Analyze Plan Data to Stem Health Care Fraud

By By John Scorza Nov 16, 2011

NEW ORLEANS—To slow rising health care costs attributable to fraud and abuse, employers should be aware of potential threats to their plans and should scrutinize plan data to identify red flags, experts say.

“If we look at the overall trends, we’ve got a better chance of stopping health care fraud,” remarked Ted Doyle, vice president of OptumInsight, a health care information and technology services company based in the Minneapolis area. Doyle spoke at the International Foundation of Employee Benefit Plans’ annual employee benefits conference here on Oct. 31, 2011. “The data is there; let’s use it,” he advised.

Health care fraud and abuse cost up to $260 billion a year, or as much as 10 percent of U.S. health care expenditures, according to Doyle and Linda Vincent, who is the founder of San Pedro, Calif.-based private investigators Vincent & Associates. But plan sponsors who monitor common high-risk areas for signs of fraud and abuse can protect their plans, they said.

Physicians and other health care providers that commit fraud and abuse pose a serious risk. Doyle and Vincent cited several cases involving unscrupulous doctors, including one in Santa Ana, Calif., who engineered a $154 million medical insurance fraud scheme involving unnecessary surgeries on healthy patients.

Fraudulent Bills

Doyle and Vincent said the most common forms of provider fraud include billing for services not rendered, misrepresenting services provided and rendering medically unnecessary services.

Fraudulent billings for services are especially problematic. These services, which generally are ordered by a doctor, often involve lab tests, durable medical equipment and home health care. “It’s a hotbed of fraud,” Doyle said.

Doyle suggested that plan sponsors look at the geographic areas where plan participants are receiving benefits. Fraud and abuse is most common in some cities and states. Doyle described Miami, for instance, as the health care fraud capital of the country, if not the world.

Medical ID Theft

Arizona, California, Florida and New York all have high rates of medical identity theft—stealing someone's medical information to obtain medical services—which is a growing area of concern. Medical identity thefts often occur as the result of data breaches, with lost or stolen laptops being the most common source. The threat of breaches—and medical identity theft—is likely to grow in coming years as medical information is stored and shared online more commonly, Doyle and Vincent said.

The consequences of medical identity theft can be severe, including improper claims payments, premium increases, participant credit problems and even death when false and erroneous information is entered into a victim’s medical files.

Prescription Abuse

Another area of growing concern is the abuse of prescription drugs, which Doyle said has become an epidemic in the United States. More than 15 million Americans admitted abusing controlled drugs in 2005, including many teens. That year, 43 percent of drug abuse emergency room visits involved pharmaceuticals, Doyle and Vincent said.

The potential harm of this epidemic is high. It includes the cost of excessive or bogus prescriptions and the cost of related medical claims for physician office visits and emergency care.

Doyle urged HR professionals to review plan claims for signs of prescription drug abuse. “Look at your data and you’ll see this information jump off the page,” he stressed.

High-Risk Areas for Fraud:

Improper billing.

Medical identity theft.

Prescription drug abuse.

Dishonest employees.

Corrupt physicians.

John Scorza is associate editor of
HR Magazine.

Related Articles:

Guarding Against Identity Theft: HR's Role, SHRM Research Articles, December 2010

Curbing Health Fraud,HR Magazine, August 2005

Quick Links:

SHRM Online Benefits Discipline

SHRM OnlineHealth Care Reform Resource Page

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