Success secrets of small, dynamic SIUs

How do special investigations units meet high performance expectations for fighting fraud despite low head counts and operating budgets? FierceHealthPayer: Anti-Fraud interviewed two experts to find out.

Karen Fondry, a registered nurse and certified professional coder, is program director of fraud, waste, abuse and recovery at Blue Cross and Blue Shield of Vermont. Kellyann Bowman (pictured right) is manager of the SIU at Group Health Cooperative in Seattle.

FierceHealthPayer: Anti-Fraud: What's the size of your SIU in relation to the size of your organization?

Karen Fondry: Blue Cross and Blue Shield of Vermont employs approximately 350 people. My fraud, waste and abuse department has three full-time employees.

Kellyann Bowman: We have two SIU employees and a little more than 8,000 people in our organization. Group Health Cooperative is both a health plan and a healthcare delivery system.

FHPAF: How do you triage cases? In your experience, what are the telltale signs that a referral isn't worth investigating?

Fondry: When we get a referral, I go to our web-based fraud software program, which takes a month's worth of claims, puts them through algorithms and spits out schemes and fraud rules the provider may be breaking. If the provider scores highly, I check how the provider compares to peers. If the provider is an outlier, the referral is almost always worth investigating.

If the provider doesn't score highly in the software program, I run a report of internal claims to look at trends. If I don't see anything that stands out, chances are there's not going to be much [worth pursuing].

Bowman: Though we investigate all referrals, those that typically lack merit are when someone says "I always see Dr. Smith, but this time he billed me for a service that didn't occur." Sometimes people forget what took place or forget they saw a particular doctor.

Durable medical equipment claims can be problematic. Say a member receives a C-PAP machine that pushes oxygen through the nose or mouth to help with sleep apnea. Patients may say they didn't order tubing or nose pillows that came with the machine. They don't understand that the machine and its supplies come together. These cases typically involve small dollar amounts.

FHPAF: What types of audits deliver the most bang for the buck?

Fondry: High-dollar recoveries are often related to facilities or large provider groups. Finding services not considered medically necessary based on our standards is where we typically get the biggest audit value. If I have concerns that billed services didn't occur, I'll call members and ask questions about services they received.

Our in-house audits involve a probe sample. We run a year's worth of claims data on a provider and pull a random sample of 10 records per provider in the office. We request medical records and I review them for medical necessity, coding and billing accuracy, and documentation. If I find that services were not medically necessary, I confer with either a physician in-house or send cases for external specialty review.

We do an extrapolated settlement process. We look at the sample records, determine a dollar error rate from the audit and extrapolate across a year's worth of claims. Then we negotiate [overpayment recovery] based on guidelines.

There's a fairly small group of providers in Vermont. So when I find one who bills abusively--as opposed to fraudulently--I work with the provider to try to help them file correctly.

If they're willing to work with us, their claims suspend to me with medical notes for prepayment review. I have weekly conference calls with the provider to discuss what's improving and what needs work. But if they don't change their billing, we typically recommend termination [from participating provider networks].

Many cases result from lack of knowledge rather than intent to defraud. For example, we see providers whose spouses handle billing for them. They aren't certified coders, and this can cause problems.

Bowman: Audits of prescription drug claims can be productive since there's so much money to be made on the black and gray markets for drugs. Members with good health insurance coverage can get a bottle of narcotics relatively inexpensively and sell them on the street.

It can be productive to audit claims that include modifiers that unbundle procedure codes and allow providers to collect extra payments inappropriately. We also audit claims for multiple units of lab services.

FHPAF: In your opinion, what are the most valuable resources a small SIU can leverage within and outside the company?

Fondry: We leverage the expertise of three outside vendors to do most of our facility audits. They conduct hospital bill account audits to verify that what was billed was provided to hospitalized members.

If money is due back for duplicate billings, we have a vendor that does those audits. We've added a coordination of benefits audit. We also have high-cost injectable [drug] audits done by a vendor's pharmacist to make sure members receive the correct dose of the right drug.

We also routinely work with staff from other areas of the company, including enrollment services and provider contracting.

Bowman: We have a tight knit group in Washington with about four health plans here and in Oregon. If we see fraud schemes, we alert people. We don't give a lot of details, but we give enough so others can look for the same kinds of problems we're seeing.

To fight identity theft, build relationships with front-line staff in provider offices. We make sure they know typical behaviors of people who come in and try to use another's identity.

What makes us effective are partnerships with departments and work units across the organization. Educate coworkers on what healthcare fraud is and what it looks like in their work. Be sure they understand how the SIU protects healthcare dollars. Once people see they can function as part of the SIU by identifying potential fraud, you can get their buy-in since they become part of a larger process.

The more people recognize the face of the SIU in your company, the more likely it is that they'll talk to you about issues. That's where you'll get good leads.

We rely heavily on customer service, since patients call them with questions and concerns. The claims processing team is also important since they may see odd claims, duplicate billings or receipts that don't look legitimate.

I've spent lots of time job shadowing people. If I hear of a new position or department and I'm not sure how they would see fraud, I'll sit with their staff for an hour or two to understand their work. It's time consuming, but it's critical. It's the only way I'll know how they can help me and how I can help them.

FHPAF: What professionals and skill sets contribute most to a small SIU's success?

Fondry: If you're a small unit, you need the right mix of skills to be effective. You need someone who understands coding, billing documentation and medical necessity. It helps to know the plan's products and benefits. And you need someone who understands how your company processes claims, how claims should have been processed and what may have gone wrong.

Another key piece is having someone with strong analytic skills who can look at data and figure out what they mean. A combination of staff with analytic skills, coding and clinical background can piece together cases that produce savings without wasting time on issues without merit.

The third person in our unit oversees our vendor relationships and answers questions they may have. She also knows our benefit structures, claims system and the inner workings of our plan.

Bowman: My senior investigator is a former law enforcement officer. You need at least one person on your team with this type of experience, someone who understands how the criminal mind works, where the money trail is, where fraud could enter a situation. Former law enforcement people also know what police look for in case referrals and can help streamline them. But what I don't recommend is staffing your unit exclusively with former law enforcement employees.

FHPAF: Overall, what are your best tips and advice for payers to create small but effective SIUs?

Fondry: You need a comprehensive program that looks at professional claims, facility claims, member and employer group fraud, and internal fraud. You need a team with diverse skills. And leverage vendors to make your program as robust as possible and improve it continuously.

It's crucial to have fraud detection software. And having a fraud reporting hotline and email address is important. These can be anonymous as well as confidential. And do anti-fraud education in-house and with providers and customers.

All this is doable with a small staff.

Finally, many states have anti-fraud meetings with the attorney general's office, Medicare, Medicaid and other insurers. These meetings are helpful.

Bowman: Communication and promotion are key. Make sure your SIU is highly visible. The combination that's worked for us is that I'm the promotion person, the face of SIU that trains other areas of the company on fraud and creates a standard SIU referral process. My senior investigator handles the nuts and bolts of finding where fraud is and recommending what we do about it.

Partnering with other SIUs is valuable. The Office of the Insurance Commissioner for Washington pulls together all SIU managers twice a year, including staff from life, auto and home insurance industries. It's helpful, since someone who's been in a car accident or is claiming disability may be trying to defraud health payers as well. And we attend the Washington Department of Justice quarterly meetings to hear about other schemes law enforcement is seeing. That sharing is important.

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