills that are filed through these big, complicated electronic systems. There are overpayments made for a whole variety of technical reasons without necessarily rising to the level of fraud or criminal acts, and we need to do our best to identify those as well,” Barnes said in July.

Christine Stuart File Photo
Office of Policy and Management Secretary Ben Barnes and DSS Commissioner Rod Bremby (Christine Stuart File Photo)

According to a December press release from 21CT, the company has developed a system to integrate its own health care fraud analytics with Google prediction software.

“Healthcare fraud investigators demand a dynamic and integrated set of techniques, all working together in one product solution, that guide them from lead to investigation to a comprehensive case. Nobody else provides this level of unified analytics to arm those on the front lines in this battle against healthcare fraud,” Mike Hamilton, 21CT director of technical marketing, said.

During a Monday interview on WNPR’s Where We Live, Malloy said the state has been working on updating the technology at DSS, which he said was woefully out of date. He said 21CT offered more advanced systems at a better price than the other companies that bid on the contract.

Malloy cited about $170 million the state needs to save and said the company would help to achieve those savings at a “relatively low price so that most of the fraud that we find or avoid will in fact go to taxpayers.”

When the show’s host John Dankosky expressed surprise the state expected to find so much fraud and abuse in the system, Malloy said the number reflected the “insanity” of allowing DSS technology to become outdated.

“I’ll tell you how bad the technology was — If the system sent out a check to Harry S. Truman at one address in Bridgeport, and H.S. Truman and S. Truman and H. Truman and sent out four checks in one day, there was nothing in the system that would catch that as fraud, even though it was going to the same address,” Malloy said.