A pharmacist takes a 30-day prescription and inputs it as four weekly prescriptions - quadrupling the Medicaid dispensing fee.

A fraud ring obtains a list of Medicare patients who recently underwent hospital outpatient procedures and starts submitting phony claims, threatening the lives of parties who expose the scheme.

The local news reports that five teachers who find a pharmacy to dispense large prescriptions for narcotics covered under the school health plan subsequently sell the drugs they receive.

What do these three stories have in common? They are all real fraud incidents.

Fradulent medical care spending

The health care industry estimates that somewhere between $70 billion and $230 billion of medical care spending is fraudulent. And while electronic medical records are being hailed as a way to save money, they actually are making it easier to commit fraud. Much as the digitization of health records has eased information exchange between legitimate parties, it also has given fraudsters an easier path to patient data. The rate of fraud based on exposure to health data was 7% in 2009, up from 3% in 2008.

Staying savvy

It's increasingly important for insurers and government agencies to get savvy about using analytics to thwart fraud. Too often medical fraud is caught by happenstance, unless the fraudster gets very greedy.

A daughter reviewing her aged father's Medicare statements might notice equipment he never received and report the situation.

Or, the pharmacist — trying to ratchet up dispensing fees — does so with such reckless abandon that the reimbursing agency, or someone on the pharmacist's staff, can't help but notice.

By using text analytics and sophisticated data mining software (which includes predictive modeling, outlier detection and social network analysis), organizations don't need to rely on tips and extreme outliers. Instead, they can quickly home in on fraudsters and stop the fraud-often before the reimbursement check is cut.

Keeping information integrity

We know that medical office administrators are sometimes coached to make sure office visits are coded properly for maximum reimbursement. And no one wants a doctor who spends 45 minutes with a patient to get reimbursed as a Level 1 visit.

How electronic medical records make it easy

Electronic medical records make it easy to preset all visits at the highest reimbursement level, with the onus on the harried provider to select a lower, more appropriate level.

Pre-filled templates can lead to "checking all the boxes" on the exam sheet to "upcode" the visit further, generating the highest charge. And it is very easy for offices to cut and paste information from one record into another.

When coupled with demographic errors (putting in a higher age than the patient is), EMRs don't just make it easy to commit fraud; they can lead to medical errors that threaten the patient's lives and cost more precious medical dollars. It can also cost individual patients money if they later apply for life insurance and their medical records are littered with mistakes that make them seem older or sicker.

Necessary technology

Advanced analytics are necessary to find and effectively root out fraud, waste and abuse. But the type of analytics that spits out a crude list of possible investigation targets isn't much use. Payers, both government and private, need:

* Text analytics. Very critical to finding problems in the "notes" section of EMRs. When every diabetic patient over the age of 65 has the exact same wording on their records from one practice, it's a tip-off that fraud or errors might be occurring.

* Intelligent outlier detection and predictive modeling. A high-volume, 24-hour pharmacy is likely to have more weekly prescriptions than a less busy pharmacy. Analytics that take into account volume and population demographics will do a better job of avoiding false positives.

* Social-network analysis. This helps claim payers, for example, find patterns of ownership in different billing entities. If one entity is under investigation, others with related ownership can face additional scrutiny. Social-network analysis also helps unearth the kind of multiparty fraud schemes that involve the theft of patient records, abuse of prescription coverage and collusion among doctors, patients and pharmacists.

EMRs have tremendous potential to lower health bills and improve care, but they also provide new options for fraudsters. Advanced analytics are the key to spotting billers who are submitting medical records that are fabricated or overstated to support erroneous or fraudulent claims billing.

Malida is the principal for health care fraud in the fraud and financial crimes practice at SAS. This article originally appeared in Insurance Networking News, a SourceMedia publication

Medical ID theft stats Tips for detecting medical identity theft $20,000 - The amount victims pay each to resolve cases. More than half say they had to pay for medical care they didn't receive in order to restore health coverage. Nearly half of victims also lost health coverage due to the fraud, and nearly one-third said their health premiums rose after they were victimized.

<10% - The percentage of medical fraud victims who say their incidents were completely resolved. 250,000-500,000 Americans who have been victimized by medical identity theft. 36%Americans age 18-49 who carry their Social Security card in their wallet, putting them at risk for medical identity theft; 43% of Americans age 50 and over do the same. Source: insurancefraud.org

1. Closely read explanation of benefits (EOB) statements that your health plan sends you after treatment. Make sure the claims paid match the care you received. Look for the name of the provider, the date of service and the service provided. If there's a discrepancy, contact your health plan to report the problem.

2. Order a copy of your credit reports, and review them carefully. The law requires each of three major nationwide credit reporting companies - Equifax, Experian and TransUnion - to give consumers a free copy of their credit report each year if they request it.

Visit AnnualCreditReport.com or call 1 (877) 322-8228 to order free credit reports each year, or complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Download the form at ftc.gov/freereports.Consumers should look for inquiries from companies they didn't contact, accounts they didn't open and debts on accounts that they can't explain.

Check that Social Security number, address(es), name or initials and employers are listed correctly.

3. Ask for a copy of your medical records. Review medical and health insurance records regularly. Thieves may use your name to see a doctor, get prescription drugs with your health ID number, file claims with your insurance provider, or have done other things that leave a trail in your medical records. Health care providers and health plans generally are required to provide files within 30 days following a request. Contact each provider - including doctors, clinics, hospitals, pharmacies, laboratories and health plans. In most instances, a provider who denies access to records must offer a reason in writing. If a request is denied, contact the person identified in the provider's Notice of Privacy Practices or the patient representative or ombudsman to appeal.

4. Get a copy of the accounting of disclosures for your medical record from your health plan and providers. It will help you follow the trail of your information and identify who has incorrect information about you. The law allows you to order one free copy of the accounting from each of your providers every 12 months. For more information about HIPAA rights, visit the Department of Health and Human Services, Office for Civil Rights website, hhs.gov/ocr. Source: ftc.gov


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