The National Institutes of Health (NIH) this month awarded Qmedtrix a $94,000 grant to begin work on a math-based system for reviewing medical bills for improper charges. The goal is to develop algorithms -- or a set of rules for solving a problem in a finite number of steps -- that can be used to block payments of medical bills that are miscoded, sent in error, or potentially fraudulent.

The federal Government Accountability Office (GAO) reported in 2005 that even a 3% billing error rate would have cost $4.6 billion in federal funds in fiscal year 2003.

Algorithms have been in used in California's workers' compensation system for a decade as a means of catching questionable bill charges, Qmedtrix founder Merrit Quarum said.

Algorithms use machine-learning to recognize when a bill from a clinic is out of the ordinary, Quarum explained. He said they've been in use for a decade to catch questionable charges in California's workers' comp system.

In the federal contract, Quarum will work with Dr. Richard Crandall of Reed College to expand the use of algorithms from workers' compensation to other health insurance systems, he said.

Crandall, whom Qmedtrix described as a mentor to Apple co-founder Steve Jobs, is credited with using algorithms to find the world's largest prime number. He holds a Ph.D. in theoretical physics from the Massachusetts Institute of Technology.

The data set to be used to create the billing rules for a Medicare and other health insurance system will be substantially larger than any that Qmedtrix has worked with before, Quarum said. However, years of workers' compensation billing data will find its way into the project.

Qmedtrix spokesman Todd McLean said the $94,000 will fund a first phase of the project, which is expected to last about six months. Qmedtrix will apply for more grant money in April, when the federal agency awards up to $750,000 in phase two, he said.

Reprinted with permission from WorkCompCentral (link to article requires subscription).

About Qmedtrix
Qmedtrix is a leading health care reimbursement decision company that develops innovative and specialized methods to deal with inaccurate and inappropriate medical charges. Qmedtrix offers a complete spectrum of services to support the cost-saving efforts of its clients, which include self-insured corporations, health care companies, third-party administrators, state funds and other insurance companies.

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