The holy grail of pre-pay health care fraud


Everyone within the health care community recognizes that the traditional ‘pay-and-chase’ model for fraud cost reduction has some serious limitations. 

Recovery of the lost funds is in some cases a mere single digit percentage point (with some exceptions – but not many) of the moneys paid.  And the effort and difficulty involved in prosecution is significant drain on time, money and resources.  Also many of the larger, conclusive fraud schemes are criminal in nature (organized crime), so the parties or money has a tendency to disappear. 

It would appear that the allure of ‘pre-payment’ fraud detection would address all of the problems.  However, there are a few catches.  Health care claims are far from real-time; there is no comparison to the banking world.  Firstly, the claims are not received when the service is provided, and most health care systems do not allow for the access to their systems of record, requiring a day to extract the data to a data warehouse. But that is only the start.  What about the requirement to pay ‘none suspicious’ claims in a reasonable time coupled with the number of potentially fraudulent claims and the limited number of investigators?  There is also the issue with the time required to triage and investigate a potentially fraudulent claim – more and more claims accumulate in the queue. 

It all translates to a very large potential bottle neck of what may be fraudulent claims.   This is by no means to say that pre-pay is not a great money saver, and by far one of the best means to reduce fraudulent claims costs, only that the Holy Grail of pre-pay must be approached in a reasonable fashion with reasonable expectations. One method that seems to get significant results is to scrape the cream of the most likely and most expensive fraud off the top and drop that into the pre-pay bucket to limit the number of claims to those that are most likely to be fraudulent and bring the most value to the organization.


About Author

Ross Kaplan

Principal Solutions Architect

Ross Kaplan serves as the Principal Global Solutions Architect for Health Care in the SAS Security Intelligence global practice. He supports health care cost containment (Payment Integrity) initiatives across the Health & Life Sciences, State and Local Government, and Federal Government verticals. He has been active across North America, Europe, Middle East, Asia Pacific and South Africa. Providing industry expertise and vision at conferences and directly to customers, Ross has been at SAS for over eight years Ross is a 16 year veteran in the health insurance industry, focusing on analytics in health and condition management, member retention, and provider profiling prior to specializing in health care. He has assisted health plans, federal and State and local government agencies in defining their requirements and providing guidance in their solution advancement. Ross is also trained and experience in Healthcare privacy laws. Prior to SAS, Ross served as a solutions architect at Computer Associates and Siebel Systems, working with the Fortune 1000. He has supported other industries such as Insurance, Banking, and Pharmaceutical. However, his primary focus has always been in health care, receiving training in HIPAA and having direct input in Siebel’s health care product development. Ross has been featured speaker at many industry events focused on health care cost containment and payment integrity, most recently on the topic of social network analysis and link analysis, predictive analytics, and fraud/waste and abuse in the European market. Ross earned a bachelor's degree in Business Administration, with a concentration in Computer Information Systems (CIS) from San Francisco State University and his Master’s Degree in Statistics as well as an MBA with a concentration in Systems Analysis. Sales Training: • Consultative Selling • The Customer Delight Principal • Major Account Sales Strategy

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