Strate­gic De­tec­tion and Tech­nol­ogy to Com­bat Claims Fraud

FICCI Business Digest - - Features -

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.

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