Managed Healthcare Executive - October 2008 - (Page 32)

Fraud control bene ts bottom line 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 o ce 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 nancial viability of a health plan.” 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 bene ts, higher copays and premiums, as well as inaccurate patient histories,” says HCI’s Vice President of Marketing Darin Johnson. Experts say that ghting fraud and abusive billing practices is a continually evolving process—not a single event. “In order to ght fraud e ectively, 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.” 32 OCTOBER 2008 U.S. HEALTHCARE FRAUD PROJECTIONS 2009-2014 (PERCENT OF TOTAL OUTLAY) 3% Loss 2009 — 10% Loss $76.7 $255.5 2010 — $81.8 $272.6 2011 — $87.2 $290.5 2012 — $92.9 $309.8 2013 — $99.1 $330.5 2014 — $0 $50 $105.7 $352.4 $100 $150 $200 $250 $300 $350 $400 Projected Fraudulent Dollars (in Billions) Source: HealthCare Insight A comprehensive fraud, abuse and overUncoding and misrepresentation of payment program can typically save MCOs services (e.g., unbundling); 1% to 5% annually. The range depends on Stolen physician/patient identities; the cost controls currently in place and the Unnecessary diagnostic services; action level of the MCO. “Some MCOs are Exploitation of bene t plans; more aggressive when it comes to recoverServices not rendered (e.g., false ing or preventing loss attributed to fraud claims/charges); and and abuse, and some opt to monitor and Kickback arrangements among proeducate providers,” Johnson says. viders. MHE The most common fraud schemes —Tracey Walker include: Commentary is independent of source data

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Managed Healthcare Executive - October 2008 For Your Benefit Editorial Advisors Contents News Analysis State Report Politics &�Policy Healthcare Reform Trends in 2009 Cost Control Strategies Predicted Premium Increase Top Challenges in 2009 IT System Integration Technology Innovation Disease Management Health Management Pharmacy Best Practices Technology Desktop Resource Ad/Edit Index Managed Care Outlook Statement of Ownership

Managed Healthcare Executive - October 2008

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