SmartLight Analytics

Reducing healthcare costs for self-funded employers

Analytics

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Employers face COVID-related fraud schemes

While the government works to prosecute COVID-related fraud schemes, employers have ways to eliminate those lost dollars, too

As the pandemic seems to be easing its grip on the United States, analytic reviews of healthcare claims are uncovering the after-effects of the widespread COVID-19 testing on self-funded employers’ healthcare spend over the past year. Employers saw costs for testing even with the free options provided by the government and some found fraudulent or abusive add-on testing that resulted in wasted dollars. The dramatic increase in the use of telemedicine is also an area ripe for fraud, waste, and abuse in the future as the pandemic wanes but remote healthcare looks to stay.

Several factors needed to tackle the overwhelming aspects of the pandemic made it easier for an unscrupulous few to take advantage of the massive amounts of COVID-19 testing, including:

  • New codes added to address the COVID-19 public emergency (e.g., modifier CS)​.
  • COVID-19 related testing no longer require an order from the treating physician.
  • Relaxation of the physician ordering rules could allow more leeway for fraudulent billing of unnecessary add-on testing​.

Instead of charging $50 or $150 for the test, SmartLight Analytics found suspect labs bill more than $500 for add-on testing with COVID claims​. One lab was found to have billed identical codes in almost all its claims despite differing diagnosis – a red flag for fraud. The federal government’s recent announcement last month regarding COVID fraud cases confirms that fraud is happening across the country.

The Department of Justice announced in a statement May 26, 2021, that it had found COVID-19-related scams in the hundreds of millions of dollars. In total, the DOJ charged “14 defendants, including 11 newly-charged defendants and three who were charged in superseding indictments, in seven federal districts across the United States for their alleged participation in various health care fraud schemes that exploited the COVID-19 pandemic and resulted in over $143 million in false billings.”1

While the government will continue to pursue COVID-related fraud, including telemedicine and other schemes,2 employers are left waiting while investigators build criminal cases. This was an issue prior to the pandemic with investigations into healthcare fraud. In addition to the federal government, insurance companies have Special Investigations Units that work on payment integrity within their claims. However, to build a case against a suspected fraudulent provider, they will often continue paying claims – which means the employer continues to lose money.

A more immediate option for self-funded employers who want to avoid losing more money to COVID-19 fraud, or any other fraud for that matter, is to have concurrent reviews of healthcare claims on an on-going basis by a third-party. SmartLight Analytics is finding fraud in employer claims right now and arming employers with the information they need to tackle the issue alongside their payer partners. Identified claims can be addressed by employers and insurance providers while the government continues to work to uncover schemes and prosecute scammers.

In the same May 26 announcement, the DOJ along with the Center for Program Integrity, Centers for Medicare & Medicaid Services (CPI/CMS) announced “it took adverse administrative actions against over 50 medical providers for their involvement in health care fraud schemes relating to COVID-19 or abuse of CMS programs that were designed to encourage access to medical care during the pandemic.”1 Those numbers may rise before they dip as the pandemic slows. But while COVID-19 testing may slow, the pandemic has likely permanently left telemedicine at the forefront of healthcare. And if the DOJ’s findings are any indication of the future, telemedicine could be the next area ripe for fraud.

In another type of COVID-19 health care fraud scheme announced by the DOJ, “defendants are alleged to have exploited policies that were put in place by CMS to enable increased access to care during the COVID-19 pandemic. For example, pursuant to the COVID-19 emergency declaration, telehealth regulations and rules were broadened so that Medicare beneficiaries could receive a wider range of services from their doctors without having to travel to a medical facility. The cases announced today include first in the nation charges for allegedly exploiting these expanded policies by submitting false and fraudulent claims to Medicare for sham telemedicine encounters that did not occur.”1 It is likely similar fraud exists in commercial payer claims.

“Our goal is to have a more immediate return for employers who have already been hard-hit by the pandemic and years of rising healthcare costs,” said Dr. Franklin Baumann, Chief Medical Officer at SmartLight Analytics. “The great majority of healthcare providers are owed a huge debt of gratitude for the work they did during the pandemic and for what they continue to do daily. We aim to help employers avoid losing precious healthcare dollars to that small minority of scheming providers. And what we’re seeing in our data is that our inferential analytics followed by our clinical reviews is uncovering COVID-related fraud and will likely continue to find it for the rest of this year at the least.”

1. “DOJ Announces Coordinated Law Enforcement Action to Combat Health Care Fraud Related to COVID-19.” Department of Justice, U.S. Attorney’s Office Western District of Arkansas. May 26, 2021.  https://www.justice.gov/usao-wdar/pr/doj-announces-coordinated-law-enforcement-action-combat-health-care-fraud-related-covid

2. Madden, Jason. “Combating COVID Crimes: First Wave of DOJ Enforcement Actions Target Fraudulent Schemes.” Proskauer Health Care Law Brief. June 9, 2021. https://www.jdsupra.com/legalnews/combating-covid-crimes-first-wave-of-5967109/

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Healthcare Fraud Investigator joins SmartLight Analytics team

SmartLight Analytics recently welcomed Bill Young to its team of analytics and clinical experts as the new head of the clinical operations. Young brings a wealth of knowledge, including 20 years of federal healthcare fraud investigative experience, to the SmartLight Analytics mission of helping self-funded employers reduce healthcare spending by identifying and eliminating fraud, waste, and abuse in healthcare claims.

Young spent the last 13 years with HHS/OIG supervising and conducting criminal and civil investigations of waste, fraud and abuse in Medicare and Medicaid programs. He has comprehensive knowledge of investigative techniques, best practices and HHS Compliance Guidance.

“Bill’s experience will be extremely valuable to SmartLight and our customers,” said SmartLight Analytics CEO Asha George. “We are continually working to bring a new level of depth to our analytical, clinical and data expertise. Bill’s background in working with Medicare and Medicaid will give us great insight in working with these claims. He is also a great addition to our leadership team.“

“Having worked on the government side of healthcare, I am looking forward to taking the lessons learned from 21 years of working with public insurers and applying those lessons to the private paying community,” Young said of his new role.

Young has a law degree from Saint Louis University and served as an adjunct instructor at the Federal Law Enforcement Training Center in Glynco, GA. He served as Lead Special Agent assigned to white-collar/healthcare fraud investigations for HHS for seven years. He spent 13 years as Assistant Special Agent in Charge for the HHS Office of Inspector General Office of Investigations supervising and conducting criminal, civic and administrative investigations of waste, fraud, and abuse related to HHS programs including Medicare and Medicaid. His team of investigators produced 357 criminal convictions and civil monetary recoveries in excess of $334 million.

Young will work with a team of analysts to review model output to identify fraud, waste and abuse in clients’ claims data and communicate those findings to the client’s administrative partner to ensure the issues identified are addressed.

SmartLight Analytics uses advanced inferential analytics coupled with expert clinical claims review to drive cost-cutting solutions for large, self-insured employers. As a partner with the Health Transformation Alliance, SmartLight works with some of the nation’s largest employers.  With expertise in statistical analysis, healthcare data, and clinical medicine, SmartLight helps organizations prevent unnecessary fraud, waste, and abuse in employee healthcare claims.  

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SmartLight Analytics named “Outstanding Service Innovation” winner in the D CEO 2020 Excellence in Healthcare awards

SmartLight Analytics is honored to be recognized by D CEO as a 2020 Excellence in Healthcare Award winner for our work to reduce healthcare costs for self-funded employers. The work to identify and eliminate fraud, waste and abuse in healthcare claims this year has become especially important as employers continue to provide coverage for employees during the pandemic.

For the team at SmartLight Analytics, however, the opportunity to make an impact in making healthcare more affordable is our true reward. We also want to thank Health Transformation Alliance, who nominated SmartLight for this award. Our partnership with HTA has broadened our ability to help self-funded employers across the country to eliminate wasteful and fraudulent spending in their healthcare plans. Moving into 2021, we are ready to partner with more companies to reduce healthcare costs without disruption to the quality of care and coverage for their employees. Making healthcare more affordable is our continued mission.

D CEO 2020 Excellence in Healthcare winners

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In healthcare claims, does distance matter?

Can the distance between your medical provider and the lab used to process your test results tell you anything about potential fraud, waste, or abuse? In fact, it can.  

In reviewing healthcare claims, data specialists use geospatial analysis to compare distances traveled for lab services. This strategy is used in one of many inferential analysis models that is not searching for a specific medical code within claims, but uses statistics and probability to determine if an observed action differs from an expected action. This can lead to a great deal of information inside of healthcare claims.  

How? It begins when analysts calculate a mathematical score that evaluates the actual distance traveled for lab services compared to what is the expected distance. One claim reviewed by the SmartLight Analytics team expected a distance of seven miles for lab work, the actual distance was two miles from the provider. That 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 billing lab scheme and at the very least requires further investigation.  

When working with businesses across the country, data analysts have found instances where providers have sent lab work or even bill for services across thousands of miles and sometimes even across state lines unnecessarily. Geospatial analysis has also been used to find claims where services were billed hundreds of miles from where the member employee could have reasonably been assumed to be that day. For example, a claim was flagged because it contained billing for an office visit to a nurse practitioner on a specific day as well as billing for tests conducted at a rural hospital 350 miles away on the same day. To believe this occurred as billed, the member would have had to travel more than 350 miles from his or her home on the same day for these tests. What likely happened was that the member saw the provider near home and the provider sent the claims to the rural hospital for billing. Such claims would then be investigated further to determine whether or not it was fraud or just an unusual case or a very sick patient who needed a specialized service. 

Geospatial analysis is just one of 40 different proprietary models used by SmartLight analysts to find fraud, waste, and abuse within healthcare claims.  

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How does looking at pharmacy claims combined with medical claims help find fraud?

When it comes to healthcare claims analysis, combining both medical and pharmacy claims data provides a more thorough picture of what is happening for specific members (or dependents) and adds an additional analytical layer to help find different types of fraud, waste or abuse that might exist.

A case study from SmartLight Analytics provides an example of how the combined data can uncover abuse. The case uncovered prior authorization abuse in pharmacy claims resulting in thousands of dollars of on-going fraud.

 SmartLight analysts noticed a set of pharmacy claims for one member with several red flags:  the member was receiving multiple controlled substances and using multiple pharmacies (at least three) to fill and repeatedly refill prescriptions for Oxycodone and Fentanyl. The Fentanyl prescription was for Subsys, which is a spray specifically approved for breakthrough pain in cancer patients. Dr. Franklin Baumann, SmartLight Analytics CMO and co-founder, called this a “very specific drug used in very specific cases.”

The analysis found that for over a year, every single month the member was receiving a prescription for Subsys at the cost of $10,907 per month. The employer’s plan was continuing to pay for this large claim. It was verified that the employer’s plan allowed this drug with a prior authorization only in cases where an employee has cancer. Once SmartLight’s statistical team noticed these pharmacy claims, they turned their research over to the clinical team (including board certified physicians) to compare these findings with the member’s medical data.

“We know there are very strong policies around this particular Fentanyl. It is only used for cancer and, specifically for cancer related breakthrough pain. In this case, it received prior authorization which means the prescribing physician indicated that in the records.”

Having looked at the bigger picture of this member’s medical and pharmacy claims data, there was no indication of any kind of cancer diagnosis.

The clinical team performed detailed historical research on all diagnosis and procedure codes submitted for this member and found “very clearly” that there was no indication of current cancer, current treatment for cancer and probably no prior treatment for cancer.

“We can say that with some confidence because of the way medical codes work.” Dr. Baumann explained. “Generally, when you have a serious cancer and residual effects of cancer, it’s going to get carried along in your medical diagnosis codes.”

SmartLight then brought its findings to the insurance carrier. “The way we bring this up with the carrier (who paid the claims) is that we don’t see it on our end (a cancer diagnosis). Based on everything we saw, it’s not there. When they looked at it, they agreed with us.”

Dr. Baumann said the repeated claims had fallen through the cracks after a prior authorization was issued initially. SmartLight partnered with the carrier to stop the payment on these claims and continues to monitor the case for the employer.