Healthcare Fraud in America's Commercial Market and How Employers Can Protect Themselves

Healthcare fraud is an insidious issue that continues to plague the United States, wreaking havoc on the economy, increasing healthcare and health insurance costs for employers, and jeopardizing the financial well-being of American workers. It has been estimated that 10% of total charges in the commercial market are fraudulent. That equates to over $120 BILLION annually.

In this post, we delve into the alarming revelations the impact that healthcare fraud has on our health insurance market. The intent is to shed light on the magnitude of healthcare fraud in America's commercial market and its detrimental consequences for both employers and employees.

The Scope of Healthcare Fraud:

Healthcare fraud rears its head in the private and public sector, costing the nation billions each year, but the commercial market bears the most significant burden.

Why the commercial market in particular? Simply put, insurers are not pursuing criminal prosecution for fraud like they can (and do!) in the private sector. Unlike the prevalence of funding for fraud prosecution in, for example, Medicare and Medicaid, insurers in the group market do not allocate the same type of funding. This not only thwarts early detection and swift legal action, but fosters an environment for greedy providers to excessively charge and mistreat patients. Furthermore, it is not uncommon for average charges in the commercial market to exceed Medicare pricing by between 100-200%, making it vastly easier for providers to justify and sneak in overcharges.

Employers are losing millions to fraud alone, and there is an urgent need to combat this pervasive issue.

But where does the issue lie precisely, how can fraud be identified, and what measures can be taken to prevent growing acts of fraud?

Types of Healthcare Fraud:

There are several common forms of healthcare fraud prevalent in the commercial market:

1. Billing for Unperformed Services: Dishonest healthcare providers submit fraudulent claims for procedures or treatments that were never provided to patients. This practice not only defrauds insurers but also puts patients at risk by subjecting them to unnecessary medical interventions.

2. Upcoding and Unbundling: Healthcare providers engage in upcoding by billing for more expensive procedures or services than what was actually performed. Unbundling involves submitting separate claims for services that should be billed together as a single procedure, inflating costs and fraudulently maximizing reimbursements.

3. Phantom Billing: This deceptive practice involves billing for fictitious patients, services, or equipment that were never involved in the healthcare transaction. Phantom billing allows fraudsters to siphon off funds from insurers, ultimately driving up premiums for honest policyholders.

Combating Healthcare Fraud:

Fortifying a health plan against fraud should be a top priority for any employer with a self-funded plan. It is perhaps one of the biggest ways plan sponsors can save the most money with the smallest forms of action. Below are some recommendations employers can use to take action:

1. Enhanced Data Analytics: Advanced technologies and data analytics play a vital role in detecting patterns and anomalies that signify potential fraud. Utilizing sophisticated algorithms, we can identify suspicious billing patterns and investigate fraudulent activities more effectively. In most cases, insurers are not concerned with employing these granular analyses to the benefit of health plan sponsors. The burden typically lies on the consultant's ability to employ these techniques and "face the giants" for the employer. It is imperative that an employer chooses the correct benefits broker if they are looking to make real change, and not lose unnecessary margin in their health plan to fraud.

2. Be the Squeaky Wheel: Once there is knowledge of fraudulent activities, it is crucial to alert the carrier that is managing your plan, and even the DOI. Often times, it takes extra measures to make sure your voice is heard, and action is taken.

3. Switch to an Independent TPA: If your plan is with one of the major carriers, it is likely that your claims are being auto-adjudicated at higher levels than what smaller TPAs set. In other words, more claims AND smaller claims are likely to be reviewed by an independent TPA.

4. Education and Public Awareness: Educating employees about healthcare fraud and its implications is key to prevention. Raising awareness about common fraud schemes (like waived OPX at certain providers), warning signs to look for on medical bills, and reporting mechanisms empowers individuals to protect themselves and actively participate in combating fraud. Oftentimes your greatest protection against fraud is found on the front line!

Conclusion:

Healthcare fraud poses a grave threat to America's commercial market, impacting both the economy and the well-being of its citizens. There is an urgent need for collaborative efforts to combat healthcare fraud, protect honest policyholders, and ensure the provision of quality care to all Americans. By employing advanced technologies, and fostering public awareness, we can work towards a future where healthcare fraud is minimized, costs are contained, and the integrity of the healthcare system is preserved.

To that end, working with a brokerage that knows how to catch fraudulent charges, and educate employees to do the same is imperative.

If your organization feels exposed to healthcare fraud, reach out today to see how we help organizations fortify themselves against this threat.