Public-private healthcare fraud partnerships aim at prevention

For decades, fighting healthcare fraud has involved a "pay-and-chase" mentality. Insurers pay criminals for fraudulent claims, prescriptions and the like and investigators chase them down, hoping to get that money back through criminal charges or the False Claims Act.

Recently, though, the focus has started to shift to prevention. Accompanying this shift has been a growth in public-private partnerships, bringing together federal and state government agencies, private insurers and professional organizations.

These partnerships work best when the entities involved are willing to cooperate and to share information. "The driving force between a lot of information-sharing and partnerships is trying to get ahead of the curve; to prevent the dollars from going out the door in the first place," Louis Saccoccio, CEO of the National Health Care Anti-Fraud Association (NHCAA), said in an exclusive interview with FierceHealthPayer: AntiFraud.

This exclusive report outlines the evolution of public-private partnerships that aim to stop healthcare fraud, discusses how advances such as data analytics can add a new dimension to old-school fraud investigations and examines what's in store for future healthcare fraud investigations.

Taking steps forward

There have been three key steps in the multi-agency effort to target waste, fraud and abuse in federal healthcare programs.

  • The Department of Justice and the Department of Health and Human Services (HHS) formed a joint Medicare Fraud Strike Force in March 2007.
  • Then, in May 2009, Justice and HHS formed the Health Care Fraud Prevention and Enforcement Action Team. Known as HEAT, the group targets Medicare as well as Medicaid fraud. The Strike Force groups are part of HEAT.
  • In July 2012, the Obama administration took the initiative a step further, expanding the partnership to include state agencies, several private health insurers and leading professional organizations such as America's Health Insurance Plans and the NHCAA.

All told, the Strike Forces, which operate in Miami, Detroit and seven other areas of high fraud activity, have brought charges against 1,900 individuals who have fraudulently billed Medicare for about $6 billion, according to an HHS statement last year. That's on top of $2.3 billion in False Claims Act settlements in healthcare fraud cases in 2014 alone.

Michael Volkov of the Volkov Law Group noted in a post on JD Supra Business Adviser that this success stems in part from five key law enforcement trends, such as addressing quality of care issues where fraudsters have provided "worthless" services and pursuing persecutions for wire fraud, obstruction and other charges beyond mere healthcare fraud.

Sharing, analyzing information

Before the Information Age, anti-fraud efforts depended on "complaints and conversations," according to Michael Little, a senior manager in the forensic division with Deloitte Financial Advisory Services. 

Little's previous experience includes work with the Department of Health and Human Services (HHS) Office of Inspector General in South Florida, one of the country's most active areas for healthcare fraud.

The partnership efforts of the last several years have made communication and collaboration more formal and systematic, Little said. In particular, the 2012 announcement specificaly emphasized sharing information among government agencies, private insurers and organizations such as NHCAA.

"Information-sharing becomes really critical on the prevention side of things. The earlier you do it, the better," Saccoccio said. "Everybody recognizes the benefit of information sharing. More and more of it is being done. The challenge is that it takes work."

It takes work, he added, because it's easy for local, state, federal, public or private entities to get caught in a silo. It takes time and effort to build a cooperative relationship and to contribute to shared sources such as NHCAA's LexisNexis database of ongoing investigations and trends. The data-sharing process also raises privacy concerns and, in some cases, longstanding questions about jurisdiction and ownership.

That said, the return on investment is often worth the trouble--and analytics is an increasingly important driver. Both states and payers are learning how to use data to thwart fraud. Mining billing data, for example, can provide insight into provider utilization, demographic trends, geographic discrepancies and any outliers that raise a red flag.

Going a step further, payers could incorporate analytics into the claims process, Saccoccio said. If a claim doesn't look right, payers could initially reject it, then use predictive modeling software to analyze the claim and, if something does turn up, share their findings with other payers and government agencies.

"Let's stop paying these claims until we have a better idea of what's going on," he said. "The driving force between a lot of information sharing and partnerships is trying to get ahead of the curve, to prevent the dollars from going out the door in the first place."

Fighting an uphill battle

Despite this recent success, fraud investigators face an uphill battle. In a recent study, the Mercatus Center at George Mason University said improper spending on Medicare and Medicaid topped $50 billion in the 2013 fiscal year. The study's authors concluded that the only way to reduce this level of fraud is to accordingly reduce the size of government programs such as Medicare and Medicaid.

That seems unlikely--under the Affordable Care Act, Medicaid expansion is in full swing. Instead, groups such as the NHCAA are doubling down on their efforts. U.S. and state attorney's offices meet regularly at a regional level and national level, Saccoccio said.

Critically, they are starting to invite private payers into these conversations as well. This is important, as fraud investigations have traditionally focused on government-funded and not commercial insurance--even though the latter makes up about half of the $3 trillion healthcare industry in the United States, Little said, and also do business with government programs such as Medicare Advantage and Medicaid managed care programs.

That's where the partnerships--old and new, formal and informal--come into play. If, say, a Boston-based commercial insurer expects fraud, it can strengthen its own internal fraud investigation by alerting government agencies, Little said.

That's why communication is a critical part of public-private fraud-fighting collaboration. Even in an era of information sharing and data analytics, you can't underestimate the power of good old-fashioned networking.

"If you do find fraud [then] you do know a prosecutor and they know you and you've built up some trust. You also know federal agents ... if you need further investigation," Little said. "You're no longer just someone walking in off the street."

For more:
- here's the JD Supra post
- read the 2012 and 2014 HHS announcements

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Data analysis adds new dimension to old-school fraud investigations
False Claims Act enforcement continues in high gear
How states and payers can make better use of data to thwart fraud
Assistant US Attorney Ted Radway on fighting Medicaid fraud