(ii) prompt payment of legitimate 
claims. 
(2) PREDICTIVE
MODELING.—The Prevention 
System shall involve the implementation of a statis-
tically sound, empirically derived predictive modeling 
technology that is designed to prevent fraud, waste, 
and abuse (by identifying such fraud, waste, and 
abuse before payment is made under the Medicare 
Program on related claims). The Prevention System 
shall use a predictive model to identify fraud, waste, 
and abuse that is— 
(A) based on historical transaction data, 
from across all markets and regions available, 
to build and continuously re-develop scoring 
models that are capable of incorporating exter-
nal data and external models from other 
sources into the predictive model; and 
(B) regularly updated, through the feed-
back loop under subsection (g), to provide infor-
mation and incorporate data on reimbursement 
claims that is collected through the Prevention 
System, including information gathered through 
the investigation of claims for reimbursement 
under the Medicare Program that the system 
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identifies as being potentially fraudulent, waste-
ful, or abusive. 
(3) PROTECTIONS
FOR
PATIENTS
AND
PRO-
VIDERS.—The identification of an unusual or sus-
pect Medicare claim by the Prevention System 
shall— 
(A) not result in the denial of items or 
services to an individual under the Medicare 
Program until such claim is further reviewed by 
the Secretary; and 
(B) not result in a failure to comply with 
prompt payment requirements under applicable 
law. 
(4) COMPLIANCE WITH HIPAA.—Any data col-
lected, stored, or reviewed under the Prevention Sys-
tem shall be treated in a manner that is in accord-
ance with the regulations promulgated under section 
264(c) of the Health Insurance Portability and Ac-
countability Act of 1996 (42 U.S.C. 1320d–2 note) 
and any other applicable law. 
(e) TREATMENT OF DATA.— 
(1) IN GENERAL.—The Prevention System shall 
be a high volume, rapid, near real-time information 
technology solution, which includes data pooling and 
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scoring capabilities to quickly and accurately capture 
and evaluate data. 
(2) DATA
SOURCES.—The Prevention System 
shall, for purposes of preventing fraud, waste, and 
abuse under the Medicare Program— 
(A) use data from claims for reimburse-
ment under the Medicare Program contained in 
existing files of Medicare claims data, including 
the Common Working File of the Centers for 
Medicare & Medicaid Services; and 
(B) to the extent practicable, pool data 
from all available Government sources (includ-
ing the Death Master File of the Social Secu-
rity Administration). 
(3) DATA STORAGE.—The Prevention System 
shall be stored in an industry standard secure data 
environment that complies with applicable Federal 
privacy laws for use in building Medicare fraud, 
waste, and abuse prevention predictive models that 
have a comprehensive view of provider and supplier 
activity across all markets, geographic areas, and 
provider and supplier types. 
(f) FRAUD MANAGEMENT SYSTEM.— 
(1) IN GENERAL.—The Prevention System shall 
utilize a fraud management system containing 
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workflow management and workstation tools to pro-
vide the ability to systematically present score, rea-
son codes, and treatment actions for high-risk scored 
transactions, as determined under subsection (d). 
(2) REVIEW OF CLAIMS.—The fraud manage-
ment system under paragraph (1) shall ensure that 
analysts who review Medicare claims have the capa-
bility to access, review, and research claims effi-
ciently, as well as decline or approve payments on 
claims in an automated manner. 
(g) FEEDBACK LOOP.— 
(1) IN GENERAL.—The Prevention System shall 
utilize a feedback loop to gain access to outcome in-
formation on adjudicated Medicare claims so future 
system enhancements can utilize previous experience. 
(2) PURPOSE.—The purpose of the feedback 
loop under paragraph (1) is to— 
(A) enable the Secretary to measure— 
(i) the actual amount of fraud, waste, 
and abuse under the Medicare Program; 
and 
(ii) any savings to the Medicare Pro-
gram resulting from implementation of the 
Prevention System; and 
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(B) provide necessary data to develop fu-
ture, enhanced models for use in the Prevention 
System. 
(3) ANALYSIS OF FINAL CLAIMS STATUS.—The 
feedback loop under paragraph (1) shall analyze 
data from all carriers to provide post-payment infor-
mation about the eventual status of a Medicare 
claim as ‘‘Normal’’, ‘‘Fraud’’, ‘‘Waste’’, ‘‘Abuse’’, or 
‘‘Education required’’. 
(h) CLAIMS REVIEW PRIOR TO PAYMENT.— 
(1) REVIEW
BEFORE
PAYMENT.—Subject to 
paragraph (2), if a claim for reimbursement under 
the Medicare Program is selected for review under 
the Prevention System, the Secretary shall not make 
a payment on such claim until such claim has been 
reviewed under the system. In order to carry out 
this paragraph, the Secretary shall ensure that ap-
propriate controls and technology are in place to as-
sess and measure the effectiveness of the Prevention 
System, predictive models used under such system, 
and the overall strategy for Medicare claims review. 
(2) TIMELY REVIEW.— 
(A) IN GENERAL.—The review of a claim 
under the Prevention System shall occur in a 
timely manner. 
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