How DoJ Can Leverage Data Analytics to Neuter Medicare Fraud

The National Health Care Anti-Fraud Association (NHCAA) estimates that America taxpayers lose tens of millions of dollars in Healthcare Fraud each year.  According to the publicly available estimates, healthcare fraud accounts for a whopping 3% of total health care expenditures. However, the Federal Agencies estimate the loss to be as high as 10% of America’s annual health outlay, which could mean more than $300 billion.

In 2018 alone, the U.S. expended $3.6 trillion of taxpayers on health care. However, concerns have been raised regarding how the staggering expenditure of $2 billion cannot be accounted for. This explains the latest actions by the federal authorities, arresting and charging over 600 defendants in 58 federal districts. The charges range from false billing to prescription and distribution of opioids and a conspiracy to support narco-terrorism in what seems to be the biggest Medicare heist in American history.

Authorities at the Department of Health and Human Services Office of Inspector General mopped the Chicago-area in a complex enforcement operation that was led and coordinated by the DOJ Criminal Division Fraud Section’s Health Care Fraud Unit, working with the Medicare Fraud Strike Force.  The Medicare Fraud Strike Force operates in nine locations nationwide. Its operations are part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force has charged more than 3,700 defendants who collectively have falsely billed the Medicare program for more than $14 billion.

In Chicago area, the enforcement saw two area physicians and three health clinic co-owners among other seven defendants charged with engaging in health care fraud schemes to defraud the Medicare program and/or private health insurers of millions of dollars. The Justice Department in the Northern District of Illinois vowed to go after the fraudsters and prosecute any medical professional who knowingly violates the rules and betrays the trust of the American people.

The Opioid epidemic in the U.S. has reached a crisis level, forcing the authorities to go after the rogue medical professionals who perpetuate the crime. Two of the Illinois cases involved licensed physicians who allegedly falsely certified patients for home-health services reimbursed by Medicare.

Elsewhere, a licensed psychiatrist allegedly earned more than $5.5 million by falsely billing Medicaid and Medicare for psychotherapy services that were never performed. Also, a physician is accused of allegedly billing Medicare for at least $2.8 million of unnecessary and “up-coded” home-physician visits from 2010 to 2018. Interestingly, the crime also ropes in a lesser-known patient marketer in Illinois. She was accused of conscripting home-health patients on behalf of at least four agencies in the Chicago area and promoting the services of her home-health agency clients at churches and senior buildings and received more than $180,000 in bribes and kickbacks from the agencies from 2010 to 2016.

The magnitude of this fraud shows that the issues of corruption and fraudulent claims remain some of the biggest challenges facing the healthcare sector. Healthcare fraud manifests itself in actions taken by a patient, others by doctors, physicians, and other medical specialists who often commit fraud or partake in corruption to draw more profit.

In particular, a study by PKF Littlejohn LLP and the University of Portsmouth characterized these frauds as i) Fraudulent provision of sickness certificates, prescription fraud, and evasion of medical charges, ii) Prescription fraud by pharmacists, fraud and error concerning payments for medical tests, facility services, and consultations, and iii) Fraud and error related to long term care, home and community-based services, foster and child care, insurance fraud. These involve actions taken by the patients, medical professionals, and insurance agencies respectively.

In their report, the problem of healthcare loss analysis revealed a global average loss rate of 6.19% as a proportion of global health care expenditure.  Under these conditions, any health care organization and any area of expenditure could see losses of at least 3%, probably more than 5%, and, in more extreme cases, well over 10%.

Medicare and Medicaid can often be a factor in all of these incidents, simply because insurance is where the money is. Insurance fraud is often looked at as the simple act of misrepresenting facts or being deliberately dishonest to profiteer. While the fortunate fact is that only a small percentage of individuals and businesses engage in fraudulent and corrupt behaviour in the American health sector, that small number of people still end up costing tens of billions of dollars in the United States alone.

Globally, health care losses due to fraud and error have risen steadily since 2008, and the United States has always been the most affected. In 2011 alone, the taxpayers lost up to USD 487 billion in 2011 in healthcare fraud and other loses.

One of the main issues with doctors ordering unnecessary treatments is that it takes valuable health resources away from those who need it. A survey of 2,106 physicians in the U.S. shockingly revealed that doctors believed that 20.6% of all medical care was unnecessary; including 22% of prescriptions, 24.9% of tests, and 11.1% of procedures. While fear of malpractice and patient demands was said to drive most of their beliefs about overtreatment, more than 70% of doctors conceded that physicians would perform unnecessary procedures when they profit from them. This disappointing finding can be considered to contribute, in part, to the overcrowding of health systems, and their hospitals and facilities in the country.

Medicare fraud has long been a driver of accelerated insurance inflation. Health insurance fraud has cost taxpayers hundreds of millions in recent years, and yet these losses need to come from somewhere.

In the case of government-provided social health coverage, fraud and corruption losses generally come out of hospital and health sector budgets. Patients of public services suffer, as under-resourcing and overburdening further reduce the quality and standard of the care they seek.

U.S. DoJ has warned medical professionals against taking advantage of people suffering from drug addiction to enrich themselves.  The DoJ now looks to hire more prosecutors and deploy data analytics in the criminal justice system to neutralize the healthcare fraudsters.

However, experts have argued that if an effective technology for fraud detection—or an opportunistic code variability anomaly—exists, it has to have the ability to handle every single claim in a precise manner, with the highest possible probability of determining the fraudulent or opportunistic billing.

That means that the detection technology has to handle all types of data. Even more important than handling all types of data, detecting fraud processes requires discovering all possible fraud patterns; currently, statistical methodologies are exclusively concentrated on finding the best patterns that translate into only one pattern. Big data, in comparison to small data, has many patterns between dependent and independent variables, and all are more or less statistically significant by different prediction units.

The detection technology also needs elastic computing and networking resources to process every single claim containing a huge amount of data. Presently, having an on-premises, bare-metal networking environment to analyze big data is costly and inefficient.

But more importantly, the more patterns that are captured by an analytical technology, the more accurate will be the predictions. In other words, the more data that analytical technology digests, the better the result that the predictions will be accurate. This consideration reflects the major challenge for all statistical methods that are available on the market today.

The objective is to accurately detect significant amounts of overbilling in real-time. In the long run, getting this problem under control can save patients significant amounts in their healthcare payments. This may well be the only viable method that authorities can use to eliminate fraudulent dealings or opportunistic overbilling practices exists in the nation.

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