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Financial Health Author: Dr. Barry Johnson, President of Healthcare Insight Last Updated: Apr 23, 2009 - 8:29:17 PM



Detect – Stop – Prevent: The Approach to Fighting Health Care Fraud
By Dr. Barry Johnson, President of Healthcare Insight
Mar 31, 2009 - 9:43:57 AM

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(HealthNewsDigest.com) - Quantifying the annual losses attributed to health care fraud and abuse remains a difficult proposition. Given the covert nature of fraud, a definitive number remains elusive, and polling the perpetrators isn’t a viable option. According to the National Health Care Anti-Fraud Association (NHCAA), 3 to 10 percent of the nation’s annual health care outlay is lost to fraud and abuse. With CMS health care spending projections of $2.5 trillion in 2009, the health care fraud and abuse problem is valued somewhere between $77 and $255 billion for 2009. The fact that fraud estimates span a range of $178 billion says a lot about the nature of fraud and our inability to accurately quantify it.

Despite the difficulty projecting fraud, one thing is concrete: As the “baby boomer” generation continues to age and health expenditures continue to increase, the fraud and abuse problem will continue to grow in the absence of adequate prevention methods. Assuming current fraud loss and health care spending rates continue to rise, the health care fraud problem could reach a staggering $330 billion by 2013. While the cost of fraud will continue to remain somewhat of an enigma, no one can argue — even by conservative estimates — that fraud is a problem that no payor can afford to ignore.

Given the facts of the problem and acceptance of the dilemma, as well as the industry’s past attempts to contain fraud, the issue remains more prevalent today than ever before. Why? Fraud programs have not been broadly embraced because previous attempts have not met the needs of the market, which is required to balance administrative efficiencies with contractual obligations, compliance requirements, as well as provider and member relations. In fact, according to a 2003 Gartner report, 45 percent of health insurers acknowledged they did not have an anti-fraud solution. Of the 55 percent that had deployed a solution, 80 percent were looking at the problem retrospectively and only 20 percent were addressing the problem in a prospective way. As a result, billions of dollars were either permanently lost through partial recovery settlements, or never identified in the first place.

Rather than relying on limited retrospective tactics to combat fraud, the industry has the opportunity to use techniques that are comprehensive in the continuum of fraud prevention and recovery. It is imperative that commercial and public payors implement controls and processes aimed at detecting, stopping, and preventing health care fraud.

Equally important is the detection and prevention of abusive patterns. There is still some intent that exists with abuse. Many providers believe that because they provide superior service, have sicker patients, and are unjustly compensated, they are entitled to additional reimbursement. Examples of abuse include up-coding of office visits or procedures rendered, unbundling, billing for services within the global service period, and modifier abuse. It is important to monitor this type of behavior because in many instances, abuse is the precursor to intentional fraud.

A comprehensive anti-fraud and abuse program needs to focus on the nuances of fraudulent behavior and abusive practices so as to deploy technical and clinical detection capabilities that recognize the differences. To effectively prevent the collective damages caused by acts of fraud, payors need to demand their program capture and dispose of all forms of fraudulent claims submissions. Approaching fraud prevention as a program — and not simply as single function — will enable payors to leverage a system that is reliable and integrated with defensible and automated results.

Picture by Kevin Kiernan/Business Connect

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