Fraud, Abuse And overpayment increases annual claims costs by up to 10% annually, but if addressed with a comprehensive fraud
control program, could be money returned to the bottom line.
"Provider and member fraud can drive up the price of healthcare and diminish the quality of care," says David Deaton, a partner
in O'Melveny & Myers LLP's Los Angeles office and a member of the Health Care and Life Sciences Practice. "An effective fraud
control program can lower premiums, increase quality for members, make healthcare coverage more accessible and protect the
financial viability of a health plan."
U.S. HEALTHCARE FRAUD PROJECTIONS 2009-2014 (PERCENT OF TOTAL OUTLAY)
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According to HealthCare Insight (HCI), a healthcare fraud and abuse surveillance company in South Jordan, Utah, fraud is currently
costing the healthcare system up to $240 billion annually.
"[Fraud] can have an impact on the patient in the forms of fewer benefits, higher copays and premiums, as well as inaccurate
patient histories," says HCI's Vice President of Marketing Darin Johnson. Experts say that fighting fraud and abusive billing practices is a continually evolving process—not a single event. "In order
to fight fraud effectively, you need to understand that fraud is a moving target, constantly changing and evolving. Once you've
uncovered one fraudulent scheme, the most sophisticated perpetrators have moved on to a new scheme," explains Brian Smith,
HCI's senior vice president of sales. "ASPs [application service providers] and SaaS [software as a service] solutions are
allowing health plans to use advanced analytics, similar to what the banking industry has used for decades, to apply rules-based
logic in order to prevent overpayments and detect aberrant and fraudulent provider billing trends."
A comprehensive fraud, abuse and overpayment program can typically save MCOs 1% to 5% annually. The range depends on the cost
controls currently in place and the action level of the MCO. "Some MCOs are more aggressive when it comes to recovering or
preventing loss attributed to fraud and abuse, and some opt to monitor and educate providers," Johnson says.
The most common fraud schemes include:
- Uncoding and misrepresentation of services (e.g., unbundling);
- Stolen physician/patient identities;
- Unnecessary diagnostic services;
- Exploitation of benefit plans;
- Services not rendered (e.g., false claims/charges); and
- Kickback arrangements among providers.
—Tracey Walker
Commentary is independent of source data
