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Healthcare Fraud

$9 Million in Potential Fraud, Waste, and Abuse Found in Fort Worth’s Medical Spend

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It is estimated the one in three dollars spent on healthcare are fraud, waste, or abuse, but companies are finding their niche in rooting out the wasted healthcare spend. Most employers would love to reduce their health spend by 3-5 percent, especially if it didn’t entail reducing benefits, kicking spouses off the plan, or making employees pay more for their health insurance. For a $100 million company, this could mean $5 million in savings without a change in benefits. Dallas-based Smartlight Analytics says it can save self-funded employers that much or more by focusing on fraud, abuse, overpayment, and waste.

Smartlight CEO Asha George has landed deals with large employers such as the City of Fort Worth and Dean Foods due to her company’s ability to look through claims information to find overspending, a service that is increasingly in demand as healthcare spending continues to climb.

Smartlight analytics has recovered millions of dollars for Dean Foods, says Dean Food’s Vice President of Benefits and HR Systems Mike Adams. “They have an extremely innovative solution, employers just don’t know about it. We have the highest ROI for Smartlight than for any of our vendors.”

When Smartlight took a look at 27 months worth of claims data, the company found nearly $9 million of potential overspending of taxpayer dollars for healthcare on the 12,000 people covered in Fort Worth’s health plan. Looking ahead the company it says Fort Worth could save $2-$3 million per year in healthcare spending. The vast majority of the overspending was due to fraud, waste, and abuse, which consisted of several schemes.

Pass through hospitals were a significant culprit, accounting for nearly $700k in overspending. In these scenarios, rural hospitals that receive higher reimbursement rates from insurers will make arrangements with out of state labs to bill for services. The hospital keeps a portion of the reimbursement, and sends most of the money back to the labs or management company that makes the arrangement. Numerous cases around the country are attempting to fight back against these practices, and insurance companies are working to get back nearly half a billion dollars paid to rural hospitals across the country.

Smartlight’s analysis found that 17 physicians based in North Texas billed seemingly routine labs to 13 different hospitals around the country, some hundreds of miles away. For those hospitals, laboratory services were the only billed service for Fort Worth plan members. Hospitals involved in the scheme were located in Oklahoma, Pennsylvania, Mississippi, California, Kansas, and Florida.

A much larger portion of the potential fraud involves unnecessary lab testing, where in-network physicians will order drug screenings that aren’t necessary and bill for them, getting a kickback from out-of-network labs to do so. The analysis of claims data found over $2 million in what may be fraudulent lab testing.

Smartlight also found over $1 million of potential overspending due to the misuse of testosterone therapy treatment, which is prescribed for patients under dubious criteria, and some physicians may be billing for a weekly office visit when a patient is merely receiving an injection, adding to the waste.

Another major culprit of suspected overspending was the use of intraoperative nueromonitoring, which is used during brain and spine surgeries to monitor the function of nerve structures like the spinal cord and parts of the brain. But the American Association of Nuerophysiological Monitoring says the practice may be being abused because of relationships between the surgeons and IONM companies. “Certain financial arrangements between an [IOM] provider and a referring physician/surgeon, whether direct or indirect, have the potential to endanger patient safety. Specifically, kickbacks and self-referrals create the potential for overutilization and substandard patient care when a physician/surgeon refers a case to an [IOM] provider based on financial considerations,” the association wrote via statement. In Fort Worth alone, Smartlight found $2.6 million in potential overspending due to IONM.

Overuse of the emergency room is another major category for potential overspending. The City of Fort Worth spent over $33 million for emergency services for its members in 2017 and 2018, and 47 employees in Fort Worth’s plan accounted for 969 emergency room visits in the 27 month period that was analyzed, totaling nearly $7 million in charges. Smartlight’s analysis says there is likely over $1 million in wasteful spending due to high ER usage.

Fort Worth’s Director of Human Resources Brian Dickerson says the analysis was fascinating, if troubling. He was surprised to find pass-through billing schemes and testosterone abuse in the report. Fort Worth will take the data back to its insurance carrier to investigate specific claims and see what can be prevented in the future.

The city has also created a testosterone clinic where they will have their employee meet with a urologist who has more expertise than a primary care physician and can make sure those being covered actually need the treatment. “We want to make sure everyone needs the testosterone they are getting, and that testosterone is what they need,” he says.

Dickerson says the city is also working to prevent IONM spending. “For a surgery that costs  $7k, we are charged $50k for the monitoring,” he says. “Doctors need to be told we are not going to pay for this in the future if it is not necessary to be conducted.”

George uses her experience in biostatistics and time spent with carriers in the special investigation department looking for fraud, waste, and abuse to root out errors in claims data even after insurance carriers have done their own searches. This is not necessarily the fault of the carriers, she says. The sheer size of large insurers means they don’t have the resources to find every mistake or fraudulent claim, but the focused attention of a company like Smartlight can find significant spending that shouldn’t have taken place.

For clients large and small, it can be easy to miss certain claim scenarios that apply to the specific employer’s benefit plan, even after the carrier has done their investigations. Carriers also have timing constraints and have limited time to look for waste or abuse. “We want to be at the very end of the line, and we are still able to consistently find savings,” says George.

Up to 40 percent of what is found in the analysis is fraud, waste, abuse, rather than a mistaken billing. George has discovered a number of fraudulent schemes, including a doctor’s office running diagnostics at hospitals 200 miles away, pass-through billing where a doctor bills for something never performed, or kickback arrangements between hospitals and physicians.

Double billing schemes such as slightly changing the code to get paid twice for the same procedure or order is also common, George says.

The process works best with a self-funded employer who can request access to the company’s claims so that they can be analyzed. “We work with the carrier to resolve the issue,” George says. “Employers empower us so we can  eliminate wasteful spending. If we are given a shot, we guarantee our services will have a two and usually 5-6 fold return to clients.”

Dickerson says that not many other cities or municipalities are thinking about finding healthcare savings in this way, but that savings is not the most important factor. “What is most important is that people will get more appropriate care,” he says.