Strategic Detection and Technology to Combat Claims Fraud
With the increasing menace of fraudulent claims, health insurance companies can no longer solely rely on long-standing practices of hypothesis-driven field investigative techniques to combat health-care fraud. The volumes of claims being submitted is growing exponentially, profits are dwindling and labour cost is gradually rising, making it absolutely imperative to adopt technology-enabled, intelligent and data-driven solutions to meet this growing challenge. Countries across the world are facing the brunt of claims Fraud, Waste and Abuse (FWA). A case in point is the United States, the world's largest spender on health care (18% of their GDP, estimated to reach $4.8 trillion by 2021). The US spends an astounding $750 billion on health care FWA annually*. Health insurance companies in India too are plagued with the escalating problem of claims fraud, and the factors that make fighting this fraud a daunting task include, low technology adoption, lack of consumer/patient awareness, misuse of insurance benefits, and missing health care data/data in inconsistent formats. For consumers, the consequences include higher premiums, out-ofpocket expenses and reduced benefits or coverage. For employers, the cost of providing health insurance coverage to employees' increases, which in turn impacts the business's bottom-line. As per estimates, India already loses approximately INR 600-800 crores to false/fraudulent health insurance claims, annually. Also, as per the 2017 annual report from IRDA, the Insurance Regulatory & Development Authority, the incurred claims ratio is very high at 101.05% (2016-2017). In 2018, with the roll out of the Government of India's Ayushman Bharat scheme, Rs 5 lakh each has been allocated to 10 crore vulnerable families, with approximately 50 crore beneficiaries. Consequently, the number of health care claims is expected to skyrocket, with a resulting steep rise in claims fraud. Health insurers need to take a strategic approach to deploying a proactive and end-to-end claims fraud intervention, with the following phased methodology, enabled by access to relevant health care data, with consistent data formats: 1. Flagging aberrant claims through deterministic rules (claim raised is valid or not) or probabilistic rules (probability of fraudulent intent) and advanced statistical techniques 2. Conducting secondary and clinical research, industry leads and vendor intelligence 3. Monitoring of data patterns for
continuous refinement of rules 4. Tracking and performance reporting of savings generated from fraud prevention. Therefore, fraud prevention is a multi-layered process, with algorithms built into the claims processing workflow. This dramatically increases the process productivity and accuracy – by reducing the number of false positives. The result is that genuine high amount claims, which would have otherwise been investigated and led to customer dissatisfaction, should now be auto-adjudicated. Optum, with its decade long presence in India, and having extensively studied health care claims and processes over a year, has acquired a keen understanding of the claims fraud challenges and opportunities in the country. The Optum fraud prevention and detection solution has been customized for the Indian market to help both government and private insurance providers power their existing anti-fraud investigation programs and unlock the true value of their inpatient and outpatient claims operations. This solution has the ability to detect potential fraud before policy issuance, detect fraudulent claims once filed, prevent payment errors, maximize claim accuracy, improve cash flows and augment savings opportunities for insurers. As fraud detection techniques evolve, fraudulent elements continue to come up with new and innovative fraud schemes and methodologies. Health insurance companies can protect themselves from this growing incidence of fraud by adopting the latest and continuously evolving fraud detection techniques and technology. This, along with consumer education and constant monitoring can help insurers combat claims fraud. The article is by Prashanth Sarpamale, Vice President - Analytics, Optum Global Solutions.