The Centers for Medicare and Medicaid Services is eyeing a combination of artificial intelligence, medical provider education and new laws to reduce improper payments and fraud, expanding on the existing CMS Fraud Defense Operations Center technology that has already stopped billions in potentially fraudulent payments.
Why Documentation Errors Are Central to This CMS Fraud Defense Operations Center Technology Push
One of the biggest drivers of improper payments, which totaled billions of dollars across CMS programs in fiscal year 2025, is incorrect documentation or a lack of documentation, according to CMS Deputy Administrator Kimberly Brandt. “Our goal is to really start using machine learning tools and some of those technologies to really help start working with the provider community,” Brandt said at the Health Datapalooza event Friday.
The Scale of Potential Savings
Brandt’s office did not clarify how the agency plans to use AI to support providers, but she stressed that reducing documentation-related improper payments could drop Medicare’s entire improper payment rate by as much as two percentage points, calling that reduction “huge.”
The Claims System Overhaul Within This CMS Fraud Defense Operations Center Technology Effort
CMS is also working with contractors to replace legacy Medicare claims systems with a modern one as part of its fraud crackdown. The new claims system would issue “real-time payments” to providers and include “real-time fraud review tools,” Brandt said.
The Contractors Competing for This System
CMS selected two companies to compete for a potential seven-year contract for the modern Medicare claims system. HealthEdge’s contract had an initial $2.5 million obligation and a $1.1 billion ceiling, while Peraton’s contract had an initial $9.1 million obligation and an $825 million ceiling. CMS has also selected Tegria, a healthcare consulting and technology services company, to provide management and technical implementation support for the overhaul. Brandt’s office did not respond to a request for comment on the claims system competition.
The Existing CMS Fraud Defense Operations Center Technology Already in Use
In March 2025, CMS launched a Fraud Defense Operations Center to proactively detect fraud. The center uses AI to sift through thousands of Medicare claims and create a heat map of frequently billed items and services.
Which Categories CMS Has Targeted
“Skin [substitutes] were a big thing last year. We’re still seeing the overflow of catheters [and] genetic testing. But the fact is that we decided those are the areas that we know that we can hit hard at,” Brandt said. Within those identified items and services, CMS uses machine learning to find documentation patterns that would benefit from human scrutiny.
The Results This CMS Fraud Defense Operations Center Technology Has Produced
The center has stopped nearly $2.5 billion in potentially fraudulent Medicare payments and taken action on just under 800 providers, Brandt said Friday. She previously told Nextgov/FCW that CMS would benefit from new dashboards and better analytics to detect fraud in state-administered Medicaid programs.
Why Medicaid Oversight Remains a Distinct Challenge
Brandt’s separate comment about needing better analytics specifically for state-administered Medicaid programs suggests the center’s current tools and results are concentrated more heavily on Medicare, with state-level Medicaid fraud detection representing an area CMS still views as underdeveloped by comparison.
The Legislative Ask Alongside This CMS Fraud Defense Operations Center Technology Strategy
Besides technology, Brandt sees a role for Congress to play in helping CMS crack down on fraud. She said she has urged congressional offices to give CMS the power to sometimes stop providers and payers from enrolling in federal programs. “If we can keep them out, it’ll be better for all of us,” Brandt said.
How This Fits CMS’s Broader 2026 Enforcement Pattern
This request for expanded enrollment-blocking authority arrives alongside CMS’s already active use of enrollment moratoriums and exclusion authority throughout 2026, including actions against DMEPOS suppliers and hospice and home health agencies, suggesting Brandt is seeking to formalize and expand tools the agency has already been applying more narrowly.
What This CMS Fraud Defense Operations Center Technology Push Means Going Forward
With HealthEdge and Peraton competing for a contract worth up to $1.1 billion, the eventual selection and rollout of a modernized Medicare claims system could significantly reshape how quickly CMS detects and stops fraudulent payments, moving from retrospective heat-map analysis toward real-time review. Given Brandt’s specific two-percentage-point estimate for documentation-related savings, providers should expect CMS to expand machine learning-driven documentation education and enforcement, though the agency has not yet detailed exactly what that provider-facing technology will look like.
What to Watch Going Forward
As CMS moves toward selecting a contractor for its claims system overhaul, industry observers will likely watch whether HealthEdge or Peraton is ultimately chosen, and how quickly Tegria’s implementation support translates into an operational real-time payment and fraud review system. Given Brandt’s explicit request for expanded congressional authority to block problematic providers and payers from enrolling in federal programs, this CMS Fraud Defense Operations Center technology strategy may increasingly combine legislative and technical tools as the agency continues its broader push to reduce Medicare and Medicaid improper payments.
For more healthcare industry updates, insights and news, visit DistilINFO. Click here to subscribe to stay informed
