Future of Fraud, Waste and Abuse in the post reform world!
Healthcare fraud, commonly referred to as fraud, waste and abuse (FWA) is a serious problem that affects every member and taxpayer. The other troubling concern is that there is no accurate estimate of the losses due to the fraud in the country. Different sources give varying ranges of losses. The generally agreed loss is somewhere between $70 billion to $234 billion .This equates to roughly around 3% - 10% of all the healthcare spending or in other words this number is roughly equivalent to the GDP of nation the size of Columbia or Finland. National Healthcare Anti-fraud association (NHCAA) estimates that only 10 to 30 percent of fraud and abuse is undetected, of which only 40-60% is ever recovered. Every 2 million invested in fighting healthcare fraud is expected to return around 17.3 million in recoveries and savings.
Some common examples of healthcare fraud include phantom billing, upcoding, unbundling and performing redundant medical services.
The healthcare reform landscape itself could offer potential opportunities to increase fraud and abuse. Given the enormity of the ICD-10 conversion problem and the absence of state mandates in most states on having fraud and abuse prevention plans in place, it makes one to think that more and more likely we could see a further surge in the fraud and abuse claims over the first few years in the post reform world.
From an ICD-10 mandate standpoint, there are two key aspects for fraud detection.
a) The greater specificity and granularity offered by ICD-10 codes leading to greater data accuracy. This will significantly aid the development of sophisticated tools for detection of questionable patterns and suspected fraud.
b) With the transition in progress, and both ICD-9 and ICD-10 in effect, it will offer greater opportunity for fraud when people are less familiar with the new codes.
To see the benefits from the granularity of ICD-10 codes in the latter years and realize an overall improvement in fraud detection rates, I see that all payer organizations should focus on the following key things while implementing the ICD-10 mandates and prepare for the post reform world.
• Leverage fully all the internal BI/Data ware housing capabilities
• Invest in tools that are specifically targeted towards 'fraud and abuse' with special focus on all federal funded programs (Medicare, Medicaid)
• Leverage the federal funding set aside towards fighting fraud
• Study and leverage the highly successful fraud detection solutions prevalent in credit card industry (e.g., FICO's patented solution for credit card industry)
With the healthcare reform mandating several anti fraud initiatives for all government programs and more stringent penalties towards fraud, it is upto all large payers to take full advantage of new infrastructure which will be in place in the new post reform world. Also the key stakeholders - consumers, providers and payers should work collectively on cracking this growing problem with unknown estimate of losses.
1- Source - National Health Care Anti-Fraud Association white paper
2- Source - National Health Care Anti-Fraud association, 2008
3- Source - National Health Care Anti-Fraud association, 2008
