Texas IG Approves Free Fraud Detection Tool

Stuart Bowen, the current Inspector General in the Tx HHSC, has approved the use of a free downloadable statistical software tool from the federal OIG, RAT-STAT, to be used in the state’s OIG fraud detection scheme. Contrast this with the debacle of the 21CT software which costs upwards of $20 million, gave hundreds of false positives emanating from bad claims extrapolations and specious associations, was championed and promoted by Jack Stick, the former Deputy IG, under FBI and DOJ investigation, for over a year now and praised and applauded by the majority party in the Texas legislature in various state hearings.

RAT-STAT is a software toolkit built in the late 1970s by federal OIG developers, used to randomly select claims for auditing and further statistical analysis, in combating fraud. The idea behind RAT-STAT is simple and is based on basic statistical sampling techniques. RAT-STAT permits the calculation of a suitable audit sample size and the sampling from a population of items based on pseudo-random number generation. It can then perform a statistical analysis on those samples. It was written using the old Visual Basic programming language and is based on 1970s, albeit valid statistical research. Therein lies two problems, (i) the updating of statistical and machine learning algorithms and research since and (ii) the need for human intervention in performing the sampling, stratification, and interpretation of the statistical analysis afterwards. Probe sampling needs to be done on the universe of claims from a provider to initially feed appropriate parameters to the software in order to have a chance at generating a valid sample size for the purpose of a statistically accurate targeted audit.

Nonetheless, RAT-STAT is a free downloadable package that is available to the general public. Providers have the opportunity to self-audit their claims using the software, as a due-diligence stage in their compliance program. SynerImages is available to help you in utilizing this tool for your compliance program. We have improved on the RAT-STAT package and can give other alternatives, (i.e., R-based tools, etc.) using more modern tools and research.