In 2009, health care fraud will cost the United States as much as $485,000 per minute,
according to statistics from the National Health Care Anti-Fraud Association (NHCAA), which
conservatively estimates that at least 3 percent (i.e., $60 billion) of the $2 trillion spent on health
care each year in this country is lost to fraud. While that is a staggering number by any
standard, others have put a much higher price tag on medical fraud, with some going as high as $600 billion. While the exact number may never be known, the reality is that the number is
huge, and it represents more than just lost dollars.
While speaking to the Senate Committee on the Judiciary, Subcommittee on Crime and Drugs
earlier this year, Malcolm Sparrow, who teaches regulatory and enforcement policy and
operational risk control at Harvard’s John F. Kennedy School of Government, made the
following statement:
“The units of measure for losses due to health care fraud and abuse in this country are
hundreds of billions of dollars per year. We just don’t know the first digit. It might be as low as
one hundred billion. More likely two or three. Possibly four or five. But whatever that first digit is,
it has eleven zeroes after it. These are staggering sums of money to waste, and the task of controlling and reducing these losses warrants a great deal of serious attention.”
“That is a pretty compelling statement,” says Joel Portice, chief operating officer at Health
Care Insight (HCI), a Verisk Health company and a provider of clinically validated fraud, abuse, and overpayment prevention solutions for private and public-sector payors. “It recognizes that no matter what the first digit is, we are talking about a massive number. If you think about it in terms of the constraints of financing health care reform, it becomes even more significant. How many uninsured lives could be covered by the amount lost on health care fraud? How many programs could be sponsored, how much research could be conducted if this money could be repurposed in an attainable way? Maybe it can’t complete the financing gap, but it certainly seems like a reasonable way to help supplement it.”
The Use of Analytics to Combat Health Care Fraud
As technology continues to grow and evolve, more and more emphasis is being placed on predictive analytics and data modeling to track down, prevent, and recoup fraudulent activity in the health care industry. Properly designed analytics have the ability to recognize established patterns and emerging trends prior to money exchanging hands for a service. “The application of sophisticated analytics and predictive modeling is critical,” says Portice. “It breaks away from the pay-and-chase method of billing and relies on intuitive pattern recognition to spot abnormalities.”
For example, predictive modeling allows the system to recognize that peer providers in a
specific region may practice in a homogenous way that is separate and distinct from other
regions of the country. As the system filters through the data, it looks at providers and
establishes acceptable practices and guidelines; it also recognizes any providers that fall outside of the norms by using statistical analysis. It can tell the difference between a single incident of abnormality and a consistent pattern of irregularity. It also can identify problems that occur at a specific code or procedure level (e.g., a code typically used for small segments of the population being used with frequency).
Unlicensed Health Care Professionals
Health care fraud, however, is not just about inappropriate billing and coding, be it intention or
unintentional. There is also the issue of individuals trying to cheat the system by billing for procedures for which they are not eligible to bill. In these instances, it’s not just an issue from a plan’s perspective or a self-funded employer’s perspective of paying money to ineligible, inappropriate, or unqualified providers but also an issue of quality and the risk that the patient’s care could be compromised as a result of an unlicensed health care professional.
For this reason, it is important to make sure that the information used to confirm the qualifications of these professionals is consistently updated and validated, says Portice, who is also co-founder of Enclarity, a health care information solutions company that manages and verifies data in real or near real time. “Too much is at stake for there to not be an emphasis on ensuring that providers are who they say they are. The tools and the resources are out there to identify claims before they are submitted or at the least allow payers to have access to the most current and complete information about the licensure and qualifications of those providers who are submitting claims. Given the enormity of the problem, the implications of not checking, and
the efficiency with which someone can now carry out the task, there really is no excuse for not checking.”
Are We Making Any Progress?
Despite the heightened attention on health care fraud over the last 10 or 20 years, the industry
continues to struggle with the issue, admits Portice. “I have been in the health care technology space for over 15 years, and it simply amazes me that fraud is still an issue at the level it is. Unfortunately, whenever you have something that represents such a significant portion of our country’s gross domestic product, people who want to steal from it will figure out a way to do it.”
“That doesn’t mean we shouldn’t be diligent in our efforts to stop fraud and abuse, stresses
Portice. “There is a lot of runway left when it comes to detecting, preventing, and recouping
fraudulent activity, and we must continue to fill the gap. We have made significant strides in
health care, and we cannot give up that effort. There is too much at stake—from a financial
perspective, but more importantly, from a patient perspective.”
