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Author: Satish Vijayakumar |01/31/19

Spot and Prevent Frauds in the U.S. Healthcare Insurance

Timely availability of medical services makes a difference between survival and death. Various studies prove that having insurance has led to increased availability and better utilization of medical facilities to have improved health and higher survival rates among people. Studies by American Journal of Public Health indicates that the uninsured have 40% higher risk of death than those with insurance.

In recent years, healthcare reforms by different governments greatly reduced the number of uninsured (as seen in Figure 1) and benefited many needy people. As of 2017, National Healthcare Expenditure (Medicare, Medicaid, Private and others) was USD 3.5 trillion or 18% of GDP. This spend has been consistently increasing and is projected to grow at the rate of 5.5% per year from 2017-2026.

uninsured rate

Figure 1

The Criminalities in Healthcare Insurance

The healthcare industry has attracted criminal enterprises of all sizes due to its complex processes and dollars spent by government, insurance companies, patients and disparate parties. Let’s explore in detail the fraud patterns in healthcare insurance and see how advancements in technology provide us with methods to detect and prevent frauds.

Pegging the frauds in Healthcare Insurance has been a tough task as no national agencies collect the fraud statistics. However, a study conducted by Donald M. Berwick, a former Administrator of the Centers for Medicare and Medicaid Services (CMS), estimates that the frauds happened in the industry in 2017 could be up to USD 272 Billion, and this is the last most comprehensive study available in public domain.

For the benefit of everyone who aren’t familiar with end-to-end “visit to claim” process, here is a brief explanation. Each diagnostic test, office visit, or medical procedure performed by a doctor or other healthcare provider has a corresponding Healthcare Common Procedure Coding System (HCPCS) or Current Procedural Terminology (CPT). The billing procedure for Medicare involves the provider submitting an electronic claim form to Medicare with these codes having information pertaining to the specific service provided to the patient. Medicare reviews the claim and reimburses the provider upon ascertaining various aspects including coverage of the said service.

uninsured rate

Figure 2

Though in numerous ways people can be cheated, the five common patterns are these:

  1. Medical Identity Theft
  2. Billing for Unprovided Services
  3. Unbundling
  4. Upcoding
  5. Double Billing

Medical Identity Theft

Medical identity theft involves fraudulent use of a person’s health insurance information to receive reimbursement for healthcare services provided to an individual who isn’t covered by the policy. A fraudster may even use this for submitting claims for services that were never provided. Both patients and providers may commit fraudulent medical claims. Other scenarios may involve employees or external hackers steeling the personal details of people to profit from selling the Personally Identifiable Information (PII).

A ten-year study by Trend Micro says that healthcare is the foremost industry prone to data breach, and it is 3 times more prone to data breach compared to financial industry. The top three breach methods in the healthcare industry are loss or theft, insider leaks and unintended disclosures.

Billing for Unprovided Services

In this scenario, the service provider bills Medicare or any other payer for services that aren’t provided to the patient.

Unbundling

The provider breaks the service like tests or procedures into items and bills to make the payer pay separately for each item. The total cost of service provided for individual items would be much higher than the rates of billing it together. For example, a hospital lab might perform a panel of blood tests for a patient, and Instead of billing for the whole panel, the lab might try to increase their revenue by billing for each test individually.

The provider/biller assigns a HCPCS or CPT code for a more expensive service or procedures than the one that was performed. For example, a simple x-ray may be billed as a complex x-ray, including more views than those that were done.

Double Billing

The provider submits the same bill multiple times even though the service was provided only once.

Technologies to Prevent Frauds

It’s challenging to bring transparency to a process of this scale which involves diverse participants. The latest advancements in technology delivers us the needed tools like Blockchain, Big Data, AI, Biometrics and so on to prevent frauds in healthcare insurance.

Blockchain

Blockchain enables zero knowledge protocols where user identity is secured from theft in a manner where the identity of the user is authenticated without the user revealing the private information. A combination of Blockchain and biometric authentication mechanisms provide a robust and secure environment for information exchange that may include patient, insurance and past treatments data.

A Blockchain network to which the patients, service providers and payers are associated would ensure that a claim is not placed without the approval of the participating node – a patient. This brings transparency and put the patient and payer more in control of the claims.

Biometrics

Using Biometrics like fingerprint, iris data, facial analysis and so on to authenticate based on “what a person is” rather than “what a person knows” makes sure that the services are provided to the entitled patient only.

AI and Big Data

AI and Big Data can detect unbundling and upcoding of services with capabilities to process huge volumes of data and draw inferences on services.

The interplay of all these technologies help in prevention and detection of insurance frauds. The table below shows a comparative analysis of the different patterns, the complexity of the new processes, the value realization from the changes made and the technology maturity.

Fraud Pattern

Process Change

Value Realization

Technology Maturity

Medical Identity theft

High

High

Medium

Billing for services not rendered

High

High

High

Unbundling

Low

Medium

High

Upcoding

Low

Medium

Medium

Double Billing

Low

Medium

High

The Wellness Care Process

The transformed process called Wellness Care has three main sub processes:

  1. Enrollment
  2. Patient Visit
  3. Claim and Reimbursement

Enrollment

Payer enrolls a patient into the wellness care network, which is a new Blockchain based network. This would involve capturing the patient’s biometric data along with a secure cryptographic key pair specific to the patient. The private key is securely stored in either a custom device or a commodity smart phone.

Patient Visit

When a patient visits, the service provider would securely authenticate the patient using biometric or “Zero-knowledge Proof” technique without the patient revealing private information.

Claim and Reimbursement

The service provider can submit a claim only if there is an entry for the visit in wellness network for a patient. The claim is first sent to the patient for approval and signing. The patient acknowledges and either authorizes the services received and request reimbursement or ask for additional information.

An AI driven engine validates the request and prompts the patient with potential issues in the request. This protects the patients against claims for services that were not provided. The provider then sends the digitally signed reimbursement request to the payer who again validates the request using AI to detect upcoding before finally approving the claim.

Creating a sustainable healthcare industry

Bringing in transparency and reliability in healthcare is of paramount importance with the increasing life expectancy and spending of government and private insurance companies. The transformation would need a strong commitment from government and support from all the other parties involved like hospitals, insurance companies and so on. It’s good to adopt a crawl-walk-run approach and start with solutions that give a medium to high returns with a low process change. The wellness network can be implemented in a small enterprise by adding foundational blocks. Further building blocks can be added, and the capability can be scaled as the solution matures and stabilizes. Let us together create a sustainable healthcare industry.

So, what are your thoughts on healthcare insurance frauds? Do you think the technologies explained here will bring transparency to the industry? Email your views on info@mindtree.com

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