Evaluating Model Predictive Performance: A Medicare Fraud Detection Case Study

Evaluating a machine learning model's predictive performance is vital for establishing the practical usability in real-world applications. The use of separate training and test datasets, and cross-validation are common when evaluating machine learning models. The former uses two distinct datasets, whereas cross-validation splits a single dataset into smaller training and test subsets. In real-world production applications, it is critical to establish a model's usefulness by validating it on completely new input data, and not just using the crossvalidation results on a single historical dataset. In this paper, we present results for both evaluation methods, to include performance comparisons. In order to provide meaningful comparative analyses between methods, we perform real-world fraud detection experiments using 2013 to 2016 Medicare durable medical equipment claims data. This Medicare dataset is split into training (2013 to 2015 individual years) and test (2016 only). Using this Medicare case study, we assess the fraud detection performance, across three learners, for both model evaluation methods. We find that using the separate training and test sets generally outperforms cross-validation, indicating a better real-world model performance evaluation. Even so, cross-validation has comparable, but conservative, fraud detection results.