The software will be used to identify potential fraud and abuse as well as inaccurate payments to Medicare and Medicaid providers, which cost the taxpayer US$65 billion last year.
The Centers for Medicare and Medicaid Services will be the first federal program agency to test the tool which was developed by the Recovery Accountability and Transparency Board to track the payout of GFC stimulus funds.
The software gathers data and analyses it in real time so it can sound an early warning on potential instances of fraud by indentifying suspect activity, according to Office of Management and Budget director Peter Orzsag.
“This will help to meet the President's goal of cutting the improper payment rate in Medicare in half by 2012,” Orzag wrote in a blog post.
Data on instances of fraud can then be mapped geographically, financially, or by method of fraud, which allows staff to look for patterns.
The government will consolidate the information about fraudulent transactions into a database of suspect suppliers known as the Do Not Pay list.
The RATB hopes to eventually roll the tool out to other federal agencies.