Medical billing fraud unveiled with new, advanced technologies

The National Health Care Anti-Fraud Association estimated that healthcare fraud costs the nation $68 billion annually.

Healthcare in America faces many challenges. One area negatively affecting health insurers, providers and consumers alike is medical fraud. In January 2020, the U.S. Justice Department reported that over $2.6 billion had been recoveredfrom lawsuits relating to medical fraud. This figure has been steadily increasing and has exceeded $2 billion annually over the past decade. The National Health Care Anti-Fraud Association estimated that healthcare fraud costs the nation $68 billion annually, however, some estimates place this figure upwards of $230 billion. Fortunately, there are new technologies making major strides in the fight against various medical fraud schemes.

Types of Medical Billing Fraud Schemes

Medical fraud schemes committed by providers include up-coding, billing for services that were not rendered or billing for more expensive services or procedures than what was actually provided, misrepresenting non-covered treatments as medically necessary, performing medically unnecessary procedures, or falsifying a patient’s diagnosis and medical record to indicate that a procedure was necessary.

Another common medical billing fraud is the separating of various steps in a single procedure and presenting them as individual procedures. Additionally, some unethical providers bill patients more than the required co-pay and/or for services paid-in-full by their managed care contract, or they waive a patient’s co-pay or deductible and over-bill the insurance carrier or benefit plans.

In 2020, numerous lawsuits and criminal cases involving these types of fraud schemes were committed by hospitals, urgent care providers, managed care companies and physicians. One Florida physician pled guilty to submitting $20 million in fraudulent claims, while a psychiatrist in Massachusetts was indicted for billing Medicare and private insurance companies for over $10 million in treatments never provided. A Texas physician agreed to pay $530,000 to settle billing fraud allegations, and two managers of a now closed North Carolina physician group were charged with billing federal payers for medically unnecessary diagnostic tests.

While medical fraud specialists are continuously fighting fraud by evaluating evolving crime patterns and developing new procedures to thwart fraud, the healthcare industry and payers are now also relying on prominent technology firms. Acting on the frontline of medical fraud, these firms are delivering advanced solutions that monitor medical bills in the background and can identify a fraud within milliseconds.

Advanced Fuzzy Logic, Machine Learning and Analytics

At the core of these solutions are leading-edge technologies that drive their capabilities and functionality. Using advanced fuzzy logic-based rule sets and dynamic intelligent profiling, a sophisticated, fully-automated, real-time solution can automatically extract claims and reveal potential fraud patterns and improper medical coding. By considering the overall context of a claim as opposed to just a single line item on a bill or bill, the solution reveals additional incorrect billed charges even after they have been checked by a medical bill review company. These solutions drill down to determine the actual risk for each billed line of a claim based on the specific account information, previous claims, patient profile, and provider history. Leveraging this robust functionality, built-in agility, and configurability, insurers/payers can react quickly to new crime patterns and deny payouts before they are made.

Whether detecting common schemes like up-coding, billing for services not provided, duplicate charges, unbundling of a procedure’s steps and falsely presenting these steps as multiple procedures, or other medical fraud schemes, the optimum solutions will feature an open architecture that enables a real-time link to external databases and a fully-automated link to multiple data sources. Additionally, the best solutions deliver transparency in reporting that displays which codes, rules, and patterns are at play. They are backed by experienced medical fraud billing experts who are continuously updating the system to reflect current medical fraud patterns, trends, and the most prevalent and active codes for fraud.

Uncovering Fraud Schemes Involving Millions of Dollars

It is not unusual for today’s advanced medical fraud and detection solutions to detect fraud schemes involving millions of dollars. One example presented by a medical fraud solution provider involved the software’s uncovering $5.7 million and additional medical billing fraud on behalf of an insurance carrier after the bills were reviewed by the carrier’s medical billing service. A second application of the software captured another $13 million and additional medical billing fraud. Clearly, the stakes are high, but today’s medical fraud solutions with their fuzzy logic-based rule sets, intelligent profiling and predictive analytics are making major advancements in the fight against medical fraud.

About the Author

Justin Newell is Chief Operating Officer, INFORM Software