Whether or not they've committed wrongdoing, payers are increasingly becoming the targets of significant fraud investigations. So it pays to prepare financially and operationally for this possibility.
FierceHealthPayer: Anti-Fraud interviewed Kirk J. Nahra, J.D., a partner in the Washington, D.C., law firm WileyRein, to bring readers expert advice on this topic. Nahra (pictured) specializes in privacy, information security, compliance and fraud issues for the healthcare and insurance industries.
FierceHealthPayer: Anti-Fraud: How can insurers decrease the likelihood that they'll be investigated for committing fraud?
Kirk Nahra: Deal well with complaints. Most fraud cases are generated by whistleblowers. Research and anecdotal evidence show most whistleblowers brought problems to their companies' attention and only became whistleblowers when problems weren't fixed. So solving problems identified by whoever brings them forward is a good way to reduce the likelihood of an investigation.
FHPAF: Why should insurers anticipate becoming the subject of a fraud investigation?
Nahra: Payers are more likely to be investigated these days because more of them participate in government healthcare programs. And the government's anti-fraud effort is increasingly and disproportionately focused on government programs rather than the commercial side of healthcare fraud. The government also is aggressive in making connections to government programs even in situations where it's not obvious that you're participating in a government program. The real issue is not so much how to avoid investigations as it is how to prepare for them and deal effectively with them if they happen.
Many insurers think a fraud investigation won't happen to them, but that's not a very good bet. If you're a Medicare carrier in one state and you see insurers doing the same job elsewhere are being investigated, make the connection to your business. This doesn't guarantee that you'll be investigated, it just means you should prepare for that possibility.
FHPAF: Many payers have errors and omissions insurance. In light of that, is buying extra insurance necessary to protect against fraud invesitgation costs?
Nahra: The answer isn't an automatic "yes." Getting involved in insurance relationships for something like a fraud investigation means you're giving up some control of how you handle the investigation and how you protect yourself, because the insurance company now has a say in it. And that's not always a good idea. While it's always worth considering insurance, I would be real careful about an insurance program that forces you not to use counsel you want to use, or forces you to get the insurance company's sign-off on too many things. You may have reasons to resolve cases that are different from the incentives an insurance company has, and you've got to be careful with that.
FierceHealthPayer: Anti-Fraud: You've recommended that insurers review contract language to ensure they're not financially responsible for fraud committed by business partners. What criteria should payers use to decide which contracts present the highest risk?
Kirk Nahra: There are two areas to prioritize: One is contracts themselves, the other is contract oversight. Payers must have a process to build the right language into contracts regardless of who's on the other side. Monitoring is harder, because it's too burdensome to do a fraud audit on every vendor. Payers need to pick their spots.
Pharmacy benefits managers are a huge risk. They have a ton of information, they're aggressively pushing the envelope on what they're doing with information, they're heavily involved in government programs. Focus also on mental health delegates or partners with more money flowing through them as part of the healthcare process. You don't want to do a fraud audit on a company hired to send mailings that doesn't present high fraud risk. Fraud risk is in companies connected to how insurers get paid by the government.
FHPAF: What actions should be part of payers' fraud investigation contingency plans?
Nahra: Make sure your people know what to do if an investigator shows up. Most government investigations in the healthcare space show up for the first time on paper rather than an FBI agent at your door. Make sure the paper gets to the right people, including your lawyers and compliance officer.
Have a plan for what to do if an investigator presents a search warrant. You need to be able to act quickly and have documentation lined up. Payers should think about weak spots and understand where they're making close-call choices. A close call doesn't mean you're wrong, but you're going to get questioned about it; so be prepared. If somebody shows up and says, "You've got 10 days to give us all this information," you can't start figuring it out then.
FHPAF: Do you have any other advice on this topic?
Nahra: One opportunity payers have which isn't really available to providers is that payers also have an anti-fraud function. Doing a good job with this can help with law enforcement. It gives payers a better reputation and gives law enforcement a comfort level with payers. It's better to be in a situation where investigators trust your company rather than distrust it.
Particularly in close-call situations, insurers with a positive working relationship with law enforcement can often explain what they did in a way that demonstrates it wasn't a problem. Law enforcement listens to those they trust. And--particularly in a whistleblower situation--sometimes the government will let trusted payers do an internal investigation and report findings.