Overview: Medical Fraud, Waste, and Abuse

By Andy Tolsma June 6, 2014

“Andy_TolsmaProperty/casualty insurers have long faced an uphill battle against medical fraud. Acquiring usable data has posed significant challenges, and the difficulty of sifting through the massive volume of information has made it easy for unscrupulous healthcare providers to hide suspicious activity. Such challenges also have complicated the efforts of special investigative units (SIUs) to identify the anomalies usually indicative of fraud.

Fraud, waste, and abuse (FWA) in healthcare can be sources of considerable expense for the property/casualty insurance industry. From inadvertent errors in billing to intentional efforts to inflate fees paid by carriers, a wide range of behaviors costs the property/casualty industry tens of billions of dollars a year.

Let’s take a look at the differences in FWA:

Fraud: intentionally deceptive practices that produce bills for services that may not have been rendered— or that result from such activity as false claims and identity theft

Waste: unnecessary expenses for property/casualty insurers based on errors or bills for unnecessary procedures and activities

Abuse: inappropriate provider behavior — such as upcoding and bill-splitting — that increases the fees paid by property/casualty insurers where lower-cost solutions may have been available

What Makes the Property/Casualty Insurance Industry Different?

Health insurance companies tend to have existing relationships and negotiated rates with healthcare providers, which can help reduce the costs associated with treatment. Property/casualty insurers, on the other hand, may not have such relationships in place, especially since the claimant (rather than the carrier) has the relationship with the provider. As a result, even in the best of cases, property/casualty insurers may effectively pay “retail” for provider services, which can cause expenses to accumulate quickly and make property/casualty insurers an easier target for FWA.

How Can ISO MedSentry® Help?

ISO MedSentry® offers retrospective, prospective, and real-time analytics, empowering insurers to use their medical billing history to remedy past anomalies and take action to prevent future improper activity. Further, ISO MedSentry stays up to date with industrywide trends and data — for example, with new suspicious activity conditions — enhancing the protection the tool provides its customers.

Learn more about medical fraud now >>