Medicare goes high-tech to head off fraud

By RICARDO ALONSO-ZALDIVAR | June 17, 2011 | 10:43 AM EDT

WASHINGTON (AP) — Officials say Medicare is adopting technology similar to what credit card companies use to screen claims for clues that can predict fraud.

The Obama administration announced Friday it has a awarded a contract worth up to $77 million to defense contractor Northrop Grumman and a group of companies for the new system, which will begin operating July 1.

Medicare anti-fraud czar Peter Budetti said it will allow the giant health care program for seniors to spot suspect claims and providers before the government sends out a check. Right now, investigators usually wind up chasing fraudsters after they've been paid. Savvy scam artists just shut down and open up again somewhere else.

Health care fraud is estimated to cost $60 billion a year.