Transcript Cut Healthcare Costs Through Fraud Protection

Cut Healthcare Costs
Through Fraud Protection
George J. Bregante
Founder TC3 Health, Inc
Current Health Care
Environment
Current Health Care Environment
2011– 2014 reform a new, unparalleled level of disruption: Payers are called upon to:
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Embrace new individual consumer markets
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Engage in new care delivery models
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Manage new payment schemes
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Implement new information codes and reporting
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Achieve mandated cost efficiency
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Demonstrate improved value and outcomes
Market cost pressures
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National health expenditures (as % of GDP) rose from 5.2% in 1960 to 16.2% in
2008 and will continue to rise over next 10-20 years (Centers for Medicare & Medicaid
Services)
Regulatory Pressures. The medical loss ratio mandate has forced payers to lower
admin costs.
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Electronic payments automation to the payers’ provider networks lowers costs and
achieves the mandated ratios
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A secure, compliant, and reliable platform to deliver these healthcare and payment
transactions is required.
Current Health Care Environment
Consumer emergence. 42 million people will purchase healthcare ins/services by
2016.
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As of January 2010, 10 million were enrolled in high deductible health plans, over
doubling 2004 enrollment level
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Responsibility for payments moves toward consumers
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Consumer market will demand more
Provider cost pressures. Increased consumer responsibility equals increased
consumer bad debt for providers.
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Consequently, providers will need integrated payment and financial tools to better
track and manage payments and outcomes.
Payer and Provider partnership. Achieving healthcare payments automation requires
collaboration between healthcare payers and providers.
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While this relationship shifts to a partnership model, efficient and automated
payment solutions will attract providers under cost pressures and improve financial
reporting and management.
The Attitudes About Fraud
• One of five U.S. adults — about 45 million people — say
it’s acceptable to defraud insurance companies under
certain circumstances. Four of five adults think insurance
fraud is unethical. (Four Faces of Insurance Fraud,
Coalition Against Insurance Fraud, 2008)
• Nearly one of four Americans says it’s ok to defraud
insurers (8 percent say it’s “quite acceptable” to bilk
insurers, and 16 percent say it’s “somewhat acceptable.”)
(Accenture Ltd., 2003)
• About one in 10 people agree it’s ok to submit claims for
items that aren’t lost or damaged, or for personal injuries
that didn’t occur. (Accenture Ltd., 2003)
• Two of five people are “not very likely” or “not likely at all”
to report someone who defrauded an insurer. (Accenture
Ltd., 2003)
How Big is the “Fraud”
Problem?
FRAUD – THE NUMBERS
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The U.S. spends more than $2 trillion on healthcare annually. At least
3 percent of that spending — or $68 billion — is lost to fraud each
year. (National Health Care Anti-Fraud Association, 2008)
Medicare and Medicaid lose an estimated $60 billion or more annually
to fraud, including $2.5 billion in South Florida. (Miami Herald, August
11, 2008)
Medicare paid dead physicians 478,500 claims totaling up to $92
million from 2000 to 2007. These claims included 16,548 to 18,240
deceased physicians. (U.S. Senate Permanent Committee on
Investigations, 2008)
That’s on top of claim processing errors:
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Medicare and Medicaid made an estimated $23.7 billion in improper
payments in 2007. These included $10.8 billion for Medicare and
$12.9 billion for Medicaid. Medicare’s fee-for-service reduced its error
rate from 4.4 percent to 3.9 percent. (U.S. Office of Management and
Budget, 2008)
Healthcare Fraud in the U.S.
By The Numbers
19% - percentage of annual healthcare waste attributed to fraud
10% - percentage of national healthcare spend due to fraud and abuse
50% - percentage increase to OIG’s fraud fighting budget*
$600 to 800B – amount of annual fraud, waste and abuse in US healthcare system
$226B - Amount of annual loss due to healthcare fraud alone
$8 to 12 - ROI for every $1 invested in fighting healthcare fraud
Source:
Thomson Reuters, 2009
(Federal Bureau of Investigation, “Financial Crimes Report to the Public, Fiscal Year
2007”
National Health Care Anti-Fraud Association, 2008)
PWC Top 10 Healthcare Issues in 2010
Why Healthcare Fraud
Has Exploded
Common Examples of Healthcare Fraud
Healthcare fraud is an intentional misrepresentation of facts submitted to support a
healthcare insurance claim that results in payment of a fraudulent claim or overpayment of
medical coverage.
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Services billed but never performed
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Upcoding/Unbundling of services
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Double billing
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Overuse of an expensive & unnecessary treatment
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Performing clinical services without a license
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Phantom provider billing – medical identity theft
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Recruiting patients for unnecessary medical procedures
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Non-disclosed provider financial interests in facility
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Doctor shopping for multiple prescriptions
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Billing for different services than are actually performed or covered by the payer
Types of Healthcare Fraud & Abuse
Other
16%
Pharmacy 10%
34%
Services never
provided
18%
False
diagnosis
22%
Upcoding
Why Has Healthcare Fraud Exploded?
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The Willie Sutton Rule: “I rob banks because that’s where the money is!” In
other words…it’s easy
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Payment models encourage maximum usage, not efficient outcomes
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“Pay and chase” dominates the healthcare system
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Prevention is minimal and detection is highly resource intensive
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Limited use of sophisticated technology
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Huge upside – mild penalties (jail time and fines) vs. other crimes
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No sharing of information
RESULT: Department of Justice from 1991-2009 recovered $23.2 billion
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Less than 0.1% of all program expenditures
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The bad guys are outgunning the good guys
Prepayment vs. “Pay & Chase”
Prepayment Fraud Detection and Investigations
It’s much easier to close the barn door before the cow gets out.
This analogy applies to prepayment investigations. It’s much easier and more
effective to stop a questionable claim from getting paid than it is to “pay and chase.”
The Value of Prepayment Fraud Detection
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100% savings on fraud identified and avoided
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Real-time savings – no need to finance the fraudsters and abusive billers
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Deterrent effect – providers change their behavior
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Fewer legal issues – shift burden of proof to bad guys
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Focus resources on most suspect, highest ROI claims
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No recovery effort or resources needed
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Less expensive than post‐pay research and audits
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Key to preservation of plan assets
How a Successful
Fraud Prevention
Program Works
Comprehensive Anti-Fraud Program Components
Detection
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Watch Lists
Analytics
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Diagnostics – Rules-Based Technology (“RBT”)
Code Edit Compliance and Duplicate Detection
Investigation
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Prepayment
Post-payment
Education
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Members
Providers
Employer Groups
Employees
Detection
The best systems combine rules, statistical
analyses, and predictive modeling.
• Watch lists
• Analytics/Statistical modeling
• Rules-based Technology
Detection
“Watch Lists”
• Providers
• Members, codes
• Proprietary – networking, associations,
previous investigations
• Public – sanctions, licensing, OFAC
• Commercial – high risk addresses
• Matching against provider demographics
to identify suspect claims (pre- or postpay)
Detection
Analytics:
- Many software programs are on the market
that have been designed to:
• identify billing inconsistencies
• target specific areas of high cost
• indicate patterns of unusual activity
• create and data mine an infinite number of
issues
• provide proactive detection
• emulate manual analysis procedures that
are followed by investigative staff
Detection
Rules-based Technology (“RBT”)
• Taking known schemes or ideas and translating
those into rules
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Rules identify claims with selected
characteristics
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Aids in identifying new providers/members
engaged in known schemes
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“If-then” type rules
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Think creatively – How would I game the
system if I could
Integrated Payment Integrity
Fraud & Abuse Prevention Suite
Provider Integrity Program
Saves 1-2% of total claims costs
by detecting fraud, waste and
abuse before claims are paid.
TruClaimSM
Clinical code editing engine and
duplicate detector save up to 4%
of total claims costs beyond
savings identified internally
3-6% Savings
Out-of-Network Repricing Optimizer
AccessPlus PPO Networks
Travel wrap networks and 90+
aggregated supplemental PPO
network totaling 900,000+
provider locations to discount nonpar claims
R & C Negotiations
Proprietary data sets establish
reimbursement on retail claims,
reducing claims cost
by 1-3%
3-6% Savings
Data Analytics & Retro Recovery
Retrospective Discovery &
Recovery Services
Administrative overpayments,
Fraud & abuse, High cost drugs,
and Medical Bill review
Data Analytics & Decision
Support
Clinical and financial predictive
modeling, trend analysis,
benchmarking and web reporting
3-6% Savings
Appeals
A conservative approach results in very low appeal rates rationale
1%
99%
Of the 1% of claims that
are appealed, only 20%
are overturned.
This means 99.8%
of claims are paid or
denied appropriately
Integrated Loss Control
Results
Integrated Loss Control Results
The average savings are 3-6%. This means if your average annual paid claims volume is $30,000,000, your
saving ($900,000 to $1,800,000) will pay for raises and other expenses as well as:
25 Nurses
Source: Indeed.com Salary
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The Four Pillars of the
Partnership
The Four Pillars of the Partnership
Immediate savings
Significant long-term
savings & benefits
No upfront costs
No complicated
IT implementation
Achieving Cost Containment Through Cooperation
and Supported of CPEECHCC & CHCC
Immediate savings:
Fraud, waste and
abuse detection
Significant long-term
savings & benefits:
TR data warehouse
& analytics
No upfront costs:
Paid as a portion
of the savings
No complicated
IT implementation:
ASP model - low cost,
no maintenance
Summary
A successful anti-fraud program is made up of several
components:
• Detection which could include a provider watch list
program, rules-based technology, analytics, and
manual referrals (via hotline or other source)
• Investigations – Pre-payment claim investigations, postpayment investigations and recovery, or both
• Education and Training – employees, participants,
providers
• Integration - with other payment integrity programs has
a significant cost reduction impact
Questions
George J. Bregante
www.tc3health.com
[email protected]
714-343-1019
Robert Duncan
[email protected]
949-335-3000
Ext 100