Fighting fraud in the new world of Value-Based Payments

Beneath the cute exterior hides a fraudster with Value-Based Payments on his mind. And cheese. Definitely cheese. Photo by Ricky Kharawala on Unsplash

Ladies and gentlemen, I give you Value-Based Payments (VBP), health care’s new magic, “silver bullet” that will solve all our fraud problems.

Last month, the US Department of Health and Human Services (HHS) issued a press release entitled, “HHS Proposes Stark Law and Anti-Kickback Statute Reforms to Support Value-Based and Coordinated Care“ that announced changes to how the Physician Self-Referral Law (the “Stark Law”) and the Federal Anti-Kickback Statute should be interpreted. The changes, proposed by the Centers for Medicare & Medicaid Services, acknowledge that “incentives are different in a health care system that pays for value, rather than the volume, of services provided.”

Basically, the idea is that it’s easier to commit fraud when volume of care is the measuring stick, rather than positive patient outcomes. Medicare typically bears the brunt of this fraud through things like providers billing for services that weren’t performed, falsifying a patient's diagnosis to justify unnecessary tests or surgeries or accepting kickbacks for patient referrals.

Personally, I usually am in favor of fewer regulations. However, when something is seen as a “silver bullet” in the fight against fraud, waste and abuse in health care my ‘spidey senses’ go on high alert.

A deeper dive into value-based health care

Value-based health care is a delivery model in which providers, including hospitals and physicians, are paid based on patient health outcomes. Under value-based care agreements, providers are rewarded for helping patients improve their health, reduce the effects and incidence of chronic disease, and live healthier lives. The approach is evidence-based, with a heavy reliance on data.

Value-based care differs from a fee-for-service or capitated approach, in which providers are paid based on the amount of health care services they deliver. The “value” in value-based health care is derived from measuring health outcomes against the cost of delivering the outcomes.

Hi Value-Based Payments, haven’t we met before?

VBPs are the latest in a series of attempts to garner greater value and efficiencies from the US health system and reduce costs at the same time. Previous innovations such as prior authorizations, units of service limitations and then managed care organizations also touted their abilities to reduce fraud.

What we have learned from all of these innovative models is that fraudsters evolve and will still find a way to game the system, like this $8M fraudulent billing scheme perpetrated by a husband and ex-wife duo. As fraud fighters, it is incumbent upon us to try and figure out the ways the criminals will subvert the Value-Based Payments model before they do!

"It’s not every day you see a crime so audacious that it results in a 90-count guilty verdict.” -- Special Agent in Charge Omar Pérez Aybar of the HHS Office of Inspector General, regarding an $8M fraud scheme in Florida

Building a better mouse trap

Having spent much of my life on a working farm, I like to think of these models such as fee-for-service, managed care, capitation, prior authorizations and now VBP as mouse traps.  Mouse traps are great, when they work. When they don’t, they are just a food source for the mouse! Understanding how the mouse trap works is the first step to figuring out how to get around the deadly consequences.

Will fraudsters be able to manipulate the episode triggers or ending points making it easier for them to increase their payments? Will they increase payments by categorizing patients at higher risk levels? Will they actually under-bill to achieve bonus payments that are worth more than the actual service payment?

Rest assured, fraudsters are already looking at the blueprints for the new Value-Based Payments trap. They are looking for ways to use or manipulate claims and care data to get to that cheese. We have to expand our knowledge base by collaborating with clinical colleagues to determine if the levels or outcomes of care are normal and customary.

With those rules established, we can analyze data to generate alerts. By understanding the data and using analytics, investigators can find the insights to indicate potential fraud. Analytics can establish the baselines by which we identify the anomalies. Artificial intelligence and machine learning have the power to identify new, sophisticated schemes.

After all, even a mouse leaves footprints!

Throughout my career in Fraud and Clinical Health Care, I am constantly reminded that underneath all of these billing codes and fancy calculations are patients, and so as we fight fraud using data analytics, AI and ML we should always recognize that our work is also fighting to help keep patients safe and ensuring they receive necessary services that promote positive health outcomes.

Check out the white paper Using Modern Analytics to Save Government Programs Millions to learn more about how to enable an enterprise fraud approach within and across government agencies.


About Author

Tom Wriggins

Sr. Manager, Global Fraud, Risk and Security Intelligence

With over 30 years of healthcare experience, Tom Wriggins brings practitioner-level expertise to his role as a Senior Manager with SAS. Tom combines extensive clinical experience with data and analytics knowledge to help government and commercial health care entities crack down on fraud and improper payments. He has led multidisciplinary teams that have delivered large and complex data solutions for government health agencies, as well as created fraud and abuse investigative training programs.

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