Mathias Method to Dramatically Decrease Healthcare Fraud

Mathias Method to Dramatically Decrease Healthcare Fraud

Healthcare Fraud Control Articles

Fraud is a serious problem that affects every healthcare system. Each health plan loses from 3% to 30% to fraud, waste and abuse. Reducing fraud losses is one of the few ways that a health plan can cut costs without hurting their members or providers. Investment in fraud control typically saves $6 to $12 for every dollar spent, yet health systems have not invested in the level of controls that will effectively stop fraud. To dramatically decrease the expenses caused by the fraud that can be found in every healthcare system, invest in these ten high-priority activities:

  1. Think like a fraudster. People who commit fraud are always looking for a way to make a buck without working for it. You’ve got to constantly think about how to stop them. Rather than focusing only on fraud that other health systems identified, think about how you would scam your system, if you wanted to commit fraud. You’re probably not the first to think of it. Create a control to keep that fraud from happening, then start thinking about how you’d avoid that control, if you were a fraudster. Read more about this: Prevent Fraud:Think Like a Criminal
  2. Appoint a Fraud Control Officer (FCO). To fight fraud, you have to make fighting fraud a top priority. This can’t be a side job for the claims manager. You need to create an executive level position dedicated to fighting fraud. The FCO should have control over a budget that is appropriate for the amount of fraud you are fighting. Read more about this: Leadership
  3. Get everyone involved. Provide fraud training for your entire staff and give them a role in fighting fraud. Staff processing mail may notice patterns that nobody else could know about, such as out of state mailings. Provider services staff may notice providers asking questions that indicate they are fishing for loopholes in the system. Claims processors can notice billing patterns that computers will miss. Teach them to be aware of fraud, then encourage them to teach you about suspicious activity they encounter. Read more about this: Everyone’s Job
  4. Focus on the easy fraud first. If you haven’t done much to fight fraud in the past, start by fighting the scams everyone knows about (upcoding, double-billing, phony prescriptions, billing non-covered services as covered services, etc.) and the provider types known to be most susceptible (lab, x-ray, medical equipment, pharmacy, podiatry, chiropractic, optometric and dental). You won’t find all the fraud this way, but you’ll be able to make some recoveries quickly with a small investment.
  5. Use the tools you have. To end fraud, you’ll need specialized tools, but these tools are expensive and take time to implement. You may be able to use existing reporting and analysis tools to get started. For one client, I used a summary report of drug utilization by therapeutic class to identify that there was probably growth hormone abuse. Then we ran an ad hoc query to identify the claims, and I analyzed the results in Access and Excel. I identified a group of patients and providers who were involved in the growth hormone scam. Once you prove what you can do with existing tools, you’ll have a better argument for investing in more sophisticated tools.
  6. Get the tools you need. Fighting fraud is difficult. You should take advantage of the wide range of tools that have been developed to control fraud. Prepayment edits, post-payment rules-based algorithms, predictive modeling, expert systems, computer network security, and link analysis can help you identify and stop fraud. Each tool has strengths and weaknesses and no tool will solve all your problems. If you use these tools well, they will produce a high return on investment. Read more about this: Fraud Control Toolbox
  7. Keep track of all your findings. You should keep track of how you identified all suspects, how much money might have been lost, whether you investigated the case, and the results of the investigation. Analyze this data. Sometimes you may identify the same provider using many different techniques. Even if the dollar amount identified with each technique is low, you might want to investigate all payments made to that provider.
  8. Chase the fraudster back to his lair. Use the data you’ve collected about suspect cases to identify other suspect cases. If you get a tip that a physician is receiving kickbacks from a lab, be sure to identify all the providers that lab works with, not just the physician identified in the tip. If the lab is paying kickbacks to one provider, he’s probably paying kickbacks to others. If the physician is accepting kickbacks, he’s probably also committing other frauds. Fraud perpetrators work together, sharing patient lists and scams. If you use data analysis to follow the fraud perpetrators and their patients, you’ll find more fraud. Read more about this: Chase the Fraud
  9. Recover the money. Identifying suspect claims is not enough. You’ve got to investigate cases and recoup money either administratively or through the court system. I’ve seen many utilization review units simply issue bulletins or letters that tell the providers how bill correctly, rather than investigating whether the problem is an honest error or outright fraud.
  10. Reinvest. If you’re like most HMOs, Medicaid programs and Medicare, you’re probably devoting less than one-tenth the resources you need to fight fraud effectively. If that is the case, for the next few years, you should put all fraud savings into a pool to be used for fighting fraud. Keep doing this until your fraud control budget is .5% to 1% of the cost of medical coverage. If you don’t, you may just pushing the fraud from one area to another. You’ll put in a new control, and the fraud perpetrators will respond by shifting to a new fraud. It will look like you’re saving money, but you really won’t be making a dent in the total amount you’re losing to fraud.