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Survey of Health Plans – Understanding Health Care Fraud

Understanding Health Care Fraud.

Healthcare fraud affects every New Jerseyan. Waste, fraud and abuse take critical resources out of our health care system, and contribute to the rising cost of health care for all.

What health plans are doing to combat fraud
    • Health plans have developed effective fraud prevention and detection programs as part of a broad-based strategy for improving health outcomes and achieving the optimal use of health care dollars.
    • The success of health plans’ fraud prevention initiatives is evidenced by the fact that government programs now are incorporating these innovative private sector practices.
    • Based on data collected in a survey of health plans serving 95 million enrollees, the report details how health plan programs prevent and detect fraud, including how they marshal resources to identify and prevent potential fraud, rather than “paying and chasing” after the fact.
    • The knowledge that health plans have robust anti-fraud measures and controls likely prevents many inappropriate billings or claims from occurring in the first place.
Four Steps in Preventing Inappropriate, Unnecessary Billing or Falsification of Medical Records

The specific tools that health plans use to assure integrity and detect the delivery of inappropriate or unnecessary care vary by company, but usually include the following four categories of activities:

    • Identifying potential fraud: The goal is to have this occur up-front, and to identify patterns of performing, ordering, or delivering medically unnecessary procedures before the claim is paid.
    • “Tagging” suspected cases of fraud: Health plans have been steadily expanding their use of technology to increase their capabilities for detecting fraud, such as through the implementation of electronic “smart flags” or “tags” that quickly identify potentially false or misleading diagnoses, as well as “mining” of claims databases to find suspected cases.
    • Investigating and auditing suspected fraudulent claims: The next step includes extensive investigation and auditing of suspected claims, comprising medical record review, clinical investigations, and coordination with clinical services departments (including in-house doctors and nurses) to develop appropriate medical opinion of the legitimacy of the claim.
    • Taking action on suspected fraud:  In certain cases, facts that may constitute violations of law would be escalated by referral to a federal or state law enforcement agency (including the FBI and State Attorneys General) through development of what our special investigations units call an “evidence package” detailing the possible fraud.