Healthcare Fraud and Abuse

INDUSTRY STATUS

Annual U.S. healthcare expenditures are $2.1 Trillion, or 16.1% of the GDP. Healthcare provider billing fraud and abuse accounts for 5 to 10 % of this cost.

Because of successful Federal prosecution, fraudulent healthcare providers have shifted their focus from Medicare and Medicaid to private insurers. In an AMA sponsored survey, 39% of physicians admitted deliberately misrepresenting services in their billing to insurers.

Previous investigation reveals recoverable healthcare fraud and abuse losses of up to 19% of claims dollars analyzed.

Since the retreat of managed care in the late 1990’s, healthcare insurers have seen a rapid proliferation of provider reorganizational ventures which makes fee negotiation more challenging.

The epidemic of new medical procedures, incorporating an avalanche of new technology, is of doubtful cost effectiveness.

All this at a time when baby boomers’ medical demands are beginning to escalate.

Healthcare billing is complex, highly technical, and requires substantial staffing to process and review it. Insurer emphasis on keeping administrative costs low inhibits maintenance of an adequate staff of dedicated in-house auditors.

Insurers are pressured to resolve claims payment issues quickly; however, electronic payment can result in million dollar losses in seconds, before staff has a chance to examine questionable submissions.