Industry Voice

Managing Frauds in Health Insurance

There are still no fool-proof mechanisms to deal with the burning issue of fraudulent claims

Dr Biswendu Bardhan

The article is a small representation of insurance frauds taking place on a regular basis. These sorts of frauds can happen at any time and place, so it is important to be prepared and awareness is the most important aspect in this regard. The insurers and all the stakeholders need to come to a common platform to create more awareness and use some scientific tools for better management of health insurance frauds.

Managing frauds are one of most challenging and difficult task. The primary problem with health insurance fraud is that there are many different forms of fraud perpetrated today and some of these are very cleverly carried out and extremely difficult to spot. There are some suggested ways for better monitoring of the fraud claims, but there are still no fool-proof mechanisms to deal with the burning issue.

Insurer’s Role

The first one to get affected by insurance frauds is the insurers, so they need to play an active role in preventing frauds. They need to form a team to fight against it. Some suggested methodologies are:

• Formulate a programme/internal audit for fighting fraud and sometimes include special investigation units to identify fraud patterns. Investigate frequent reimbursement claim from network hospitals, delayed request for cashless, insured admitted for procedures like CABG, angioplasty, kidney failure etc within a year after insurance coverage etc.
• Report fraud to local and state authorities. Fraudulent claims when discovered and proved should be liable to strict legal action including imprisonment and insurers need to join hands with the regulatory authorities to penalise the fraudsters.
• Fully investigate fraudulent claims to stop further loss. Prosecute perpetrators, recover any loss upon discovery.
• Robust fraud detection tools to deal with the full spectrum of health benefit products and wide array of participants in the healthcare market—doctors, hospitals, pharmacies, pharmacists, dentists, equipment suppliers and more.
• Develop the concept of 'partner providers' rather than network hospitals and sharing the insurance risk with them.
• Take patient signature on the bills and preauthorisation request note.
• Use document management system (DMS), which will help in easy retrieval of patient’s previous claim and clinical history, if any, at the time of settlement of subsequent claim.
• Share the list of fraudulent providers with all insurance companies, medical councils, doctors association and the insured.
• Promotion of a fraud hotline.
• Rewards, if any, for someone who reports about fraudulent claims.
• Discourage treatment in non-network hospitals by introducing co-payment.
• Encourage network hospital usage by providing additional benefits for treatment taken from partner providers.
• Cost-effective special insurance products with all planned hospitalisation to be taken only on network hospitals.
• Recognising more surgeries as day care surgeries to prevent unnecessary additional billing for room, doctor, nursing and other miscellaneous charges.
• Prepare educational posters and sessions explaining fraud and its penalties.
• Psychological profiling and use of lie-detectors (insurance companies in England uses this tool).
• Increased use of technology like using anti-fraud software to throw triggers for fraudulent claims. The software uses a unique combination of data mining capabilities, visualisation techniques and reporting tools, which can identify a potential fraud before a claim is paid, or retrospectively analyse providers' statistics and past behaviors to flag suspicious patterns.

Insured's Role

The insured person has a major role to play in preventing fraudulent practices. Some of them are as follows:

• The member should never give his/her health insurance details on telephone or to door-to-door solicitors or in a free medical camp.
• The insured needs to understand in detail any free treatment that features no out-of-pocket expenses or no deductibles.
• The member should read the benefit and billing statements to ensure that he has actually received treatments that were paid for, and report any apparent discrepancies to the concerned authority.
• If they are aware of any fraudulent practices by doctors, patients, nurses, pharmacist, providers or any of the stake holders, they need to inform the fraud hotline immediately.
• The member should deal with a reputable agent.
• The member should disclose all illnesses at the time of taking the policy. This may amount to a bit extra premium, but will bring more peace at the time of claim.

Provider’s Role

Fraud is a serious crime that legitimately concerns all stake holders, insurers, premium-payers, Government, taxpayers, patients and healthcare providers. The doctors, nurses, pharmacists, administrators and the providers need to play an active role in preventing a fraud.

• The providers need to avoid fraudulent practice and intimate the TPA/insurance companies if any beneficiaries approach them for fabricating a false claim. It's a social and ethical commitment of the hospitals.
• Use of electronic medical records and integrating the same with the TPA software or insurance company's software which will prevent manipulating/tampering with the patients' medical history.

Fraud Claims Trigger

Insurance frauds usually have common profile and pattern. There are certain parameters which can be used as a trigger to detect or analyse fraudulent claims or practices. They are as follows:

• Treatment costs are usually on the higher side as compared to the etiology.
• Costlier investigations are more.
• Diagnosis of the ailment and the investigations done are not much related to each other.
• Post operative histopathology reports are not available (surgical cases)
• Documentations are usually in order.
• More member re-imbursement claims from the partner providers of the TPA and insurance companies.
• In most fraudulent claims, the treating doctor, agents, ailments are the same.
• Patient residence and the hospital, chemist address, are not geographically same.
• Fraud claimers are usually short-term policy holders with lower sum insured.

The writer is Manager Operations Back Office-Insurance Patni Computer Systems Noida
biswendu@gmail.com