CMS Leverages AI for Enhanced Fraud Detection in Medicare and Medicaid
The Centers for Medicare & Medicaid Services (CMS) is leveraging artificial intelligence to enhance fraud detection by identifying fraudulent claims in its operations. This strategic move, according to Jeneen Iwugo, acting director of CMS’s Center for Program Integrity, allows the agency more discretion in combating fraud under the current administration, as highlighted during a UiPath event in Washington, D.C.
Medicare and Medicaid programs often face fraudulent activities. Iwugo's team, with around 500 members, scrutinizes an immense volume of claims—between 4 to 5 million daily. Artificial intelligence aids in pinpointing claims with the highest fraud risk, enabling more effective resource allocation. "That’s where I’m going to invest additional time," Iwugo stated, referencing AI-flagged areas of potential fraud.
According to the Government Accountability Office, fiscal 2024 reported $162 billion in improper payments across 68 federal programs, with Medicare identified as a high-risk area. CMS employs approximately 250 fraud prevention models daily as part of its fraud prevention system, aligning the center’s priorities with AI-driven insights.
Significant enhancements in CMS’s fraud detection have resulted in a high return on investment, with 2024 witnessing a $14 return for every dollar spent on anti-fraud measures. Iwugo noted a shift from conservative practices to a more balanced risk-reward strategy, crucial in legal challenges.
Despite ongoing efforts, a financial gap of roughly $100 billion in fraud remains. Iwugo remains optimistic about AI advancements, which she believes will significantly address outstanding issues in fraud prevention.
Sarah Harvey, director of GAO’s Science & Technology Assessment unit, stressed the importance of integrating human judgment with AI analysis to ensure comprehensive reviews before halting payments. The "human in the loop" approach ensures thorough consideration of all contextual factors.
The initiative has been bolstered by a fraud "war room" launched in 2025, a collaborative effort with legal counsel and the Office of Inspector General. Focusing on evaluating high-risk cases, this effort saved almost $2 billion in its first year. Iwugo noted the war room's collaboration with the Department of Justice and plans to shift focus increasingly from Medicare to Medicaid.