Jack Price on building a top-notch SIU

FierceHealthPayer: AntiFraud spoke to Jack Price (pictured) about how payers can create high-performance special investigations units (SIU) to control fraud, waste and abuse. A former law enforcement officer, Price is a consultant with more than 20 years of experience developing, managing and leading SIUs in the life and health insurance industries.

FierceHealthPayer: AntiFraud: What do top-performing SIUs do that average or underperforming units don't?

Jack Price: Top-performing SIU operations have an adequate staff with expertise in several different areas of investigations or health insurance operations. If you just have a group of auditors or investigators who receive and handle referrals, the SIU will have to rely on expertise from other areas or they'll miss opportunities to enhance investigations or their results.

It's helpful to have diversified expertise within an SIU staff, including nurses, pharmacists and a physician if you can afford it. Typically, payers have a medical director or assign a physician to support the SIU, and that works. But it won't work if the doctor has so many other responsibilities that the SIU is an afterthought.

Consolidating fraud and abuse fighting into one business area has proven to be very effective; but some payers break the function apart rather than running a unified SIU operation.

In some organizations, the SIU only handles the worst of the worst, or the horrible fraud cases that come up. But there's also waste and abuse, and they're all closely related. If a payer fights waste and abuse through other departments and there's no communication between everyone, it hurts. Communication isn't as effective as it is when payers combine fraud, waste and abuse control in one operation.

FierceHealthPayer: AntiFraud: What are your best tips for hiring SIU professionals?

Jack Price: The people I've had the most success with--those who became exceptional employees--were all highly intelligent. They had a diverse education. They were really good at dealing with people, and I think that's the key factor.

Also ask yourself: How will candidates do in stressful situations? Are they skilled in analyzing facts and information logically?

Required skill sets can be found in many places. Some of my best employees were former law enforcement agents, detectives or investigators. Some were from the insurance industry, and some came from other areas of the company. I hired an applicant who came from a military contractor and had no healthcare fraud experience; but he was a biometric scientist for the U.S. Department of Defense who brought a level of analysis to intelligence documentation that proved extremely valuable.  

FHPAF: Please describe the law enforcement agency SIU model. What are the advantages of running an SIU built on this?

Price: The SIU law enforcement model of structure and operation involves having an organization that is experienced in doing criminal investigations. Investigations SIUs conduct may be used in criminal prosecution of suspects or defendants. Therefore, the more like a typical law enforcement investigation SIU referrals are, the easier it is for prosecutors and attorneys to understand them.

The law enforcement agencies will be able to pick right up on exactly what's going on and what the evidence is. In this model, SIUs package investigation findings like the criminal investigation reports a special agent or a detective would prepare.

The advantages of running an SIU under this model are that it's much more effective when dealing with law enforcement and makes successful criminal prosecution more likely.  To run the model successfully, it's helpful to employ staff who were immersed in the law enforcement system for years and know exactly what to do and how to do it.

FierceHealthPayer: AntiFraud: How do medical-loss ratio requirements affect SIU staffing?

Jack Price: In some cases, the medical-loss ratio, which is a requirement under the Affordable Care Act law and regulations, requires insurers to spend defined percentages [of premium revenues] on patient care and administrative functions, or daily operational costs for the company.

The decision was made some time back to place fraud investigations in the administrative arena. As such, when companies exceed the percentage spent on administrative expenses, they look for areas to cut. So SIUs may face operational cutbacks and struggle to do more with less.

It's always been a challenge to maintain adequate staffing levels, but with the medical-loss ratio coming into play, it's become even more of an issue.

FHPAF: In view of money they recover, SIUs have been described as the goose that laid the golden egg and therefore the last area that should be downsized. You're saying that's not always true?

Price: It's not necessarily true, but management in some companies tends to see the SIU as a profit center. If you look at it like that, you're making a mistake.

SIUs are a valuable corporate tool and asset to reduce expenses and exposure while generating good will and public relations value. The public wants to know that healthcare fraud is not going to be tolerated and that their insurer is doing everything they can to combat it. And a company that is able to do that well looks good in the marketplace.

FierceHealthPayer: AntiFraud: How can SIUs demonstrate their value to corporate leaders?

Jack Price: Much depends on the executive management of the company. If they see the value of SIU operations in combating health insurance fraud, they typically support their operations very well. The companies that don't consider SIUs important--or see them as less important than other areas of the business--typically will never have one of the best SIUs in operation.

We developed annual reports for executive management and the other operational areas. We documented what the SIU accomplished in those reports. If you do a good job telling your story, it gets the leadership's attention and they see the importance of having an effective SIU. But they still have to be disposed to support it.

Many leaders think, 'We need to be active in this arena, but we don't want to spend that much money on it.' Remember there's a balance between how much money you spend and the value returned. SIUs can spend a lot of money on technology and staffing but reach a point of diminishing returns.

So where is that point? It varies by company. I've never been in a position where the diminishing returns point was ever reached, let alone approached.

FHPAF: Do you have any other insights to share on this topic?

Price: Fraud expenses can be controlled, but not through technology or staffing alone. Success depends on a combination of factors. SIUs must use technology efficiently and have staffing levels that allow them to do that. SIUs need people with the ability to investigate and document cases of fraud, waste and abuse and chase the money down.

It will be interesting to see what happens in the future with healthcare reform. I think everybody's curious to see first-year results on fraud levels. People who perpetrate fraud are committed, they're for the most part very intelligent and they develop ways around any obstacle or roadblock put in their way. And while we know what some of the fraud committed after the Affordable Care Act will probably be, new schemes will unfold and old schemes will be modified.

So fraud fighting is a never-ending job. There's always a percentage of the population that will lie, steal and cheat. The best U.S. attorneys I've worked with have a very simple philosophy on healthcare fraud: You prove that people are lying, cheating and stealing, and then you've got a case.

With more people enrolling in health insurance under the Affordable Care Act, there are more possibilities for bad actors in the system. And as reimbursement levels continue to decline, some providers are tempted to do improper things to increase their cash flow.

Editor's Note: This interview has been edited and condensed for clarity.