{"id":"AIBD-1009","title":"ANAO finds that an AI-enabled model helped flag eight potential Medicare fraud or non-compliance matters before the department dropped it","summary":"The ANAO found that eight potential Medicare fraud or non-compliance matters, estimated at $5,253,601, came in part from an AI-enabled model. The model was not used after December 2025.","date_observed":"2026-09-21","date_basis":"source publication","date_precision":"day","benefit_status":"reported","source_collection":null,"source_entry":null,"account":"In August 2023 Australia's Department of Health, Disability and Ageing began building a system to detect fraud and serious non-compliance in Medicare claims. One of its six models, which the department counted as AI-enabled, ran from July 2024 to December 2025. The Australian National Audit Office (ANAO) examined it in an audit published on 21 September 2026. The ANAO found that eight potential fraud or non-compliance matters came in part from the AI-enabled model. By February 2026 five had been confirmed as potential fraud or non-compliance and referred for investigation or audit, and no money had been recovered. In a preliminary analysis of August 2025, the department found that the model identified matters accurately 22% of the time. About 80% of the providers that it flagged were new to the other models. The ANAO notes that the eight matters, estimated at $5,253,601, combined results from several models, including models without AI. The department stopped using the AI-enabled model after December 2025 because manual assessment could not keep up with its volume of matters.","category":"aggregate result","unexpected":false,"purpose":"The Department of Health, Disability and Ageing built the AI-enabled model to focus manual reviews on the riskier of the many providers whose Medicare claiming showed behaviors linked to fraud.","system":"AI-enabled model in the MBS fraud and non-compliance detection system","model_version":null,"developer":"Department of Health, Disability and Ageing (built in-house from August 2023)","deployer":"Department of Health, Disability and Ageing, Benefits Integrity Division","location":"Australia (national)","domain":"Health insurance fraud and improper payments","segment":null,"benefit_type":"Reduced Risk","work_activities":["4.A.2.a.4","4.A.2.a.3"],"taxonomy_note":null,"registry_ids":{},"ratings":[{"group":"organizational","depth":2,"reason":"The model contributed to eight potential fraud or non-compliance matters, and about 80% of the providers that it flagged were new to the other models."},{"group":"societal","depth":null,"reason":"No money had been recovered from the matters by February 2026, so no gain to public funds is established."}],"ai_role":{"status":"unassessed","statement":"The ANAO notes that the eight matters combined results from several models, including models without AI, and that reporting did not separate them. The department identified which providers only this model flagged, but no one compared outcomes with and without the model. The report does not describe the model's technique. A November 2024 risk assessment stated that the system's models can use supervised and unsupervised machine learning."},"evidence":[{"kind":"audit report","citation":"Australian National Audit Office. Artificial Intelligence and Medicare Benefits Integrity. Auditor-General Report No. 5 of 2026-27, published 21 September 2026. Paragraph 19 and paragraphs 5.5 to 5.14 (archived copy of the report page).","title":"Artificial Intelligence and Medicare Benefits Integrity","url":"https://web.archive.org/web/20261010124600/https://www.anao.gov.au/work/performance-audit/artificial-intelligence-and-medicare-benefits-integrity","date":"2026-09-21","written_by":"independent","quote":"Eight potential non-compliance or fraud matters were created and referred for preliminary analysis using, in part, the AI-enabled model in the MBS fraud detection system. While ad hoc preliminary performance analysis showed the AI-enabled model was efficacious, it was not used after December 2025"}],"replication":{"produced_by":["The model analyzed Medicare provider claiming data for behaviors known to be linked to fraud.","Department officials manually assessed the model's signals and referred matters of concern for further analysis and investigation."],"must_hold":["Staff must be able to assess manually the volume of matters that the model generates.","Referred matters must be confirmed through analysis, investigation or audit before any money is recovered."],"echoes":[]},"paired_incident":null,"headline":"Medicare's *AI-enabled model* flags eight possible fraud cases","metric":"eight potential Medicare fraud or non-compliance matters","comparator":null,"later":{"status":"withdrawn","date":"2025-12-31","note":"The department stopped using the AI-enabled model after December 2025 because manual assessment could not keep up with the volume of matters that it generated. 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