Medicare Transaction Fraud Prevention Act
Medicare Transaction Fraud Prevention Act would create a two-year pilot program under Medicare to test an artificial intelligence–driven predictive risk-scoring algorithm aimed at overseeing payments for durable medical equipment (DME) and clinical diagnostic laboratory tests. Participation in the pilot is voluntary for a defined group of beneficiaries who opt in to electronic notices, with safeguards to require human review before suspending transactions. The program would involve testing, learning from beneficiary data, notifying affected parties, and providing opportunities for beneficiaries to cure or confirm transactions before any suspension. It also authorizes targeted actions, such as temporary suspensions and Medicare Summary Notices alerts, to address high-risk transactions while ensuring beneficiaries can respond. The Secretary would manage the pilot, collaborate with industry, and have authority to suspend transactions or terminate a Medicare card as needed to prevent fraud.
Key Points
- 1Establishes a 2-year pilot program to test predictive risk-scoring algorithms for overseeing DME and clinical diagnostic laboratory payments under Medicare, beginning no later than January 1, 2026.
- 2Participation is voluntary for “applicable beneficiaries” who opt in to electronic Medicare Summary Notices and to the pilot; beneficiaries can terminate participation at any time.
- 3The algorithm would score relevant transactions from 1 (least risky) to 99 (most risky) and must be tested and evaluated prior to deployment; includes requirements to inform beneficiaries/providers about usage and data processing, with possible waivers of notice where appropriate.
- 4For transactions scoring above a Secretary-set risk threshold: a human review is required; beneficiaries receive an opportunity to cure or confirm the transaction, and if suspended, an automatic alert is sent via Medicare Summary Notices, with subsequent electronic notices every two weeks for three months and fraud-reporting information included.
- 5The Secretary can determine when to terminate or issue a new Medicare card to prevent fraud; the process emphasizes collaboration with industry representatives (including DME suppliers) and requires a clear, documented review before suspensions.