New Deloitte Research Highlights Need for Dynamic and Holistic Fraud Prevention Strategies to Address $137 Billion in Losses to Government Benefits Programs

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May 16, 2016, 09:00 ET

WASHINGTON, May 16, 2016 /PRNewswire/ -- The amount of improper payments reported by government benefits programs has ballooned from $38 billion in 2005 to $137 billion in 2015, according to the Government Accountability Office. After adjusting for inflation, that's a near tripling in losses.

To address this growing issue, Deloitte Public Sector Research today released a report titled, "Shutting Down, Fraud, Waste, and Abuse: Moving from rhetoric to real solutions in government benefit programs."

"Politicians have been complaining about fraud, waste, and abuse for years with little in the way of improvements," said William D. Eggers, director of public sector research at Deloitte Services LP. "It's time to match the rhetoric with results based on proven models."

The study describes an enterprise approach to program integrity that combines retrospective and prospective approaches, predictive analytics, and adaptive techniques that are used in leading private and public sector organizations. The report found that these approaches could yield tremendous public value by better detecting fraud that has occurred, but also preventing improper payments before they are made.

"Though modest gains have been realized through audit, compliance, and rules-based monitoring, government agencies can better detect and deter fraud by incorporating advanced analytics into their program integrity strategies," said Brien Lorenze, principal, Deloitte Advisory, Deloitte & Touche LLP. "Because fraud is dynamic and always changing, government agencies can think of the fight against fraud as a chess match -- always anticipating and planning for the next move."

To defend program integrity successfully, agencies should consider an enterprise approach coordinated among departments, functions, channels, and related programs. With enough contextual data, fraud and waste indicators can be generated and evaluated in real time using advanced analytics, and appropriate interventions applied.

The report also includes two interactive graphics. The first, providing an overview of what a flexible and holistic program integrity platform design looks like. And the second, a look at the future of program integrity.

Deloitte's new report outlines a roadmap that entitlement programs – both at the federal and state level – can consider implementing to provide more adaptive and effective program integrity:

Set a high-level goal of adopting enterprise-level integrity management
GAO's recent survey of fraud prevention programs found that the most successful agencies are those whose leaders demonstrate a commitment to managing risk and ensure this commitment at all levels of their organizations.
Don't just buy a point solution—build an enterprise strategy
To defend program integrity successfully, agencies should consider an enterprise approach coordinated among departments, functions, channels, and related programs.
Bring cybersecurity and identity management into program integrity efforts
It's critical to make cybersecurity a central part of strategic planning and operations as data warehouses for benefits programs are magnets for identity thieves.
Start by tackling waste and abuse
Clearing away waste and error can reveal the magnitude and location of fraud more clearly.
Use data to inform your choice of interventions
Technology now permits the evaluation of more data faster. Analytics can transform raw data into a list of key moments amenable to intervention.

About Deloitte Research
Deloitte Research, a part of Deloitte Services LP, identiﬁes, analyzes, and explains the major issues driving today's business dynamics and shaping tomorrow's global marketplace. From provocative points of view about strategy and organizational change to straight talk about economics, regulation and technology, Deloitte Research delivers innovative, practical insights companies can use to improve their bottom-line performance. Operating through a network of dedicated research professionals, senior consulting practitioners of the various member ﬁrms of Deloitte Touche Tohmatsu Limited, academics and technology specialists, Deloitte Research exhibits deep industry knowledge, functional understanding and commitment to thought leadership. In boardrooms and business journals, Deloitte Research is known for bringing new perspective to real-world concerns.

As used in this document, "Deloitte" means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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