The U.S. health care system loses approximately $750 billion a year—nearly 30 cents of every medical dollar—to fraud, waste and abuse, according to a 2012 report by the Institute of Medicine (IOM).
The report identified that $75 billion—nearly 10 percent—can be attributed to fraud. Today’s estimated losses due to health care fraud range from 3 to 10 percent.
In response, payers, providers, government agencies and health care stakeholders have ramped up efforts in a united fight against fraud, waste and abuse, which can divert significant resources away from programs like Medicare and Medicaid.
And we’re starting to see promising results.
In July, the Centers for Medicare & Medicaid Services (CMS) reported it saved $42 billion by preventing potentially fraudulent and improper Medicare and Medicaid payments between October 1, 2012 and September 30, 2014. Rather than using a “pay-and-chase” method of recovering payments after they have been made, CMS is using preventive methods, including ensuring health care providers enrolled in programs are properly screened; using predictive analytics to prevent fraud, waste, and abuse; and coordinating anti-fraud efforts with federal and external partners.
Other public-private partnerships are also making great progress.
Four years ago, CMS launched the Healthcare Fraud Prevention Partnership (HFPP), a ground-breaking public-private effort to stem the impact of health care fraud and abuse. According to CMS, HFPP, which uses data shared by public and private entities, estimates it has saved $259 million since inception. The partnership has also embarked on an ambitious One Billion Dollar Campaign with a goal of reaching $1 billion saved by the end of the year.
WellCare, which is a member of the HFPP, is doing its part and is dedicated to eliminating fraud, waste and abuse in the system. Take for example:
- Proactively Predicting Fraud, Waste and Abuse – At WellCare, we open approximately 5,000 special investigation unit (SIU)/anti-fraud cases that examine improper billing such as “upcoding,” which occurs when a provider submits codes for more serious (and more expensive) diagnoses or procedures than those that were actually diagnosed or performed; billing for services not rendered; or “unbundling” of services which illegally increases a provider’s profits by billing bundled procedures—which have a lower reimbursement rate—separately. Our goal is for 20 percent of these cases to be proactive by using advanced data analytics to mine our data for outliers and trends. Today, 23 percent of our medical cases are proactive.
- Tracking Fraud Leads – This year, WellCare has opened 173 fraud leads, meaning we have opened a case, investigated the situation and, when necessary, worked with our government partners to resolve an issue.
- Recovering Overpayments – Our goal this year is to recover $4 million in overpayments, or payments that should never have been made, and $6 million in cost avoidance, meaning unnecessary or fraudulent charges. We have already reached more than $4.4 million in overpayment recoveries and $10 million in cost avoidance savings.
And we’re seeing great results at the local level.
In April, Florida Attorney General Pam Bondi’s Medicaid Fraud Control Unit, with assistance from WellCare, arrested two individuals for participating in a scheme to defraud the Medicaid program using teenagers’ personal identity information. The alleged suspects fraudulently billed Medicaid more than $500,000 for services not rendered.
This year, federal agents charged 25 Miami-area defendants in three separate cases for their alleged participation in various schemes to defraud Medicare of approximately $26 million in false claims through the Medicare Part D program. WellCare assisted in this investigation, which led to nearly $180,000 in recoveries.
In collaboration with our provider and government partners, we’re helping to send a clear message to those looking to defraud the health care system that industry and government are cooperating like never before in the fight against fraud, waste and abuse.
Christopher Horan is vice president, corporate compliance investigations for WellCare; Lori Peters is senior director, special investigations unit for WellCare.