Experts predict that close to $3 trillion will be spent annually within the health care industry over the next few years, says William Gedman, vice president, Quality Audit, Fraud & Abuse with UPMC Health Plan. That much money is sure to attract a criminal element. Certainly, the vast majority of both physicians and members would never seek to defraud. Nonetheless, the industry estimate is that 3 to 10 percent of all health care claims are fraudulent.
The health care claims billing and reimbursement process, medical billing and coding convention, and compliance requirements in particular are so complex it almost fosters abuse, says Gedman. It can be extremely difficult to detect fraud or abuse in this system because of the volume of transactions, billing and coding complexities and ‘creative’ abusers.
Smart Business spoke to Gedman about how employers and employees can protect their health care assets.
What are examples of fraud and abuse?
There are numerous types of health care fraud and abuse. Fraud can include identity theft resulting from stolen insurance cards, drug-seeking behavior on the part of the member or drug diversions on the part of health care providers. Other types of fraud or abuse include medical providers billing for services not rendered or billing for more complex services than were actually performed. Fraud can also occur at pharmacies. For example, they may substitute generic drugs for brand-name drugs or charge an insurance company for drugs never picked up by its members.
In the health care business, there are so many transactions being processed it is often difficult to detect fraud prior to payment being sent to a provider. Once a reimbursement is made, it can be more difficult for an insurance company to recover inappropriate payments.
How can managed care organizations crack down on fraud?
It is important to establish strong internal controls around the claims payment process. There should also be a Special Investigations Unit, which is actually a requirement for many insurance carriers. An SIU should conduct data mining and analysis.
Considerations should be given to installing and monitoring fraud detection software, which can identify trends or red flags that require further investigation. Cooperation with regulators and law enforcement entities that fight fraud is also essential.
Health care providers should be routinely educated on industry medical record and coding requirements, as well as trends and potential fraud and abuse, and how it can be detected. Managed care organizations should also work to educate members about types of fraud and ways to identify potential fraud and abuse.
What steps can an employer take to protect employees from health care fraud?
Education is a must. People need to understand what types of potential fraud or abuse are possible. Employers should be very selective and demanding when they choose an insurance carrier. They should make sure their insurer has strong controls in place to detect fraud and the infrastructure in place to investigate and prevent fraud and abuse.
How can an employee detect and prevent potential fraud or abuse?
Awareness is essential for protection against fraud. Employees must educate themselves about potential types of fraud and abuse and play an active role in their health care. They must review their Explanation of Benefits and understand all services rendered. This is the only way to determine if you and your insurance company are being appropriately charged for services or supplies/equipment.
In many instances, people do not question medical providers because they are regarded as authority figures. Employees should never be afraid to ask physicians about treatment options and prescription choices. Those receiving services should fully understand their treatments. This will help them get the best possible care and understand the services for which they and their insurance company are paying.
What should members do if their insurance information is stolen or they feel they are being charged incorrectly?
Employees need to treat their insurance information like they treat their credit card information. They should not share their member identification numbers with others or use their information on unsecure Web sites. If this information falls into the wrong hands, billing fraud could occur, and it is possible that inappropriate information could subsequently appear on their medical records. Future treatment or insurance coverage could be affected by this inaccurate medical record information.
Members should contact the insurance company immediately if information is stolen or if they disagree with what has been billed. In addition to customer service lines, insurers should have a fraud and abuse hotline where people can call in with issues regarding suspected fraud and abuse. The information should be kept confidential and tips can be anonymous.
How does fraud and abuse affect health care costs?
The obvious answer is increased premiums. Someone has to pay for fraudulent claims. However, increased costs also occur because of the administrative expense required to detect and investigate suspected fraud and abuse. This causes increased health care costs for everyone.
WILLIAM GEDMAN is vice president of Quality Audit, Fraud & Abuse with UPMC Health Plan. Reach him at (412) 454-5675 or email@example.com.