Fighting Fraud in Government Benefits Programs

By Sheila Hoeppner, Director, Fraud and Risk Systems, State Enterprise Solutions, Xerox

Government benefits programs like food stamps, Veterans benefits and Social Security provide vital assistance to the citizens who need it most. Unfortunately, qualified recipients aren’t the only ones trying to benefit.

Every year, government assistance programs lose billions of dollars to fraud, siphoning money away from legitimate recipients and increasing the burden on already-tight government budgets. Government agencies at the local, state and federal level are falling victim to fraud daily. Just a few examples:

  • In 2013 alone, Supplemental Nutrition Assistance Program (SNAP) losses due to “improper payments” were estimated to exceed $2.6 billion.
  • Fraud loss related to “improper” unemployment insurance payments topped $3.3 billion in 2013, according to a study by the St. Louis Federal Reserve.
  • A recent report by the RAND Corporation estimates that annual Medicare and Medicaid fraud to be as much as $98 billion and system-wide healthcare fraud costs amounted to nearly $272 billion.
  • According to the Washington Post, federal agencies have paid more than $700 million since 2008 to the deceased because of fraudulent acceptance of benefit checks intended for people who have died but are “alive” according to federal records.

These are just a few of the many government programs that incur losses because of fraud, and most programs are expected to continue to grow over the next few years. For example, SNAP has grown 70% since 2007. Therefore, agencies and programs need to make a conscious effort to counteract and stop this type of fraud.

While the threat of fraud is nothing new, technology has changed the game. Back in the day of check-based benefits disbursements, forgery and counterfeiting were the main concerns. As government agencies move from paper to Electronic Benefits Transfer (EBT) and branded debit cards, fraud threats become more sophisticated, fueled by international crime rings, as well as local, computer savvy predators. Fraud today has no geographical boundaries – funds due to U.S. residents can be easily stolen by someone in China or Russia, with little or no chance of recovery.

Identity theft is another element of fraud that can have devastating effects far beyond the financial impact. Criminals stealing the identities of authentic benefits recipients don’t just steal money, but can also have years-long consequences for individuals, compromise program integrity, and pose a threat to national security.

To compound the problem, fraud, waste and abuse schemes are constantly changing. As fast as you can block today’s common culprits, new scams are already in progress. Fighting fraud is a continuum. Today’s master plan requires the fluidity and expertise to anticipate and protect against tomorrow’s challenges.  Luckily, trends like big data initiatives can help support investigations into government fraud.

Although nothing can completely stop fraud in government benefits programs, agencies can reduce it through early detection and deflection. Fraud follows the path of least resistance. Much like a burglar bypasses the house with the locked gate and security system for the one with the open window, criminals will always look for the easy money. The key to protecting benefits funds from fraud without alienating recipients is to remain vigilant and invest in the right combination of data analytics, fraud prevention tools and expertise required to deflect these ever-evolving threats.

Even with the right mix of technology, many organizations struggle to effectively tackle ongoing fraud mitigation on their own. The best defense is finding a technology partner who offers a full portfolio of tools, a highly developed analytics practice and a deep understanding of the intricacies of government benefits programs.

You can read more about the current state of fraud in government benefits programs and how to take a stand against it by clicking here.

 

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