This interview with Pondera CEO Jon Coss is part of our series on Emerging Technologies.
Innovation has the ability to transform how you do business, improve your system environment, and even change the world. At CSRA, we look at tomorrow’s innovation and bring it to our customers today by collaborating with technology companies that offer next-generation solutions we believe can help solve customers’ challenges. At CSRA’s Emerging Technology Days, we connect these companies with our program managers and our customers to foster relationships and nurture innovation.
Pondera is one of the companies we will feature at our upcoming Emerging Tech Day. Pondera’s innovative solution leverages advanced-prediction algorithms and the power of cloud computing to combat fraud, waste, and abuse in government programs. Pondera employs certified fraud examiners, data-mining experts, statisticians, former government program-integrity managers, and law enforcement agents to deliver their award-winning software.
The Thinking Next blog asked Jon Coss, CEO of Pondera, to describe the challenges facing federal agencies today as they battle fraud, waste, and abuse. Here’s what Jon had to say:
Thinking Next (TN): How large of an issue is fraud waste and abuse among federal government agencies and organizations?
Jon Coss (Coss): Most people don’t realize that the government maintains over 2,200 federal assistance programs and distributes over $2 trillion per year in subsidies. Of this, approximately $125 billion is lost to fraudulent or improper payments each year. Some of the more problematic programs include Medicare, with an 11 percent improper payment rate representing over $41 billion per year; Medicaid at 10.5 percent and $36 billion; and Unemployment Insurance at 11.65 percent and $3.9 billion. The Earned Income Tax Credit (EITC) improper payment rate is currently 24 percent!
TN: How does Pondera’s solution help agencies battle fraud waste and abuse?
Coss: Pondera is unique in that we combine leading-edge technologies, including machine learning, cloud computing, proprietary prediction algorithms, and advanced link analysis, with experts in government fraud and law enforcement to provide context to our analytics. These two approaches combine to provide investigation-ready leads versus complex statistical data. We also focus on rapid user adoption by delivering the leads in an intuitive dashboard that is literally “built by investigator for investigators.”
Our leads also differ from traditional detection methods in that we are able to rank the most important leads (those that pose a public risk or represent the largest dollar amounts) with fraud risk scorecards. We also help identify fictitious businesses, collusive rings of fraudsters, as well as emerging trends, patterns, and clusters.
In addition, by offering our solution on a true Software as a Service (SaaS) architecture, we can rapidly analyze massive data sets and return leads prior to payments being disbursed. This provides the option to use our system as a pre-payment solution versus using traditional “pay and chase” collection processes. SaaS, combined with machine learning, also allows us to constantly improve and evolve our detection models to keep pace with the changing nature of fraud. Bad actors never stop innovating. We need to constantly improve to detect emerging fraud methods and trends.
TN: What government trends and challenges are you seeing that make FDaaS solutions a necessity across the federal government today?
Coss: Many government agencies operate under an extremely difficult set of rules. They often have rapid payment rules that are set in regulations. There is almost no tolerance for false positives in fraud detection, unlike a credit card company, for example, which can temporarily cut off a consumer’s card if it suspects fraud. And they are under increasing pressure to provide Internet-based services to apply for, check on, and even deliver services. In many ways, this is the perfect scenario for fraudsters.
In recent years, we’ve seen bad actors increase their focus on government programs because they can take advantage of these rules. Combine this “target rich” environment with more technically-savvy fraudsters who have easy access to stolen identities on the Dark Web, and it is actually a bit scary to think about what the future may hold.
Much of Pondera’s value proposition is that we operate across government agencies and programs, just like the fraudsters do. This is important to note: many fraudsters will, for example, create a fictitious business and file fake tax returns across multiple states while also ripping off the state employment departments and other agencies. Pondera can detect emerging schemes in one government agency, develop a model to identify the scheme, and deploy it to all of our government clients.
TN: Are any government organizations currently utilizing Pondera’s solutions? Do you have metrics or anecdotes that illustrate the benefits that they're receiving?
Coss: Pondera’s system is currently used in over 30 programs in eight states. Our core markets include Medicaid, Unemployment Insurance, Integrated Eligibility, Tax, and the Supplemental Nutrition Assistance Program (SNAP). We run some of the nation’s largest programs including 42 percent of the country’s Medicaid claims.
To date, Pondera has identified over $6 billion in likely fraud, waste, and abuse. Our clients have collected and prevented hundreds of millions of dollars of improper payments. And our average return on investment is 300 percent. This does not include prevention which is likely several times this number.
We are most proud of the fact that Pondera’s clients have used our system to help indict and prosecute dozens of fraudsters. And it’s important to note that money that is stolen from government programs often funds other illicit activities including human trafficking, gun smuggling, and even terrorism.
TN: Pondera is one of the IT solution providers participating in the next CSRA Emerging Tech Day. Why is Pondera participating in this event, and what benefit is the company looking to receive from participating?
Coss: We have been very pleased with our partnership with CSRA, including our work with the New York and North Carolina Medicaid systems. We believe that CSRA complements our fraud detection platform and program integrity expertise with world-class project management, systems integration capabilities, and regulatory and program understanding.
Our hope is that we extend our relationship with CSRA to include the federal government, additional states, and new vertical markets. We think we can introduce CSRA to new accounts with a joint offering and bring value to CSRA’s existing accounts with a modern, high ROI fraud detection system.
Learn more about CSRA’s Emerging Technology Days and join us for our next event on October 25, 2017, to hear more from Jon Coss and Pondera.