Healthcare Fraud

Fraud in the Time of COVID-19

Mitigating healthcare costs and avoiding fraud, waste, and abuse during the pandemic.

There is no question employers across Texas and the nation with self-funded healthcare plans will see increases in the cost of covering sick employees during the COVID-19 pandemic. What they want to avoid is increases due to fraud, waste and abuse. Existing areas of vulnerability in our healthcare system could be ripe for additional fraud and abuse when the country is in crisis mode.

With reduced oversight to improve accessibility to treatment during the pandemic, fraudulent billing could slip through easier than ever. Bad actors – those already committing fraud within the system – see every tragedy as an opportunity. We have seen evidence of the high prevalence of suspect billing long before the pandemic. As reported by D CEO Healthcare in December 2019, the City of Fort Worth took immediate action after identifying nearly $9 million in unnecessary spend over a 2-year period in its employee health claims. Even without a global health pandemic, fraud and abuse can be found in every employer’s healthcare claims.

The only proven means for self-funded employers to ensure their plan costs are not padded with fraud, waste and abuse is to increase oversight. The top three areas most susceptible to abuse during this pandemic are: out-of-network expenses, phantom billing and lab testing.

Out-of-network expenses: With the intention of reducing travel time and unnecessary exposure to the public, most payers are waiving their out-of-network penalties. Expanded out-of-network payment coverage will allow members to receive treatment from the closest doctors and hospitals. However, with unregulated payment rates, there is a high potential for waste among out-of-network claims. Expect bad actors to take advantage.

Phantom billing: Billing for services not rendered, called “phantom billing,” has been a well-recognized problem in claim payments long before coronavirus became a household name. This fraudulent practice is seen when dishonest providers submit bills for services that were not provided, often by adding extra services to an existing patient visit. The increase in claim volume as a result of COVID-19 will make it even harder to weed out illegitimate services. Employers will pay the price if such billing goes unchecked.

Lab testing:  Testing for COVID-19 is in high demand resulting in a foreseeable spike in laboratory billing. It is also true that laboratory testing is a highly abused part of the US healthcare system. When it comes to lab testing, medically unnecessary claims have been an expensive problem for all payers, insurance companies and self-funded employers. Expect fraudulent laboratory billing to become even more attractive to those looking to dupe the system.

The best defense against becoming a victim of healthcare fraud is to be vigilant about knowing how plan dollars are being spent. Analytic experts in mining healthcare population data, who understand the ins and outs of claims adjudication can become a useful resource in mitigating extra exposure to fraudulent billing during this health crisis.

Unnecessary medical spend in the form of fraud and abuse impacts all employees via reduced coverage and higher premiums. Attacking wasteful spend in your employee health plan offers a huge cost savings opportunity for a relatively low investment.

Asha George is the co-founder of SmartLight Analytics, a healthcare data analytics company that helps employers mitigate the rising cost of their employee health plan costs. Prior to founding the company, she spent 17 years leading statistical analysis of healthcare data for multiple large payors and Healthcare IT companies.

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