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Processes and strategies
Benefits access rules should be well-structured. For example, a physiotherapy benefit claim from a provider where the insured initiated the treatment without referral by their physician would need a highly structured approval pathway to control negotiated costs and limit overutilization. Internal strategies can include developing multifunction specialist teams to undertake certain tasks, such as investigating unusual referring patterns.
Insurers need to have multifaceted embedded processes and strategies in place to combat fraud, waste, and abuse.
Client-facing strategies should include strong policy terms and conditions language, especially around definitions of “Medical Necessity” and “Reasonable and Customary.”
Conclusion
Fraud, waste, and abuse are highly prevalent in health insurance, and claims teams must be constantly vigilant. Technology can be an effective identification tool, but insurers will also require bulletproof policy language as well as appropriate human intervention to challenge and combat these activities. Where appropriate, insurers should also work with regulators and prosecutors to bring perpetrators before the courts.
Impact of Anti-Selective Behavior on the Life Insurance Industry
Legal issues
When fraud becomes a criminal offense, insurers should consider reporting appropriate cases of suspected fraud cases to local law enforcement authorities, recommend prosecution, and be prepared to assist in providing sufficient reliable, admissible, and credible evidence that could produce a realistic prospect of conviction.
Identifying fraud, waste, and abuse
Artificial intelligence is also emerging as a tool. Machine learning models that examine average length of hospital stay, for example, can be trained to assess claims using the diagnosis, procedure(s) undertaken, and patient age, gender, and comorbidities, as all of these factors can affect length of stay. AI can also detect certain subtle patterns in claims data such as the number of cross-referrals for claims with a certain diagnosis code. However, it is not infallible. It might interpret common actions as correct, even though they might not fit with an insurer’s medically necessary guidance.
The key role of a claims assessor today is to ensure claims are payable under policy terms. To accomplish this, insurers deploy a myriad of systems to assist in detecting fraud. Tools include exception reports, which can pinpoint claims outside of normal patterns (costs too high or overutilization), and expert rules engines, which can assist in validating and enforcing policy terms. For example, if a policy excludes psychiatric or mental health conditions, any claim with a code for a psychiatric or mental health condition could be flagged.
Kickbacks >
Identity theft >
Upcoding >
Unbundling >
Duplicate claims >
Overcharging >
Overutilization >
Phantom billing >
Misrepresentation >
Non-disclosure >
Fraud, waste, and abuse can take many forms, such as:
Types of health insurance fraud, waste, and abuse
Click on each type of fraud above to view definitions and examples.
Failure to disclose information material to a claim, whether due to inadvertent oversight or deliberate acts of misrepresentation, is highly prevalent in healthcare. The most commonly experienced is failure to fully disclose medical history, as medical conditions predating policy inception are often subject to pre-existing condition exclusions.
Acts of misrepresentation involve deliberately providing false statements in order to misguide approval of claims. Examples:
Providers billing for services, such as examinations and tests, that were not performed. Such bills can come either from service providers or claimants. If providers submit invoices directly to the insurer and the insurer settles with the provider, this risk can be reduced. Claimants should be provided an “explanation of benefits” or “claims statement” detailing the treatment(s) that were billed for so that any incorrect items can be corrected.
Excessive charges for supplies and procedures are particularly prevalent for drugs and other medical consumables such as implanted prostheses. Providers are expected to mark up consumables, but insurers should be aware of actual costs and challenge excessive charges. Insurers should also have strong policy language around reimbursement of “usual and customary” charges.
Billing for the same service more than once. This can either be malicious, with the intention of securing double payment, or accidental, such as when a provider resubmits previously billed charges if they were unaware of the status of the claim or if settlement is delayed.
Providers not using a procedure code but rather claiming for each individual element comprising a procedure in order to increase reimbursement. It can also refer to submitting multiple bills for tests and services performed within a specified time period which should have been submitted as a single bill. This type of fraud can be particularly difficult for an insurer to detect but may be identified through analysis of treatment patterns.
Providers submit a billing code for a more expensive service than was provided. A physician, for example, may examine a patient briefly but will submit a code bill for a complex hour-long visit. A provider may also bill for a high-cost branded pharmaceutical item while dispensing a lower-cost generic, or a doctor may provide a diagnostic procedure and then bill for a therapeutic one.
An insured person’s identity is used to claim for medical services provided to an uninsured person, e.g., claiming for an uninsured family member’s treatment costs.
A provider receives a reward for unnecessary or inappropriate referrals, such as unnecessary specialist referrals. The reward is the fee charged for the unnecessary service.
A false representation that has been made knowingly, without belief in its truth, or recklessly.
The one thing to know about fraud is that it is an ever-present factor in health insurance’s day-to-day business. It can be defined in everyday language as “Wrongful or criminal deception undertaken with the intent to obtain financial or personal gain.” Legal definitions of fraud, however, tend to be stricter and narrowly focused on specific aspects, and can vary depending on the country. For example, the U.K.’s 2006 Fraud Act defines civil fraud as “a false representation that has been made knowingly, without belief in its truth, or recklessly.” It further states that “fraud may be committed by false representation, failure to disclose information, and abuse of position,” with all actions showing intent to create a gain for themselves or cause loss to another.
U.K.’s 2006 Fraud Act
Fraud, waste, and abuse can also be either planned or opportunistic. Planned actions are more likely to meet legal definitions of fraud as there would have been premeditated intent to gain. Opportunistic actions of this sort, on the other hand, are more likely to be viewed as waste or abuse. Waste, for this instance, can be defined as “providing a health service carelessly or extravagantly or to no purpose,” and “abuse” as “using or doing something for the wrong purpose in a way that is harmfully or morally wrong.”
Fraud.
Waste.
Abuse.
A terrible trio
Global Health Brief
Issue 23; May 2024
Trusted partner.
Proven results.
Fraud, waste, and abuse. Prevalence of all three of these challenges is constantly on the rise for healthcare providers and insurers, leading to materially increased costs for payers, be they consumers, government bodies, or insurers. This makes it vital for claims professionals to be consistently aware and conscious of how medical treatment costs are set and reimbursed as well as best practices around treatment, hospitalization, and more. In this way, strategies can be developed that may efficiently and effectively identify and mitigate all three.
Sincerely,
Items such as a hospital keeping a patient longer than medically necessary, admission to a hospital without sufficient medical reason for a procedure doable on a day-patient or outpatient basis, and medical care provided without an acceptable reason in more advanced settings than may qualify as medically necessary, such as intensive care and high dependency units (e.g., Special Care Baby Units [SCBUs], Neonatal Intensive Care Units [NICUs], coronary care units). Insurers should have defined criteria for approving such admissions and care, and the ability to obtain medical records on the case for the company’s Medical team.