Reducing Health Care Fraud through Analytic Insight
Smarter systems can help weed out fraud and put the focus on providing preventative care.
Guest commentary from Brad Allen, lead architect for IBM Entity Analytics
Personnel at a hospital in Miami called an Illinois woman repeatedly, demanding she pay a $2,000 bill for giving birth. She told the callers she'd never been to that hospital - and was 72 years old.
A fraud ring used 29 fake storefronts spanning Florida, North Carolina, South Carolina, Georgia and Louisiana to provide bogus cancer and AIDS drugs in an attempt to defraud taxpayers of $100 million.
And problems such as these are not confined to the U.S.: About $260 billion is lost every year to fraud and error in health care around the world, or enough to quadruple the budgets of the World Health Organization and UNICEF and control malaria in Africa, combined.
Health care identity theft dominated all other crimes in the industry last year, according to the National Health Care Anti-Fraud Association. As more citizens apply for health care benefits over the next couple of years, a deeper level of analytic insight will be needed to avoid the potential for catastrophic errors that can occur when moving from paper-based, medical-record-keeping systems to electronically based, interconnected systems.
It's an inside job
Today, 80 percent of U.S. health care fraud is committed by medical providers, 10 percent by consumers and the balance by other sources. In fact, fraud or "claim padding" accounts for up to 20 percent of every claim.
Health care fraud increasingly affects the entire health care value chain, ranging from inappropriate interactions between employees and health care suppliers, such as kickbacks or procurement errors; multi-party collusion and fraud rings, such as slip-and-fall scams and billing fraud; and insiders stealing pharmaceutical drugs to re-sell to criminals and drug abusers.
Fraud schemes can include health care practitioners obtaining subsidized or fully covered prescription drugs that are actually unneeded and then selling them on the black market for a profit. Intentional incorrect reporting of diagnoses or procedures can erroneously result in a maximized payout and there have been instances of kickbacks provided for member referrals.
Using a deeper level of analytic insight can help health care insurance organizations detect fraudulent schemes and techniques, as well as uncover insider fraud and collusion that typically involves two or more individuals who are familiar with the policies, procedures, systems and controls of the organization they defraud.
Setting your records straight: The victim
It's a case of guilty until proven innocent. The burden of proof tends to fall on the victim.
A person's records are most likely scattered among many different providers, because there's no medical records clearinghouse that keeps them organized and accessible in one place.
Under HIPAA, the federal law that addresses medical privacy, an individual is entitled to a copy of these documents, though there may be a fee to obtain them. If there's an error, a correction can be made to the record, but often doctors and hospitals are reluctant to remove erroneous information from a health record, forcing the person to file a police report and seek legal action.
If an impostor receives health care services under another person's name, a couple of things may happen. An individual's medical history and health care records can be mixed in with someone else's information, which can be life-threatening, such as causing a transfusion of the wrong blood type. And, in some cases, health care providers have been reluctant to show health records to patients who have been victim to identity fraud. If the provider decides the information in the victim's file is not about them, the provider may reject the request, according to the World Privacy Forum.
Financial losses caused by health care identity fraud can severely impact a credit history. Unpaid medical bills will go to collections agencies, and it can take months or years to restore one's credit score.
In many cases, the thief will take steps to prevent the detection of fraud by simply changing the address where insurance and hospital information is sent, making it difficult for victims to discover the fraud. If the person isn't getting his or her insurance statements or seeking medical treatment, the individual will remain ignorant of the fraud.
As hospitals, insurance companies and the U.S. federal government are pushing for wider adoption of electronic health care records, organizations are trying to solve business problems relating to the true identity of individuals. Systems that provide a new level of analytic insight are needed to help answer questions, such as "Who is Who?," "What Have They Done?" and "Who Knows Whom Anonymously?" By creating a holistic view of information, health care providers, members, employees and suppliers will be better able detect fraud, despite attempts to disguise or misrepresent the patient's true identity.
And even if one doesn't fall victim directly to health care fraud, everyone can feel the consequences of fraud, from higher premiums, increased cost of consumer goods as businesses pass on the costs of fraud to everyone, and decreased or loss of access to insurance coverage.
Now more than ever, the success of the modernization of U.S. health care will be dependent on the industry doing a better job of protecting its citizens from medical identity theft. Smarter systems that generate new levels of insight can help weed out fraud and put the focus on what matters most: providing preventative care for more Americans.