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The Nolan Company is pleased to bring our readers
a special series of new articles covering the surprising
opportunities and the risks of these turbulent times. In each of
the coming weeks, we will share our insights and experiences in
managing toward the upside during a time of unique market
dynamics.
Fraud and Abuse: A Renewed Focus
Teri Mullaney
Vice
President
There are
probably many reasons why fraud and abuse initiatives were not as
widely implemented as one would conventionally think. Often,
organizations had to make the difficult choice between the expense
reductions achieved by implementing these processes versus the
ability to retain a strong network for their membership base. Ten
years ago, a CFO told me that his organization chose not to
aggressively audit provider billing, as the plan had a difficult
time maintaining an adequate provider network. They did not want to
jeopardize a member's access to care or the health plan's ability to
compete by making things difficult for the doctors; this could
result in a more limited network. As a result, the health plan
routinely built an extra percentage into their annual budget to
account for the expected aberrant billing activity. It was viewed as
a marketing expense, the cost of maintaining their network. This was
not an atypical situation.
There is a renewed focus on this activity for a few reasons,
notwithstanding the most important – there is a fiduciary
responsibility to do so. First, the tables have been turned, and the
scrutiny is placed on the health plans to comply with the growing
regulatory requirements placed upon them. The second is the economic
downturn which has adversely impacted many health plans' bottom
line. The third, which we will save for a future article, is that it
adversely affects members both financially (in terms of co-payments,
deductibles, and life-time maximums) and clinically.
The increase in government-funded health care programs
(managed by national or regional health plans) means that there are
more plans than ever that are held accountable by CMS and/or the
State for overall program integrity. For example, Medicare Advantage
plans are reimbursed based on the illness burden of their
population, and the onus is on the plan to ensure that providers
submit accurate data to them; this, in turn, allows the health plan
to submit valid data to CMS. And in the case of Medicaid, CMS and
the individual states require that managed Medicaid plans have a
program integrity process in place to safeguard against fraud and
abuse in order to keep the cost of the Medicaid program down.
In addition to the growing regulatory requirements mentioned
above, the economic downturn has affected health plans, whose
profitability has been negatively impacted as investment income
declines and employer-sponsored health care decreases. There is
greater attention than ever to the bottom line. And since the
majority of expense is in the medical care provided to members (not
the administrative cost) there is now an increased awareness on
ensuring that the plan is paying providers for appropriate services
that were actually rendered.
There are a number of technology solutions which are critical
to success but are not the panacea for these issues. In order to be
effective, there must be a fully developed program in place to
identify, analyze, and report/recover fraudulent and abusive
activities. Without taking all three of these areas into account,
the technology will do nothing more than frustrate the physicians
and overburden the staff when they try to act on the information.
There are numerous questions that must be answered to put an
effective solution in place. What are the primary goals of your
program? What do you need to identify? How do you handle conflicting
requirements between CMS and the State? Do you want to implement a
program all at once, or phase it in based on mandatory versus
optional requirements? How will you analyze the findings? How will
you follow-up on the analyzed information, since there are different
processes for handling true fraud versus billing errors, CMS versus
state corrections, and collection differences based on provider
contract provisions? How will you staff to support these new
processes? How will the initiatives be communicated to the
stakeholders (providers, employees, members, and auditors)? And
let's not forget the importance of measuring the efficacy of the
program, so that continuous quality improvement can occur and a
return on your investment can be assessed.
Answering these questions and designing the program will
require a structured approach. The approach should be based on best
practice, yet will need to be tailored to your plan's individual
needs and goals. If you want some help getting there, e-mail me at
teri_mullaney@renolan.com,
or call me at 800-248-3742.
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