There is no question employers with self-funded plans will see increases in the cost of healthcare due to infected employees (and their family members) during the COVID-19 pandemic. Those paying for the higher costs hope to avoid being the target of fraud, waste and abuse while the country’s doctors and hospitals fight the virus. However, in a time of crisis, while our primary focus is elsewhere, history teaches us that specific areas in our healthcare system could be ripe for additional deceptive billing schemes.
Strong public sentiment is pushing employers and insurance companies to reduce restrictions on accessibility to treatment during the pandemic, which is well-intended and necessary to save lives. Self-funded employers who determine the coverage guidelines of their employee’s health plan want to make it easier for members to get life-saving treatment during this crisis. However, you can be certain that bad actors – those intentionally submitting improper claims within the existing system – won’t let a national tragedy go to waste. As oversight of medical claims becomes necessarily less restrictive in preparation for the increased volume of appropriate healthcare claims, the number of fraudulent claims will also increase.
The five areas most susceptible to abuse and intentional fraud during this pandemic are:
- Prior authorization: AHIP is reporting many insurance providers will waive prior authorization for services so patients can be treated quickly. Prior authorization serves as a gateway to expensive procedures because it requires healthcare providers to obtain advanced approval to qualify for payment overage. Even before the pandemic, fraudulent providers were exploiting the existing prior authorization process to obtain coverage for non-covered prescriptions and medical services with false or misleading information. The relaxing of existing requirements along with the inevitable increased volume of claims due to COVID-19 will make the prior authorization process an easy target for fraudulent billing. 1
- Out-of-network expenses: Again, with the well-intention of reducing travel time and consequently unnecessary exposure to the public, most payers are likely to waive their out-of-network penalties to reduce the spread of the pandemic. Expanded out-of-network payment coverage will allow members to receive treatment from the closest doctors and hospitals. However, with unregulated payment rates, there is a high potential for substantial wasted spend among OON claims. Expect bad actors to take advantage. Payers should be wary. 2
- Billing for non-rendered services: Billing for services not rendered, called “phantom billing,” was a recognized problem in claim payments long before coronavirus became a household name. This fraudulent practice is seen when unscrupulous providers submit bills for services that were not rendered. Patients who are victims of phantom billing are often unaware of the claims submitted against their plan coverage. It is important to keep in mind: while the need for healthcare is increasing, the need is not evenly distributed. While infectious disease and pulmonology specialists should expect a substantial rise in demand, other office-based practices, like chiropractors, or podiatrists could see a decline in patients while the country practices social distancing. However, fixed costs of running an office will remain, providing a motive for some to “maximize” each visit. Employers will pay the price if such billing goes unchecked.3
- Lab testing: Testing for COVID-19 is in high demand resulting in a foreseeable spike in laboratory billing for the duration of the pandemic. In fact, shortage of labs available to conduct the testing necessary to fight the virus has led to newly formed public and private partnerships.4 It is also true that laboratory testing is a highly abused part of the US healthcare system. When it comes to lab testing, medically unnecessary claims have been an expensive problem for all payers, insurance companies and self-funded employers. Recent cases of fraud in urine drug testing (“liquid gold”) and pass-through lab billing have cost employers millions in the last few years. 5 Expect fraudulent out-of-network laboratory billing to become even more attractive to those looking to dupe the system.
- Member eligibility: The numbers of uninsured in the country as a whole and especially states with large population centers, like Florida and Texas who consistently rank at the bottom, are likely to see abuses of member coverage in the face of increased healthcare needs. Using someone else’s insurance card or adding ineligible members to a policy holder’s plan are forms of member eligibility fraud.6 Those managing the health plan membership rolls should keep a watchful eye on eligibility if the pandemic drags out for many months.
In order to mitigate these five areas of exposure, self-funded employers should first increase awareness of the potential abusive areas. The best defense against becoming a victim of healthcare fraud is to be vigilant about knowing how plan dollars are being spent. Plan administrators (whether small TPAs or larger carriers) may be able to provide the additional scrutiny needed, but as they deal with the rise in claims, extra assistance is likely. Administrators dealing with a massive influx in claims will have less resources available than usual to dedicate to finding and preventing waste in the system.
Analytic experts in mining healthcare population data, who understand the ins and outs of claims adjudication can become a useful resource in identifying suspect areas. Using inferential analytics to look at what’s below the surface at a time when claims are skyrocketing will become more important than ever. When the rules are changing fast, searching for fraud and abuse needs an innovative approach, not the traditional rules-based methods.
Even before the COVID-19 outbreak, it was predicted employers would pay more for healthcare coverage in 2021, as much as 5-6% more. Now with the COVID-19 pandemic, that cost will skyrocket. A few ill-intentioned players are already pushing the envelope in our complicated healthcare system; this pandemic will only exacerbate that problem. Unnecessary medical spend in the form of fraud and abuse impacts all employees via reduced coverage and higher premiums.7 Self-funded employers should take the extra steps to identify and eliminate the waste that’s certain to increase during this global crisis. After all, fraud left undetected can have far-reaching impacts on your organization’s ability to weather the downturn. Attacking fraud, waste, and abuse offers a huge cost savings opportunity for a relatively low investment.
- Health Insurance Providers Respond to Coronavirus (COVID-19). AHIP. Mar 30, 2020
- Medicare Is Updating Coverage to Help in the Coronavirus Crisis. The New York Times. Mark Miller, Mar 24, 2020
- HealthCare Fraud. HealthCare Business & Technology. Catalyst Media Network: healthcarebusinesstech.com. 2019
- Bottlenecks in Coronavirus Testing Mean Excruciating Wait Times for the Sick. Los Angeles Times. Melody Petersen and Emily Baumgaertner, March 30, 2020
- Liquid Gold: Pain Doctors Soak Up Profits by Screening Urine for Drugs. Kaiser Health News. Schulte, Fred and Lucas, Elizabeth. November 6, 2017
- Key Facts about the Uninsured Population. Kaiser Family Foundation. Jennifer Tolbert, Kendal Orgera, Natalie Singer, and Anthony Damico. December 13, 2019
- COVID-19 Could Prompt Higher 2021 Insurance Premiums, Benefit Cuts. Modern Healthcare. Shelby Livingston, Mar 23, 2020
Asha George is the co-founder of SmartLight Analytics, a healthcare data analytics company. Prior to founding the company, she spent 17 years creating payment integrity solutions for multiple healthcare companies, including insurance carriers. She has a master’s degree in public health with a concentration in biostatistics and epidemiology. Asha founded SmartLight Analytics to deliver a solution that meaningfully reduces fraud and abuse in healthcare spend. SmartLight uses statistical, clinical, and data expertise to deliver the most complete wasteful spend reduction solution directly to self-funded employers.