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Leveraging Analytics to Improve the Outlook on Fraud, Waste and Abuse

Proactive, effective response to fraud, waste and abuse is fueled by actionable data that exposes problematic claims.

A war is being waged on the national healthcare stage against fraud, waste and abuse. Recent estimates by the Centers for Medicare & Medicaid Services (CMS) point to $60 billion in related losses last year alone. These findings, which equate to more than 10% of Medicare's total budget, are further fueling a firestorm of audit activity that has been on the rise in recent years.

Payers providing services to Medicare patients face an unprecedented level of scrutiny and vulnerability today. While Medicare payer resources were previously prioritized around the design and implementation of managed care networks, those initiatives have matured and now require less focus. In turn, CMS has shifted resource allocation to activities that expose its liabilities with improper payments. The once fragmented national effort around fraud, waste and abuse is now highly coordinated, increasing exposure for both intentional and unintentional compliance issues.Analytics

As such, it is critical that payers optimize claims management processes to reduce the potential for problematic claims. That is easier said than done, since the complexities of fraud, waste and abuse run deep, and the opportunities for error are many. The good news is, there are strategies and tools payers can leverage to avoid such scenarios.

Forward-looking payers recognize that it will take a combination of technology and insight to streamline claims management and lay the groundwork for proactive identification of billing issues. Specifically, infrastructures that leverage vast data sets and provide advanced analytics capabilities can empower claims professionals with the awareness needed to make smarter decisions and reduce the prevalence of fraud, waste and abuse.

The Payer-Provider Challenge
The terms "fraud, waste and abuse" are defined by different layers of severity and consequence. As the most serious of the three, fraud is characterized by intentional acts of deception or misrepresentation. Abuse is deviation from accepted healthcare practices that results in higher costs, and waste is overutilization of services with unnecessary costs.

While instances of fraud make newspaper headlines, true fraud actually represents a small part of the problem. Wasteful and abusive practices make up the lion's share, and a fairly wide margin exists between activities that are classified as waste and abuse and those that would fit into the fraud category. Yet payers often spend the majority of available resources conducting fraud investigations to eliminate criminal activity.
SEE ALSO: Purchased Services Spending Data and Benchmarking

In pursuing this strategy, payers often leave a lot of money on the table by ignoring low-dollar but more frequent waste and abuse. The challenge often comes down to a manpower issue. Manual investigations are extremely human-resource intensive, and most payers struggle to allocate resources to analyze even the high-dollar fruit. The greater share of low-dollar claims that happen with greater frequency must often be placed on the back burner. Unfortunately, lack of oversight in this area can result in a health plan losing millions in overbilling.

Without analytics capabilities, payers face notable barriers to addressing improper payments. Healthcare is increasingly complex, involving payer oversight of not only the providers within their networks, but also the expanding coding landscape. Going forward, payers need access to the infrastructures and competencies that provide the best insights into both static and dynamic data. 

A Better Strategy for Addressing Fraud, Waste and Abuse
Proactive, effective response to fraud, waste and abuse is fueled by actionable data that exposes problematic claims. When technology-enabled workflows enable leadership insight, payers can identify trends, patterns and behaviors that require action.

Fortunately, much of the information needed already exists; it simply needs to be aggregated from disparate information systems and aligned with the right functionality. Advanced analytics infrastructures that provide scalable data storage and longitudinal retrieval of historical information are the missing elements for most payers.

In tandem with the right analytics infrastructure, payers also need access to data visualization tools that speed analysis of key trends, identify deficiencies and drive better decision-making. This way, analytics capabilities are leveraged for assimilating data, and visualization tools close the gap between knowledge and actionable insight.

While technology is an enabler of more strategic decision-making, a comprehensive approach to minimizing fraud, waste and abuse requires judgment. Increased use of automation and expanded codification not only heightens the complexities of claims management, but also requires more in-depth, critical thinking skills and analysis. With these factors in mind, payers can elevate fraud, waste and abuse strategies through:

Benchmarking. Compare payer performance and provider network behavior to other similarly positioned health plans. This type of analysis can provide valuable insights into performance gaps and lay the groundwork for process improvement. Data comparisons around coding behavior and cost provide good starting points.

Health information management (HIM) assets. Payers improve the overall outlook on fraud by simply making sure they have qualified, trained coders who not only understand the nuances of coding but also recognize the challenges and opportunities of coding in provider settings. Payers can establish a more holistic approach to improper payments by recruiting and training staff who have the full perspective.

Medicare audits are more of a certainty than a question today, requiring payers to invest in the right tools for proactive response and strategic process improvement. As the industry continues to embrace predictive analytics and automation, the outlook on fraud, waste and abuse will continue to improve.

Kurt Anderson is senior vice president and general manager of Payment Integrity Solutions at Change Healthcare.

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