The average annual US spending on health care is $3.8 trillion. Some estimate that fraud, waste, and abuse (FWA) costs the nation at least $114 billion annually, or more than 3 percent of overall health care spending.
So what can payers and providers do to reduce massive overspends? First, let’s define FWA.
Defining Fraud, Waste and Abuse
Fraud: Willful deception or misrepresentation to defraud a health care benefit plan to obtain unauthorized benefits or payments. This involves intentional, wilful and willful misrepresentation or misrepresentation of material facts.
Examples include intentionally billing for services that were never performed, billing for services that are more reimbursed than the services provided, or altering a claim form or electronic medical record.
waste: Misuse or overuse of resources, services or practices that result in unnecessary costs. For example, providing services that are not medically necessary.
Abuse: Provider practices that are inconsistent with sound financial, business, or medical practice, resulting in erroneous or unnecessary costs; reimbursement for services that are not medically necessary; or services that do not meet professionally recognized standards of healthcare. Abuse is similar to fraud, except that it does not require proof that the abuse was committed intentionally, intentionally, and intentionally.
For example, billing for services not covered, misusing code in claims, or inappropriately allocating costs in cost reports.
Understand the complexities of the healthcare system
Before we address the massive overspending in healthcare, it’s important to understand the different types of FWAs and how they differ. This is not a new trend, but as healthcare systems have become more complex in recent history, we also tend to see instances of rising waste.
Additions or changes to regulations, such as new regulations, policy changes, or new guidelines for CMS, can add complexity to the system. Lack of understanding between suppliers often leads to incorrect billing.
For example, during the Covid-19 pandemic, the use of telehealth has surged, with providers seeing 50 to 175 times the number of patients through telehealth. As a result, CMS has introduced several policy waivers and extensions to accommodate the proliferation of telehealth services.
While telehealth offers many benefits to patients, it creates operational complexity for providers and raises legitimate concerns about payer fraud, waste, and abuse.
On the other hand, we’ve also seen an increase in fraud incidents, which is a more deliberate act, mostly by finding loopholes in the guidelines to get higher reimbursement.The Office of the Inspector General claims that the U.S. More than $6 billion lost to a single telehealth-related fraud case. The rise of telehealth during the Covid-19 pandemic increases the risk of FWA.
Fighting Fraud, Waste and Abuse with Technology
When it comes to incorrect billing or misrepresentation of services provided, it is the responsibility of the payer to identify these FWA cases or risk overpayment. The practice of identifying FWA instances to improve payment accuracy and reduce overall spend waste is often referred to as payment integrity. Accurate end-to-end payment integrity has never been more important to health plan operating costs, so the question becomes, how can resource-constrained payers address payment integrity effectively and cost-effectively? Technology can help.
Natural language processing (NLP) capabilities combined with machine learning (ML) methods can be used to train systems to act as human auditors to identify overpayments and billing errors.
When the report comes from the provider, the auditor will study some parts of the claim (such as medical records) and capture all the provider’s notes on the backend. From there, the machine starts learning trends in the report and creates these new machine learning algorithms, which help identify outliers or errors in future claims.
Therefore, by deploying NLP and ML techniques, organizations can reduce the manual work previously required and specify which claims are paid incorrectly or identify suspicious instances of FWA.
Now is the time for payers to double down on payment integrity solutions to prevent mistakes that lead to excessive or unnecessary spending.
Photo: Feodora Chiosea, Getty Images
