Benefits fraud and insurance abuse are not victimless. They are real crimes with real consequences, including plan losses that can result in the reduction or elimination of health care benefits for those who need it most. Employers, plan sponsors and insurers—as noted by Suzanne Solven in “The Dynamics of Fraud on Health Benefit Plans” in the May/June issue of Plans & Trusts—can help to tackle benefits fraud through the key pillars of prevention, detection, investigation and resolution. In addition, the industry should promote education and adaptability as well as new technologies for analyzing and detecting fraud.
Solven, associate vice president of audit, investigations and quality assurance at Pacific Blue Cross, noted that fraud can originate from many different points, including individual members, providers, collusion between providers and members, and even organized crime rings. In her article, Solven explained the four pillars of prevention, detection, investigation and resolution and how they can help the industry tackle the growing issue of fraud.
Four Key Pillars of Dealing With Fraud
Prevention
To help prevent fraud from occurring, make sure the plan has the proper controls in place. This refers to the structure used by the insurer and employer to address fraud. “It includes caps and limits in plan design; business rules in the adjudication system; contract language; policies and procedures that are rooted in privacy legislation; and a diverse investigative team with experience in legal, privacy, data mining, health care professions, regulation and compliance,” Solven wrote. It also should include an independent and confidential whistleblower program and a zero-tolerance culture for fraud, with mandatory fraud training during employee onboarding and again annually.
Detection
Use the right tools to detect fraud in a timely manner. Increasingly, the right tools require sophisticated technology because of the complexity of fraud and the sheer number of claim lines—the majority of which are being submitted electronically. Claims adjudication systems now have the ability to implement analytics tools based on artificial intelligence, machine learning and predictive analytics, Solven noted. Depending on the tool, algorithms can be developed and run on all claims data to help identify patterns and risks on individual transactions or across social networks. “Advanced technology may also enable dynamic algorithm growth as evolving fraud schemes are identified,” Solven wrote, “which not only allows insurers to take a deeper look into claims but also helps them focus investigations on the highest risks to plan sponsors.”
Investigation
Conduct thorough investigations—regardless of how small the fraud might seem to be. “All investigations should be approached in a fair and transparent manner, following appropriate evidence and administrative law procedures,” Solven noted. Even if the evidence is excellent, an entire case can be thrown out if the process is improper. Since any investigation could grow into a larger, more complex case, all cases should be approached in a thorough way and with the same policies and procedures.
Resolution
Develop the right processes to successfully resolve cases of fraud. If necessary, refer them to the appropriate law enforcement or regulatory bodies. “Because of the unintended consequences that fraud can have on the long-term sustainability of health benefit plans, the primary goal for resolution should be to help clients get back money that was improperly billed or claimed and to stop any further fraudulent claims from being paid going forward,” Solven noted.
The Importance of Adaptability and Education
In conjunction with the key pillars of prevention, detection, investigation and resolution, insurers should be willing to adapt to new schemes, environments and technologies to tackle fraud. Fraud management is a dynamic process, and Solven said that insurers need to be willing to operate in an agile, flexible environment instead of getting stuck in the way things have been done in the past. New tools that make use of data analytics can help uncover suspicious billing practices, including COVID-19 billings and pharmacy billings.
In addition, the industry should work hard to educate plan sponsors, providers and members on the cost ramifications of fraud and insurance abuse and their role in helping to prevent and detect it. According to Solven, education is vital to helping plan members understand that the practice of fraud can increase the cost of their benefits—or even end up reducing or eliminating them if fraud becomes too costly. Instead, by working together, all stakeholders can help to decrease fraud and strengthen the value of their benefits.
[Related Reading: Cybersecurity Risks: Protecting Your Data from Cyberattacks]
Robbie Hartman, CEBS
Editor, Publications, for the International Foundation
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