SmartLight Analytics

ANALYTIC EXPERTISE - CLINICAL EXPERTISE

Asha George

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Pass through billing schemes

“Healthleaders Media” recently reported on a case involving pass-through billing in Florida which highlights how such schemes can grow if undetected during regular claims reviews.

The case involved the owner of a substance abuse treatment facility who sent his patients’ urine samples to a lab that returned 40% of the insurance reimbursements to the owner. He then arranged with the managers of two rural hospitals in Florida to have the testing billed to private insurers at a higher reimbursement under the hospitals’ in-network contracts.

The scheme expanded to include rural hospitals in Georgia, and more drug rehab centers, resulting in laundering more than $57 million in illicit reimbursements.

Rural hospitals, often due to declining revenue, have been repeatedly identified in fraudulent and abusive billing schemes intended to increase revenue. Vigilance by those processing claim payments is required to prevent wasted dollars from being spent. SmartLight has identified multiple schemes involving suspect patterns of urine drug tests and pass-through billing.

Rural hospitals involved in pass-through billing to maximize reimbursements from claims administrators is a growing problem. SmartLight has identified over 7 hospitals in Texas and neighboring states involved in this abusive billing scheme in 2019. Analysis of claims data using inferential methods can quickly identify these suspect claims in an employer’s healthcare claims population.

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CASE STUDY: Uncovering potential abusive billing

June 2019
 

During monthly monitoring of a client’s claims, the SmartLight Analytics’ team identified potential abusive billing by a licensed in-network physician who owns a family practice in Texas. The issue was identified due to an abnormal billing pattern in comparison to provider peers.  The suspicious claim pattern included repeated payments for injections without any associated drug codes stretching over a 9-month billing period.

The provider also reported an inconsistent diagnosis of chronic kidney disease for a patient, with no follow up service related to this diagnosis seen anywhere in the patient’s medical history. Additionally, this provider began billing allergy testing and antigen therapy preparation and injections for this same patient.

Records review of this provider’s billing showed references to numerous potentially excluded, unproven and non-medically necessary services including testosterone replacement therapy for male menopause, laser face lifts, laser hair and tattoo removal, laser-lipo body contouring, Botox and chemical peels. Claims not meeting medical necessity and coverage guidelines will be denied for this provider and credited back to the employer’s plan funds.

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Cosmetic Surgery Is Ripe for Fraud

Multiple healthcare fraud schemes have been investigated over the years involving providers who misrepresent cosmetic procedures as medically necessary ones to increase patients and their profit. Rhinoplasty is known to be the most common procedure that is inappropriately billed to health insurance. Surgeons charge for repair of a “deviated septum” and then perform cosmetic rhinoplasty. Tummy tucks have also been billed to insurance as hernia repair. Separation of the abdominal muscles is sometimes falsely called a hernia and billed to insurance.


Any effective wasteful spend analysis should routinely conduct review of a focused sample of medical records as an identification and prevention measure. We posted last week about one case.


An example can be seen from a selected visits review ($10,000 – $30,000/per procedure): A 26-year-old female was billed for reduction mammoplasty by a Beverly Hills plastic surgeon. Services that are typically seen prior to this procedure, i.e. physical therapy for back pain or related office visits, were not seen in this member’s medical history prior to surgery.