SmartLight Analytics

Reducing healthcare costs for self-funded employers

SmartLight News Desk

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The Differentiator: Inferential Analytics

What is inferential analytics? This analytic method is used by the SmartLight team to find fraud, waste, and abuse in employee healthcare claims. Simply put, it does not rely only upon algorithms, which are a set of rules created to solve specific problems. Instead, it looks beyond the expected “rules” to find outlier patterns of behavior.

Inferential Analytics

Algorithms look for known issues and targets. For example, an algorithm might be set to look for a specific rule — all providers who bill two x-rays for every patient – which could possibly be an indicator of fraud or overbilling. However, that specific rule could be overlooking a more creative or different fraud scheme. In contrast, inferential analysis does not rely on rules but instead uses evidence, reasoning, and content knowledge to look for anomalies in the data. It models “normal behavior” such as the average spend per patient then compares all the data against that model.

When using algorithms as your primary tool, the downside is you are never ahead of the curve. As soon as a provider finds that claims are getting denied using one code, then the provider will switch those codes to something else. With inferential analytics, data analysts are not searching for a specific code but using statistics and probability to determine if an observed action differs from an expected action.

As an example, geospatial analysis used by SmartLight compares distance traveled for services such as lab processing. Analysts calculate a mathematical score that evaluates the actual distance traveled between a provider and a lab for routine lab services, compared to the expected distance.  One claim reviewed had an expected distance of seven miles for lab work, and the actual distance was two miles from the provider. The claim was then compared to another claim where the expected distance for lab work was 10 miles, but the actual distance was 2,976 miles. This drastically different mileage might indicate a “Pass-through Lab Scheme” and at the very least requires further investigation.

Inferential analytics allows employers to see beyond the surface of their employee healthcare claims and prevent wasteful spending.

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How does analytics save employers money?

The American healthcare system has become increasingly more elaborate and difficult to navigate over the past several decades. COVID-19 did nothing to help that, in fact, the crisis made it more complicated as restrictions were reduced to deal with the pandemic. Within this environment of complexity and rising costs, over 95% of employers are now funding their own employees healthcare and are going to need to contain those costs now more than ever. Industry experts estimate that billions of dollars are leaking out of the system with no measurable improvement in patient health. Are employers left with any options? 

To significantly reduce this waste, SmartLight Analytics, LLC was formed by a group of industry insiders who wanted to make a meaningful impact on the rising cost of healthcare. With this end in mind, SmartLight uses statistical, clinical, and data expertise to deliver the most complete cost reduction solution directly to the actual stakeholders – self-funded employers. Since processing claims is outside the core competency of most employers, patterns of error often go unnoticed and result in the unnecessary spend of health plan dollars. Regular, deep analytic reviews deliver a low-touch, high-impact solution to self-funded employers. 

Millions, even billions, of dollars are spent annually providing healthcare coverage for employees across the U.S. Adjudication of medical services is complex and requires specialized expertise. Employers focus on selling their own products and outsource medical claim payments to third-party administrators. Consequently, there is limited transparency for the employers in this process resulting an avoidable cost being spent on the employer’s behalf. An expert in inferential analytics and clinical data is needed to evaluate payments for appropriateness. Having the independent review of payments reduces annual spend between 3 and 5%.  It is an option more employers will want to have in their toolkits, especially those with 10,000 or more employees. Employers with high numbers of white-collar employees or union members can most benefit from the recovery of these lost dollars due to fraud, waste, and abuse. It is money left on the table when every dollar is needed to keep businesses afloat and back into recovery. 

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SmartLight Analytics Achieves HIPAA Compliance with Compliancy Group

SmartLight Analytics has demonstrated compliance with federal HIPAA regulation by completing Compliancy Group’s proprietary 6-Stage HIPAA Risk Analysis and remediation process.

SmartLight Analytics has achieved compliance with the federally mandated standards of the Health Insurance Portability and Accountability Act (HIPAA) through the use of Compliancy Group’s proprietary HIPAA methodology, The Guard® compliance tracking software, and HIPAA Seal of Compliance®.

HIPAA is made up of a set of regulatory standards governing the security, privacy, and integrity of sensitive health care data called protected health information (PHI). PHI is any demographic health care-related information that can be used to identify a patient. If vendors who service health care clients come into contact with PHI in any way, those vendors must be HIPAA compliant.

“HIPAA compliance matters to SmartLight Analytics because it follows a strong code of ethics that SmartLight believes in and follows. Making sure patient data is secured is very important to our business and a promise we make to our customers,” said SmartLight Analytics CEO Asha George.

SmartLighthas completed Compliancy Group’s Six Stage Implementation Program, adhering to the necessary regulatory standards outlined in the HIPAA Privacy Rule, HIPAA Security Rule, HIPAA Breach Notification Rule, HIPAA Omnibus Rule, and HITECH. These standards have been heavily vetted against the letter of the law and meet federal NIST requirements. SmartLight’s good faith effort toward HIPAA compliance with The Guard has been verified by the HIPAA subject matter experts at Compliancy Group.

The HIPAA Seal of Compliance is issued to organizations that have implemented an effective HIPAA compliance program using The Guard, Compliancy Group’s proprietary compliance tracking solution.

“The HIPAA Seal of Compliance re-enforces SmartLight’s commitment to take every step needed to protect our customer’s data,” George said. “Compliance with HIPAA is of the utmost importance to our practice.”

More on the HIPAA Seal of Compliance

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Finding wasteful spending in healthcare: A Female Founder’s Journey

A study released late last year estimated between $760 billion and $935 billion spent on healthcare in the U.S. is waste. That’s 25% of the total costs of healthcare according to estimates published on JAMA Network.1 Further broken down, the study found between $58.5 billion and $83.9 billion are a result of fraud and abuse, with another $76 billion plus wastefully spent on overtreatment or low-value care. With such staggering numbers, finding a way to reduce even a fraction of the fraud, waste and abuse could save employers millions each year.

As employers struggle to provide competitive benefits in the current economy where the jobless rate is low and healthcare costs continue to rise, turning inward to look at spending on healthcare is not only a recommended action, it is a fiduciary responsibility. It behooves a company to not only provide the highest quality benefits overall, but to make sure the money invested on health benefits is not wasted unnecessarily on issues like billing errors, abusive use of the emergency department, testing for medically unlikely scenarios, or on intentional fraud.

During the past two years, SmartLight Analytics has found patterns of such wasteful spending for employers across all industries. Examples of potential savings found for just three employers, each with more than 12,000 employees/family members covered under self-insured healthcare plans, ranged from $4 million to $8.9 million. The analytic healthcare data reviews showed some of the main sources of this waste includes:

  1. Fraud in the form of schemes like pass-through billing
  2. Waste on such things as hormone therapy misuse
  3. Overuse of emergency rooms
  1. “Waste in the US Health Care System: Estimated Costs and Potential for Savings,” William H. Sharnk, MD, MSHS; Teresa L. Rogstad, MPH, Natasha Parekh, MD, MS. October 7, 2019, JAMA Network

So how exactly is money being wasted on these things? Pass-through billing schemes, for example, can happen under the radar and go relatively unnoticed. In many cases, it involves doctors referring routine lab tests to rural hospitals, which are reimbursed at a higher rate, rather than sending them to local hospitals or labs. Doctors receive a kick-back and the rural hospital – which may often be struggling — is fed more business. In March 2019, the CEO of a Texas hospital pleaded guilty to a pass-through billing scheme involving more than $55 million in fraudulent claims. That is an extreme example, but more common examples exists in employer’s data regularly. One detailed clinical review of claims by analytic experts in 2019 found the exposure of pass-through billing for one employer to be more than $688,000 over two years.

Waste can be found in many forms in healthcare claims, but one form frequently identified is the misuse of testosterone therapy for male patients. A review of one employer’s healthcare claims data showed multiple provider groups fitting the suspect pattern of wasteful spending on testosterone replacement. Such a practice involves doctors treating patients for low testosterone levels, when in fact, the levels are not low enough for treatment. I can also take the form of excessive treatment and/or office visits for such unnecessary treatments. Regular analytical reviews by SmartLight Analytics found several providers were identified that appear to be supplementing their revenue by billing unnecessary office visit codes during every patient visit or providing unnecessary treatment. This extreme example was based on claims over a 30-month time period for approximately 500 members of a single employer. Exposure of billing of hormones was estimated to be more than $1.1 million for the employer.

Finally, ER overuse remains an issue when it comes to wasteful healthcare spending. Employers often find that a few “superusers” can drive up their healthcare costs excessively. However, identifying and working with those employees to find out why they are using the ER – whether it is for a chronic disease, addiction or lack of available primary care – can prove effective in eliminating this cost. One employer review identified a small number of superusers — 0.2% of the total number of covered employees for that employer – were spending $1.8 million on ER care. Taking action to identify and work with those employees could mean significant savings.

While the idea of eliminating fraud, waste and abuse is logical, most companies are not equipped to find where those issues are happening within their healthcare spend. Claims administrators focus their work on processing and paying claims, leaving the reviews left undone. Finding a third-party to work with claims administrators to regularly review claims can result in the identification of suspected patterns of waste or statistical outliers which can indicate abuse or fraud even. Such a collaboration will help companies take steps to remediate fraudulent claims or prevent further waste from happening.

Why Asha George started SmartLight Analytics 

As an experienced healthcare analyst with an academic background in epidemiology and biostatistics, Asha George watched as healthcare costs continued to rise and knew the trend was unsustainable. She saw a focus on government overspending and waste in healthcare spending but did not see much attention being paid to the commercial side of healthcare. 

“I had an insider perspective,” she said having spent 17 years working as an independent statistical consultant for multiple healthcare IT companies, directing Statistical Analytics teams, and developing and implementing predictive analytics products for large insurance carriers. She knew the numbers. “I had worked inside the industry and I knew that more and more companies were going toward the self-funded model for healthcare, yet they had little awareness of how their dollars were being spent.” 

George knew there was waste, felt passionate about the need for transparency and saw a market for helping companies deal with this issue. She talked to experts in the field from physicians to data statisticians to healthcare lawyers about her idea. They all agreed there was an issue with fraud, waste and abuse and a void to be filled in the market. In fact, there were indisputable numbers backing up her concept of a need for attention in this space.  

So, she went to work carving out a business plan and a business model working to focus her work on helping self-funded employers reduce their healthcare spending. She found a partner — a clinical expert who shared her passion about making a difference in this space of healthcare spending — in surgeon Dr. Franklin Baumann, who had also worked on the insurance side of healthcare. Together they knew there was real value in what they wanted to do with the unique solution SmartLight Analytics developed to help companies reduce healthcare costs.  

The idea was quickly confirmed when the first employer they approached said yes to their solution in the first meeting. That was in 2016. They found their first big obstacle in getting access to the healthcare data they needed in order to analyze claims and identify areas for savings. It was an obstacle that seemed insurmountable at first. But with the help of a strong advocate in their first client, Dean Foods, they were able to obtain the data they needed to get to work. They used that roadmap for future clients and learned how to work effectively with the different parties involved.  

“We learned quickly what didn’t work; we now look at ourselves as a partner with the insurance carriers,” George said. “We fill in the gap to provide the best service for our mutual employer clients.” 

As a female in the healthcare IT industry, George knows she is a rarity and there are not many women at the tables she shares. Though she did have one meeting with a potential client where she was largely ignored and questions were directed to her male business partner only, which was unexpected – she said she does not think much about being a female role model or pioneer.

“I don’t think much about being a female entrepreneur, but a friend of mine who is a female entrepreneur was giving me the statistics that less than 2% of women-owned start-ups have revenue over $1 million and I was shocked.” 

She chose to designate SmartLight Analytics as a “Certified Women’s Business Enterprise” specifically so she could represent the small number of women working in the healthcare IT field.   

As for the future of SmartLight Analytics, George knows there are endless opportunities to serve self-funded businesses in reducing their healthcare spend. She is also positioning SmartLight to be a software solution company.

“Right now, we are providing a needed service, but we will ultimately be a software company.” 

Published Feb. 25, 2020 for the Texas Healthcare Challenge blog

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City of Fort Worth and SmartLight Analytics Form Partnership to Reduce Healthcare Costs

FORT WORTH, TX, December 11, 2019 – The City of Fort Worth recently partnered with healthcare cost-reduction experts, SmartLight Analytics, in an innovative effort to alleviate the rising costs of employee healthcare. An initial analysis of employee healthcare claims from the previous two years showed that the ongoing partnership could save millions for the City over the next few years.

Given the estimate that 1 in 3 healthcare dollars in the US are spent on fraud, waste, or abuse, the City of Fort Worth was eager to find an independent partner with the required expertise to reduce unnecessary costs for employees, retirees, and taxpayers. The City of Fort Worth Human Resources department engaged SmartLight Analytics to review a subset of past paid claims in a pilot program. Initial findings showed that an ongoing partnership would give the City additional tools to continue to proactively fight against wasteful healthcare spending and decrease its overall healthcare costs. 

SmartLight CEO, Asha George, said its “singular objective is to meaningfully reduce the City of Fort Worth’s per member per month (PMPM) cost by identifying and removing wasteful spending from its annual health plan dollars.”

“The intended outcome of this examination was to report significant findings to Fort Worth on its health plan spend and also provide solutions for reducing potential wasteful spend in future payments,” SmartLight stated in its first report to the City.

Some examples of what SmartLight Analytics was able to identify include:

  • pass-through billing schemes where unscrupulous physicians route lab services to out-of-network labs who in turn send the claims to in-network rural hospitals in order to receive a higher reimbursement due to their remote location, or
  • medically unnecessary abusive urine drug screening and genetic testing claims, or
  • identifying claims submitted that violate the anti-kickback laws, or
  • overuse of emergency rooms.

Given the success of the initial engagement, SmartLight Analytics will now enter into an on-going partnership with the City. Once a wasteful claim is identified, SmartLight will pass that information on to the City’s current medical and prescription providers and work with them to get the money back for the City. Additionally, the medical or prescription providers may report these findings to authorities to help curb the abuse throughout the healthcare system. SmartLight Analytics anticipates the City could save up to $2-$3 million per year in reduced wasteful claim costs.

“We anticipate that SmartLight Analytics will identify claims with fraud, waste, or abuse.  Then, they will work with our claims administrator to recover the costs for the City, and have them credited back to us,” said Brian Dickerson, Fort Worth’s Human Resources Director. “This will be a win for our employees, our retirees, and the taxpayers of the City of Fort Worth.”

SmartLight Analytics provides a comprehensive solution to effectively reduce health care spend through proven methods developed over decades of focused experience. The City of Fort Worth engaged the firm to further reduce spending and save taxpayer dollars. The SmartLight Analytics clinical team led by board-certified physicians reviewed the claims that were identified as either being unnecessary, duplicates, or billing errors that are costing the City unnecessary dollars. The initial report was generated using statistical models and showed the City of Fort Worth exactly where there were issues. On a go forward basis, through their data analytics and clinical expertise, SmartLight will work with the City’s insurance carrier to eliminate future wasteful claims. 

The partnership will provide the City with significant savings.