An interview with Brian C. Smith on Prospective Overpayment and Fraud Prevention

by Clive Riddle, June 18, 2010 

This week, MCOL conducted a podcast interview with Brian C. Smith, an Executive Vice President with HealthCare Insight as a part of the 2010 Predictive Modeling Web Summit. Brian addressed a predictive approach to health care fraud and abuse. Below are some selected statements from Brian during the interview. 

“It’s a sad fact that particularly such areas as Durable Medical Equipment and HIV testing are wide open for abuse. For example, in South Florida with over a couple of years of focus just on the DME problem, they've seen the amount of DME submitted bills go down $1.7 billion dollars, meaning that upwards of 50-60% of prior claims were pure fraud.” 

“If you're going to defraud a payor, you're going to go where the easiest, most likely, and highest dollars are, and those are in federal and states programs like Medicare and Medicaid, as opposed to commercial health insurers who are investing a fair amount of dollars and really getting after fighting fraud and abuse.” 

“The Federal side has about a $1.8 billion investment in fraud, waste and abuse on an annual basis that primarily goes to the DOJ Office of Inspector General and Medicaid Fraud units, and has recaptured in the $2.5 - 2.8 billion range. In contrast, the Blues, for example, which have reported recently that across their 100 million members, that their 39 plans represent, they recovered $516 million, which works out to $0.43 pmpm. Apply that to the much larger federal population, and it would be a much higher yield. “ 

“We're seeing our customers move away from the idea of pay and chase [retrospective identification of overpayments or fraud] to a prospective basis. We're looking at literally all of their claims, upfront, overnight. We have history of flagged providers as well, from a couple of years for up to five years, and we can identify various schemes and profiles of these providers, and stop these payments up front. That produces a tremendously higher yield, and those dollars never leave the claims shop. The Federal side has generally not embraced this technology. “ 

“The predominant tactic today, particularly on the Federal side, is pay and chase. The Federal side uses fiscal intermediaries who generally have no incentive, or capability, for that matter, to stop the payment before it leaves the door. Many self insured administrators are also just doing a cursory job at looking backwards, retrospectively, at these schemes. The best, most efficient way, is when clients and payor customers, before they send these payments out, look at patterns with these particular providers, comparing those providers to other specialists within that provider range. What you can see is that these particular providers are often unbundling their services for what should be a global procedure, and bill continually in a manner fraught with unbundling, overcoding, upcoding, and incorrect coding. That's a pattern. Our customers are stopping those claims from being paid, and have the claims clinically verified. Once our system identifies a pattern, we have clinical investigators that drill down into those particular providers, and provide a detailed report with recommended actions to take.” 

“1 to 2 percent of the 1 million+ providers might have been involved in actual fraud at some point in time. There's far more dollars in the abuse area, where there's aggressive billing habits, compared to normal billing patterns, where the particular providers are 2 to 3 standard deviations more aggressive in how they bill, with areas such as modifier abuse with the codes. That's where we see hundreds and hundreds of millions of dollars of abuseful practices.” 

Click here to listen to the full podcast interview with Brian C. Smith, Executive Vice President, Sales, HealthCare Insight, discussing "Prospective Overpayment and Fraud Prevention.