Tech Overlook

Using Azure to fight government fraud, waste and abuse—Part 1

I always think the most fascinating stories on “60 Minutes” and other investigative programs are about government fraud, waste and abuse. That’s why I’m excited to have Microsoft partner Pondera Solutions offering state-of-the-art, Azure Government-powered cloud computing solutions to fight this insidious problem. It was a pleasure to recently interview Pondera’s founder and CEO Jon Coss since his company pioneered many fraud, waste and abuse systems, which are now integrated with our secure, trusted Microsoft government cloud. Here’s Part 1 of our two-part series:

Recently, government agencies have had a focus on fraud detection and management.  What’s the current state of fighting fraud, waste and abuse by government agencies?

Not that long ago, fraud, waste and abuse was a small subset of requirements in larger systems for tax, Medicaid and other programs … it was bundled in with all the other system functions, like paying claims and enrolling beneficiaries. Government has really started to shift away from that, which makes fundamental sense. You want the company and the system that’s doing the actual processing of transactions to be separate from the company and the system that’s (ensuring) the integrity of those transactions.

We also hear from our clients and prospects, “We don’t need anomalies that may not mean anything and are difficult to investigate; we need investigation-ready leads that our analysts and auditors can work on.” We’ve seen a move away from this focus on discrete transactions to looking at it more holistically—looking for larger trends, patterns, clusters of suspicious activity … transactions over time.

Two other significant things:

  • We’re seeing governments start to move toward more prepayment prevention vs. post-payment, pay-and-chase activities. The availability of cloud computing like we can do in Azure, gives us the ability to process massive amounts of transactions very quickly so that if we identify highly problematic claims prior to a payment being made, then it gives the government agencies the opportunity to not make that payment at all.
  • We’re also starting to see a really encouraging trend: within a state, agencies are starting to talk to each other. We’re starting to see the first few bids come out … to address fraud, waste and abuse across agencies instead of within an individual agency. There’s also a lot more discussion across states. The bad actors that are defrauding systems … they act across programs and in multiple states.

Can you tell us more about Pondera Solutions and what government customers can expect to help them battle fraud, waste and abuse?

We offer a true software-as-a-service (SaaS) architecture, with a true multi-tenant environment to accommodate multiple programs within a state, same programs across states—different combinations to really effectively fight fraud. This architecture also allows us to add new data sources as they become available and we can push new fraud detection algorithms as we develop them. If we find an emerging fraud scheme on the East Coast we could develop a fix for that in our algorithms and then deploy it to all of our customers.

States are starting to look at fraud, waste and abuse more holistically … Last week, we just pulled in a transaction file from one of our larger clients and it’s 750 million records— when you combine it with 20 to 30 external databases, that’s a ton of data. We take all of that data—we certainly provide alerts on individual anomalies, suspicious activities and suspected fraud—but we pull it all together and we add it with our behavioral models and then we provide back a triaged list of cases. We uncover larger, more collusive activities and we provide a single fraud risk score … then we return back that investigation-ready lead that our clients are asking for—and we do it quickly and we do it accurately. That’s really what our clients can expect from us: rapid responses, very low false positive rates, triaged cases and, importantly, an understanding of a (larger) network that a case might be a part of.

Can you elaborate on why you decided to go with a SaaS approach?

What the cloud allowed us to do was take this massive computing power and advanced analytics and get really smart people to run this data … without having to build our own datacenter and with the ability to leverage Microsoft’s security protocols. Without that, we never could have ever started this company … All we do is fraud, waste and abuse, and yet we can have as much computing power and as advanced analytics as any (traditional IT) company. Microsoft lets us be a fraud, waste and abuse company instead of a technology company; that’s how I think Microsoft is changing the world.  

There’s a lot more to this story so please stay tuned for Part 2 on combating fraud, waste and abuse, including examples of positive customer outcomes. Until then, please:

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