How long has health care fraud been hiding under the bed?


It has become more and more apparent, country by country and state by state, that many organizations do not have a clear grasp on what their exposure is to health care fraud. Whatever name it goes by – aberrant behavior, abuse, waste or fraud – and no matter how it is measured – in currency (dollars, euros, pound, etc.), volume, or lost time – it is clearly underreported.

What makes this lack of exposure more dramatic is not just the current exposure rates but also the lack of understanding about historic exposure.  By this I mean, how much negative behavior has been occurring, for how long, and is it still going on?

Case after case enters the media around health care fraud, many discussing fraud that has been active for five or more years.  One of the issues of concern is that much of the on-going historical fraud is collusive: involving more entities and translating to much higher costs.

So the question always comes to mind, “What other pre-existing fraud is there – and where is it hiding under the bed?”  This raises to light an interesting paradox: how does one calculate what they are losing and plan how to respond appropriately (staffing, policy modification, etc.)  if they don’t even know there is an issue – or, in this case, what the size of the issue is.

The situation leaves companies in the position where they really must look outside themselves to see what is happening not only in their immediate region, but in neighboring geographies or organizations as well. Understanding local and regional trends could really help a health care company understand how much fraud remains to be uncovered.

Unfortunately, many organizations appear to function as stand-alone entities, neither asking nor sharing any information they might have.  In some cases, their fraud information is seen by the organization as competitive advantage: if they can reduce more costs then their competitors they can have more aggressive premiums.  However, that argument has no substance when it comes to government agencies, or different geographies that don’t compete.

Either way, most organizations are not communicating simply because they never have in the past and have no process for doing so in the present.  Information sharing and improved empirical analytics would appear to be the most obvious means of first steps.  This all leads back to the issue at hand: how do organizations address the issue of not knowing what fraud is occurring, and subsequently, how much money is being lost because of it? The resulting concerns are obvious: if an organization doesn’t know about it, and doesn’t look for it, how much money are they losing?

Organizations have a number of options to potentially address these issues.  First they can participate in consortiums or become active in regional anti-fraud health care conferences.  Secondly, they can investigate technologies for health care fraud detection that analyze patterns empirically.  Lastly, they can become more communicative with other similar (potentially non-competitive) organizations.

There may be further options down the road. No matter how you proceed, it becomes important to look at the current environment in a new light and to make an active effort to understand what is actually occurring (and how much is it costing).  This enlightenment may significantly change how the fraud is viewed and what resources are being allocated.

Read more about techniques you can use to prevent health care fraud.


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

1 Comment

  1. John Maynard

    Great article Ross. In my past life, we said, "Program integrity is a team sport." People need to communicate and collaborate to improve effectiveness. Healthcare fraud is pervasive and under-reported in my opinion. Being an ostrich with your head in the sand is not a good option as cost containment in the US and other national healthcare systems becomes a critical issue. Thanks for sharing!

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