Frustration of Fraudulent Claims

It’s a well-documented reality across nearly all lines of insurance coverage that fraudulent claims account for 5–10% of total claims processed. And despite the industry’s best efforts to combat fraudulent activity, it’s largely accepted as a “cost of doing business” in the world of insurance.

What has frustrated several of my self-funded clients however, is that medical claims fraud perpetrated by doctors is often allowed to continue for weeks, months or even years on end – all while the client continues to foot the medical claims expense associated with the providers.

The reasons are multifold. Firstly, the carriers want to see a documented pattern of fraud before they are willing to step in and flag providers. Many doctors perform a wide variety of services, so even things that look and smell fishy get a pass for a long time due to the favorable language of the provider contacts.

Secondly, and perhaps more maddening, is that once a provider is deemed fraudulent, law enforcement – typically at the federal government level – is called into action and they won’t allow claims to be stopped so as to not tip their hand about an ongoing investigation. All the while clients continue to accrue tens (if not hundreds) of thousands of additional claims costs that they know to be fraudulent.

Despite all its quirky billing and procedure codes that add huge administrative burden, in my opinion, the carrier payment system based upon thousands of CPT codes and “modifiers” continues to be too provider-friendly. The complexity of the system has enabled unfair gamesmanship and misbehavior to the detriment of the payers (carriers and clients alike). We need a simpler and more responsive payment system. And with latest healthcare trend figures showing a pickup in medical inflation threatening to push medical spend to 20% of U.S. Gross Domestic Product (GDP), the urgency for action is now.

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