One hundred fifty billion dollars is a staggering figure. Combine it with the phrase, "in losses," and the number becomes a nightmare. That nightmare-$150 billion in losses-is one estimate of the cost of health insurance fraud and abuse in America.
The immediate targets of fraudulent billing practices are private health payers and government-funded health plans. But payers, employers and patients pay the price in higher premiums, lower benefits, higher taxes and higher copayments. Between 1998 and 2003, the cost of health benefits rose by 48%. A 1999 Health Insurance Association of America (HIAA) report, "Health Insurers' Anti-Fraud Programs," cited fraud as a contributing factor to that rise.
Perpetrators see healthcare fraud and abuse as a low-risk crime. The insurance industry offers an abundance of easy targets. Claims operations are geared toward processing massive amounts of claims efficiently and rapidly-with a focus on coding, not fraud. Electronic data exchange and other technological advances can present another kind of exposure for payers and patients to creative new schemes to defraud the system.
Ignoring fraud creates risk, allows the problem to grow unchecked and increases avoidable payouts. On the other hand, a comprehensive program allows health plans opportunities to prevent and recapture loss.
KEEPING UP WITH FRAUD By establishing an aggressive, end-to-end fraud and abuse program, health plans can potentially save millions while providing accessible, affordable, high-quality care to their members. The most effective anti-fraud and recovery programs include elements of:
Health insurance executives who want to implement a comprehensive anti-fraud and recovery program must answer a critical question: Build or outsource? To answer this question, they need to determine if they can find and keep the right people; if they have all the tools they need for prevention and recovery; if they have the resources to train their investigators; and if they have the resources to keep up with a problem that will become increasingly sophisticated and widespread.
Whether the choice is outsourcing or building a system, health insurance anti-fraud and recovery programs can yield positive results. One insurer investigated more than $726,000 in potentially fraudulent claims and recovered in excess of $617,000. Such a result amounts to getting back nearly $9 out of every $10 paid due to fraud and abuse (See chart).
Any amount of money lost due to fraud is money wasted, money that could have been used to keep premium rates in check or to improve patient care.