3 Ways MCOs Can Prevent Fraud, Waste and Abuse

Sep 8, 2020

A robust fraud, waste and abuse program at MCOs and MAOs includes three key areas: Technology, Clinical Audit and Investigative capability.

As your health plan grows its fraud, waste and abuse initiatives, there are three areas a strong prevention plan should address. Rather than relying on piecemeal components to combat Medicare and Medicaid fraud, as many health plans do, a comprehensive approach is best practice.

To truly be successful with a fraud, waste and abuse program, you must have three key pieces of the puzzle in place: Technology, Clinical Audits and Investigative capabilities.

With all three of these tactics in place, health plans are more likely to increase their recoveries as a percentage of total claim spend. Pareo®, a total payment integrity solution, supports each of these fraud, waste and abuse capabilities.

Risks of Overlooking Fraud, Waste and Abuse

Fraud, waste and abuse are three classifications of improper payments, which is a payment made or received in error in a government healthcare assistance program (like Medicare and Medicaid). Improper payments are more broadly combated by a comprehensive payment integrity and FWA program, as simply addressing fraud, waste or abuse alone will still miss some areas of fraudulent or wasteful activity.

According to this article, fraud, waste and abuse investigators typically focus on “two general areas: corruption and asset misappropriation.” They do this by analyzing the large amounts of big data generated by healthcare transactions. But are MCOs and MAOs doing enough in this area?

A recent report found that Medicaid insurer efforts to root out fraud, waste and abuse were disappointing. The major oversights found in their report include:

  • Failure to report offending providers to the state (allowing them to defraud other Medicaid insurers).
  • Failure to recover millions of dollars in overpayments, which could lead to increases in Medicaid rates that are based on fraudulent numbers.

Meridith Seife, a co-author of the report, said, “We are concerned anytime we see evidence that managed-care organizations are not finding fraud and abuse and sharing it with states in a rigorous way.”

And a 2020 GAO watchdog report found that at least 63% of MAOs’ encounter data is missing national provider identifiers, data essential to tracking provider ordering, prescribing and billing habits. As the report states, “Both CMS and OIG rely on NPIs for ordering providers to conduct oversight and pursue fraud investigations.”

As stewards of taxpayer dollars, MCOs and MAOs have a duty to thoroughly combat fraud, waste and abuse. To more effectively manage FWA in your organization, you need to be sure your solution has the following three key components:

1. Technology

According to CMS, Medicare improper payment rates have been steadily decreasing while Medicaid’s have been rising. The robust fraud initiatives in the Medicare program have been given the credit for the progress there, and their strategy was recently updated with the aim of further improving the effectiveness through 5 pillars:

1. Stopping bad actors
2. Preventing fraud
3. Mitigating emerging programmatic risks
4. Reducing provider burden
5. Leveraging new technology

Steps to ensure proper payments have been taken in the Medicaid program as well. In 2018, under the third pillar of its reform initiative – integrity and accountability – CMS announced audits of state programs to review Medicaid enrollee eligibility as well as if programs are correctly reporting medical loss ratios. It also promised to leverage increased data sharing and analytics and step up provider education of proper billing practices. In 2019, it released a new rule intended to prevent known fraudulent providers from billing government insurer programs.

The continued focus of CMS on eliminating Medicaid and Medicare fraud, waste and abuse means that health plans need to properly utilize technology to gain transparency into their process. Health plans and managed care organizations have to connect large volumes of data in order to comply with fraud, waste and abuse regulations. Advanced technology – especially a solution that leverages applications of A.I. like deep learning – can integrate and process large amounts of data to identify anomalies and patterns more effectively than people can do alone.

Technology-enabled fraud, waste and abuse solutions can quickly turn things around for MCOs – especially if they are plugged into a larger, more integrative payment integrity platform. Documentation, risk identification, lead prioritization, referrals, audit preparation and reporting are all capabilities that a robust fraud, waste and abuse technology solution can provide to MCOs and health plans.

2. Clinical Audits

The second element a preventive fraud, waste and abuse program needs to have is the ability to perform clinical audits. This gives MCOs and other payers and health plans the ability to review claims that have been flagged as potential fraud, waste or abuse cases. Clinical audits determine if diagnoses, prescriptions, encounters, procedures and more are worthy of further investigation or not. An internal audit program is beneficial to a health plan, as it often can be used to prevent improper payments from occurring in the first place.

While retrospective provider audits can unnecessarily stress the payer-provider relationship, that doesn’t have to be the case. By connecting real-time data between providers and payers, streamlining the medical records request process, seamlessly coordinating with vendors to prevent overlap, and transitioning more efforts prepay – all supported by Pareo – you can work to mitigate provider abrasion while satisfying compliance requirements.

Notably, the ability to analyze claims data and use predictive modeling allows a health payer, plan or MCO to effectively safeguard against fraud, waste and abuse. Tech-enabled clinical audits, like those performed within Pareo by a services vendor, can either complement or supplement the internal efforts of a health payer as well as those performed by Recovery Audit Contractors RAC for outlier billers. However, RAC audits have reduced significantly in recent years as payers move away from fee-for-service arrangements.

3. Investigate Capability

Increasingly, health plans, payers and MCOs should arm their FWA programs with a strong investigative arm in order to protect against non-compliance. If fraud is suspected, investigative capabilities allow direct reporting of fraud schemes to the appropriate authorities, providing evidence that supports (and protects) health payers and taxpayer funds. Should a claim be taken to court, both the evidence and a documented FWA process within a health insurance organization prove invaluable.

The amount of big data collected by healthcare organizations presents incredible opportunities to those invested in fraud, waste and abuse prevention. Governmental agencies are now using big data to investigate and prosecute FWA offenders. Mike Cohen, an operations officer with the OIG’s Office of Investigations, explains that “data…creates a pyramid effect, and we can go to the top of that pyramid.” And as fraud schemes grow increasingly sophisticated, the evidence data must evolve along with it.

Pareo® supports investigative activities across a healthcare organization’s data ecosystem, and ClarisHealth staffs a team of expert-level investigators, a benefit which also supports cyber threat intelligence efforts. As with clinical auditing, the investigative component of a fraud, waste and abuse program can be partially or completely outsourced to ClarisHealth.

Request a Fraud, Waste and Abuse Presentation

Does your organization have what it takes to effectively prevent Medicaid and Medicare fraud, waste and abuse? Find out by requesting an FWA presentation from ClarisHealth, where a member of our team will discuss your specific needs. Learn more about the ClarisHealth 360-degree solution for payment integrity and FWA, Pareo Fraud: Case Management and Detection powered by A.I. here.

Learn more about the ClarisHealth 360-degree solution for payment integrity and FWA, Pareo Fraud: Case Management and Detection powered by A.I. here.

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