Rick Grape

Posted on: October 9, 2018

Every few months, we hear on the news about another ring of healthcare fraud conspirators defrauding Medicare or other health insurers. Its modern day cops and robbers.

It’s satisfying to learn of the arrests, and to believe that our tax dollars are no longer going to criminals. But the truth is, most of the money stolen will never be recovered. And the conspirators who were caught were merely one small piece of a larger scheme.

The State of Healthcare Fraud Today

Estimates put healthcare fraud as high as 10% of annual healthcare expenditure, or $230 billion1. That’s money that could be spent on improving the delivery and quality of care. The loss of revenue also results in higher costs for patients and reduced profit margins for payers.

Traditionally, pay-and-chase is the game that Special Investigations Units (SIUs) have had to play in hopes of recovering inappropriate payments. The old way of combating fraud involved labor-intensive investigations commenced only after payments for false claims had been sent. It often takes years for an investigator to uncover the full breadth of these conspiracy rings and to collect and document enough evidence of their actions to justify arrests and prosecution.

At the end of a successful case, recovering the stolen money is far from guaranteed. In fact, the U.S. Government Accountability Office (GAO) states, “Once fraudulent or improper payments are made, the government is likely to only recover pennies on the dollar2” and the same is true among most private payers.

Pre-Payment Claims Analytics Can Help

So what can health plans do? Here are three considerations to keep in mind when evaluating pre-pay solutions to end the vicious cycle of pay-and-chase:

1) Look beyond claims editing which typically focuses only on administrative waste

2) Deploy analytics that enable peer-to-peer comparisons, trends and outlier analysis

3) Test impact decision points prior to going live with any pre-pay rules you’re considering

While other industries have long relied on pre-payment fraud detection solutions, healthcare has only recently begun to recognize its value. Making changes to your claims processing workflow can be challenging, but the rewards are significant. By using statistical techniques to identify and analyze factors that indicate where fraud is occurring before payments go out the door, payers can successfully reduce losses by preventing improper payments.

Want to know more? Learn about an advanced fraud detection system that works in the pre-payment stage of claims processing here.

1 https://www.bcbsm.com/health-care-fraud/fraud-statistics.html

2 http://www.justfacts.com/healthcare.asp#spending-waste

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