States look to prevent waste, fraud and abuse with IT investments

The business intelligence (BI) market, along with audit and recovery (A&R) technologies are poised to help state and local government root-out nearly $70 billion in waste, fraud and abuse, a recent INPUT report finds. By targeting benefits programs like Medicaid, Social Services and food stamps, the market research firm says states can also address budget shortfalls while increasing transparency and encouraging use of performance management technologies.

According to the INPUT report, the market for state and local BI / A&R will increase at an annual growth rate of 7.6 percent, topping out at over a billion dollars in 2014. It’s a modest bump compared to the private sector, which is likely to see gains of over double that, according to an IDC survey released earlier this week. But the savings that could be derived from the five major benefits programs – Medicaid, unemployment insurance, TANF, housing assistance and food stamps – are anything but modest.

The report estimates that states will lose $67 billion to waste, fraud and abuse (WFA) in 2010, which is nearly 80 percent of all federal benefits spending at the state and local levels. But by using BI and A&R tools, auditors can access near real-time information across programs to identify WFA. INPUT believes technologies such as data mining and standardization, predictive analytics, biometric authentication, and fraud case management systems, can add to the arsenal of tools already being used by some states and localities.

Alameda County, California has implemented a full suite of IBM solutions to improve operations and find WFA in their department of human services. Within days of the new system’s launch Alameda officials were able to identify WFA, potentially saving the state and county millions. “For Alameda, the goal was to improve the speed of their service delivery, while making sure people were getting only the kinds of benefits they’re eligible for,” Jeff Jonas, Chief Scientist for IBM’s Entity Analytics, said in an interview about the county’s system.

The report also highlights technologies used in Connecticut and Texas, who are using fingerprints to prevent duplicate enrollment in welfare and geospatial mashups to see which doctors are luring patients from exuberant distances – a red flag for potential fraud.

Cumulatively, INPUT believes states will invest $600 million in A&R solutions, and $225 million in BI and prevention solutions in 2010 for the five biggest federal benefits programs. But that number may very well increase according to a study released, focusing on the private sector’s use of Saas-based BI solutions.

To add fuel to INPUT’s claims that BI software is likely to see gains over the next several years, IDC found that BI tools delivered from the cloud, “will experience triple the growth of the market overall.” According to Forrester Research analyst Boris Evelson, Software-as-a-Service tools can get BI to typically under-served users, such as front-office workers, a lot faster, and a lot cheaper – something that is likely to be a boon for state and local governments, looking to take advantage of the solutions.

To access the INPUT report, click here.

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3. Calif. benefits program to see $20 million in cost avoidance annually