SmartLight Analytics

ANALYTIC EXPERTISE - CLINICAL EXPERTISE

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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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Mitigating costs and avoiding fraud, waste & abuse in a pandemic

There is no question employers across the nation with self-funded healthcare plans will see increases in the cost of covering sick employees during the COVID-19 pandemic. What they want to avoid is increases due to fraud, waste and abuse. Existing areas of vulnerability in our healthcare system could be ripe for additional fraud and abuse when the country is in crisis mode. 

With reduced oversight to improve accessibility to treatment during the pandemic, fraudulent billing could slip through easier than ever. Bad actors – those already committing fraud within the system – see every tragedy as an opportunity. We have seen evidence of the high prevalence of suspect billing long before the pandemic. As reported by D Magazine in December 2019, the City of Fort Worth took immediate action after identifying nearly $9 million in unnecessary spend over a 2-year period in its employee health claims. Even without a global health pandemic, fraud and abuse can be found in every employer’s healthcare claims.  

The only proven means for self-funded employers to ensure their plan costs are not padded with fraud, waste, and abuse is to increase oversight. The top three areas most susceptible to abuse during this pandemic are: out-of-network expenses, phantom billing and lab testing.  

Out-of-network expenses: With the intention of reducing travel time and unnecessary exposure to the public, most payers are waiving their out-of-network penalties. 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 waste among out-of-network claims. Expect bad actors to take advantage. 

Phantom billing: Billing for services not rendered, called “phantom billing,” has been a well-recognized problem in claim payments long before coronavirus became a household name.  This fraudulent practice is seen when dishonest providers submit bills for services that were not provided, often by adding extra services to an existing patient visit. The increase in claim volume as a result of COVID-19 will make it even harder to weed out illegitimate  services. Employers will pay the price if such billing goes unchecked. 

Lab testing:  Testing for COVID-19 is in high demand resulting in a foreseeable spike in laboratory billing. 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.  Expect fraudulent laboratory billing to become even more attractive to those looking to dupe the system. 

The best defense against becoming a victim of healthcare fraud is to be vigilant about knowing how plan dollars are being spent. Analytic experts in mining healthcare population  data,  who understand the ins and outs of claims adjudication can become a useful resource in mitigating extra exposure to fraudulent billing during this health crisis.  

Unnecessary medical spend in the form of fraud and abuse impacts all employees via reduced coverage and higher premiums. Attacking wasteful spend in your employee health plan offers a huge cost savings opportunity for a relatively low investment. 

References and Further Reading

  1. Health Insurance Providers Respond to Coronavirus (COVID-19). AHIP. Mar 30, 2020
  2. Medicare Is Updating Coverage to Help in the Coronavirus Crisis. The New York Times. Mark Miller, Mar 24, 2020
  3. HealthCare Fraud. HealthCare Business & Technology. Catalyst Media Network: healthcarebusinesstech.com. 2019
  4. Bottlenecks in Coronavirus Testing Mean Excruciating Wait Times for the Sick. Los Angeles Times. Melody Petersen and Emily Baumgaertner, March 30, 2020
  5. Liquid Gold: Pain Doctors Soak Up Profits by Screening Urine for Drugs. Kaiser Health News. Schulte, Fred and Lucas, Elizabeth. November 6, 2017
  6. Key Facts about the Uninsured Population. Kaiser Family Foundation. Jennifer Tolbert, Kendal Orgera, Natalie Singer, and Anthony Damico. December 13, 2019
  7. 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 leading statistical analysis of healthcare data for multiple large payors and Healthcare IT companies. She has a master’s degree in public health and epidemiology. She founded SmartLight Analytics to help self-funded employers mitigate the rising cost of their employee health plan costs. 

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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.

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SmartLight Analytics grew out of a desire to take meaningful action on rising healthcare costs

In August 2016, SmartLight Analytics was founded out of a desire to help employers deal with the rising cost of healthcare and make an impact that would not only help big companies but thousands of their employees as well.

Employee healthcare costs are expected to top $15,000 per employee in 2020, according to research from the National Business Group on Health.

SmartLight Analytics is focused solely on reducing year-over-year medical spend for self-funded employers. Founder and CEO Asha George headed up the Payment Integrity departments inside various large insurance carriers for decades before forming SmartLight Analytics. SmartLight was created because she saw the need for more independent, pro-active intervention in reducing unnecessary healthcare spend. 

“The American healthcare system has become increasingly more elaborate and difficult to navigate over the past several decades. Within this environment of complexity and rising costs, over 95% of employers are now funding their own employees’ healthcare,” George explained, adding that industry experts estimate billions of dollars are leaking out of the system with no measurable improvement in patient health.

To significantly reduce this waste, SmartLight Analytics, LLC was formed by a group of industry insiders including George and her co-founder: Chief Medical Officer Dr. Franklin Baumman, a surgeon who spent 11 years as a medical director for UnitedHealthcare, the largest insurance carrier in the country.  

“We wanted to make a meaningful impact on the rising cost of healthcare,” George said.

With this end in mind, SmartLight uses statistical, clinical, and claims 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. SmartLight delivers a low-touch, high-impact solution to self-funded employers.

Other organizations with the similar vision of reducing commercial healthcare costs, are primarily using member pricing transparency tools, allowing members access to pricing options for specific services. Whereas SmartLight is a comprehensive solution that works on identifying and resolving issues directly from the client’s plan funds, George explained. “SmartLight identifies wastes, coordinates with the employer’s claims administrator to prevent future waste and, most importantly, ensures that offsets and denials are credited back to the health plan.”

“I’m passionate about making a meaningful impact in this space,” George said. “Insurance carriers, in the role of third-party administrators, do their best to manage the waste in the system while processing claims, but we have, without exception, reduced spend by an additional 3-5% for our customers. We use statistical, clinical and data expertise developed over decades of experience to deliver the most effective cost-reduction solution available in the market, customized to your unique population.”