Fraud control benefits bottom line

October 1, 2008

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.

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 office 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 financial viability of a health plan."

Experts say that fighting fraud and abusive billing practices is a continually evolving process-not a single event. "In order to fight fraud effectively, 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."

A comprehensive fraud, abuse and overpayment program can typically save MCOs 1% to 5% annually. The range depends on the cost controls currently in place and the action level of the MCO. "Some MCOs are more aggressive when it comes to recovering or preventing loss attributed to fraud and abuse, and some opt to monitor and educate providers," Johnson says.

The most common fraud schemes include:

-Tracey Walker

Commentary is independent of source data