23-2-2012

1. Dealing with HEALTH INSURANCE Frauds & Abuses Dr. Nayan Shah 23-2-2012 PARAMOUNT HEALTH SERVICES (TPA) PVT. LTD. HEALTH QUARTERS

2. Definition of FRAUD An intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him, or to surrender a legal right; A false representation of a matter of fact, whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury.

3. DEFINITIONS • Fraud- • Intentional deception + Misrepresentation intended Unauthorized benefit • Abuse- • Charging for services that are not medically necessary, do not conform to professionally recognized standards, or are unfairly priced • Impact – • 15% claim amount (Rs. 600 – 800 crores) • Fraudulent Claim – • Intention to deceive, conceal or distort relevant information affecting benefits- derive undue benefits from Insurance industry • Preparation of exaggerated/inflated claims/medical bills • Malafide intention to induce the firm to pay more

4. Healthcare FRAUD Healthcare Fraud is an intentional deception or misrepresentation that the Individual or Entity makes knowing that the misrepresentation could result in some unauthorized benefit to the Individual, or the Entity or to some other party.

5. Global & Indian Scenario of Healthcare FRAUD & ABUSE 1 unit out of 7 spent goes to Fraud & Abuse. 16 billion USD in Medicare in 2008 – estimate About 36 billion losses to U.S Health Insurance per year In India, estimated loss is 1000 crores & increasing

6. Categories of Perpetrators of FRAUD • Consumer • Sales Distribution Channel • Providers • TPAs • Insurers • Govt. mass policies- anew dimension of frauds • Investigators!!!

7. Consumer Related FRAUDS & ABUSES Eligibility Frauds • Age, Occupation, sports habits, life style • Enrollment Details • Suppression of material facts and previous illnesses • Suppression of Chronic Ailment Information • Health coverage of dependants from other sources Pre Policy Checkups • Impersonation • Influencing the diagnostic center Over insurance

8. Consumer Related FRAUDS & ABUSES Travel Health • Suppression of Medical Details Frauds at the time of Claims • Duplicate Filing • False bill preparation • Collusion with Providers • Impersonation Bogus groups for Group Discount (non-homogenous groups) Bogus group members in Employer funded groups Non existent employee in Employer’s list for Claims purposes

9. Distributor Channel Related FRAUDS Brokers • Data Fudging • End of Policy Reports to Insurer i.e. IBNRs Agents • Underwriting guidance • Pre policy checkup fabrication • Inappropriate information about Policy • Misrepresentation for higher commission • Pocketing of money without passing it on to Insurer • Collusion with Providers

10. BIMA(RI) KYA HAI ?

13. Provider Related FRAUDS & Abuses • Wrong Billing • Inflated Billing • Billing for Services not rendered • Fraudulent timings of admission – 24 hrs hospitalization • Admission without Diagnosis • Planned admissions classified as emergency admissions • Length of Stay - overutilisation • Admission for Investigations

14. Provider Related FRAUDS • Wrong surgical categories & surgical details • Overcharging for Consumables • Pharmacy billing – Generics U1 branded • Doctor’s visits • Class of Admission – Single, Sharing, General • Cross references not warranted • Over Investigations • Life Support system usage • Waiver of Copays

19. TPA Related FRAUDS • Kickbacks from Provider Network • Collusion with Network for Inflated / Wrong Bills • Rewards in the garb of early payments / release of payments to Providers / Consumers • Directing the Consumer to a colluded Provider • TPA Employee colluding with Fraudsters

21. Insurer Related FRAUDS • Reluctance for giving senior’s policy, renewal after claims • Non registration of claims toward the end of tenure • Reluctance to pass on appropriate data to competition • Termination to loss making policies • Subjecting TPAs to exercise uncalled for force on providers without changing the products.

24. Other FRAUDS Globally Observed • Primary Care – Pharmacy, Diagnostic Centers • Coding – Bundling & Unbundling • Higher Codes • Viatical Frauds

25. Dealing with Consumer FRAUDS • Eligibility Check criterias • Teleinterviewing • Tele Underwriting • HRA Tools for Corporates • Fraud Detection Software • Investigations • Canceling the Policy • Control on Diagnostic Centers

26. Dealing with Distribution Channel FRAUDS • MIS Reports • Business Reviews • Profitability Reviews • License Suspension / Cancellation

27. Dealing with Provider FRAUDS • Cost Control Techniques & Tools • Utilization Reviews & Medical Audits • Care Pathways • Preferred Networks & Network Contracts • DRG based Payments • Investigators Services • Creation of awareness amongst Providers • Legal Remedies • Blacklist of errant providers & publishing the same

28. Dealing with TPA FRAUDS Regulator • Termination of License Insurers • Terminate the contract • Levy Penalties Providers • Cancellation of contract • Complaints to Insurers & Regulators Consumers • Complaints to IRDA • Complaints to Insurers • Ombudsman • Consumer Forums & Judiciary • Press & Media Coverage

29. Dealing with Insurer FRAUDS • Complaints to Regulators • Media exposure of errant insurers • Complaints to Consumer forums, Judiciary

30. . Mass policies-Govt • Enrollment level frauds • Distributor frauds • Network Hospital frauds

31. . Mediclaim journey over years • Transition from indemnity to managed indemnity • Distributor channel level overtaken by providers • Network Hospital become aware of the system and create innovative ways to cheat.

32. Future frauds • OPD • Pharmacy • Care pathway fudging • Wrong medical info for preauth • Incentivizing the patient for inflated billing • LTC product

33. Can We achieve 0 fraud level in Health Insurance ??

34. Typical reactions to suspected fraud? Abuse? Investigate

35. Why To Investigate? • To control the claim ratio (ICR) • To understand the behavior of hospitals in Region • To identify the adverse claims behavior • To identify the nexus if between any hospital and agent / client or other intermediary • To confirm hospital eligibility as per the policy conditions • To control prolonged hospitalizations and over-billing / over stay • To identify good hospital who are willing to work on reasonable SOC under TPA network of hospitals • To synchronize and educate hospitals / patients to utilize the policy in proper manner

36. Trigger Points for Investigations In cashless hospitalizations • Repeated admissions • High value claims • Irrelevant investigations • Prolonged hospitalizations • Repeated additional AL requests • Treatment/Procedure not consistent with the ailment

37. Trigger Points for Investigations In reimbursement claims • Admissions at suspected/blacklisted hospitals • Repeated hospitalizations of the same insured • Repeated hospitalizations of the family members • Admissions at same hospitals • Admissions at hospital located far from the residence • Well documented claims • Claims do not contain pre-post documents • High value claims not consistent with the ailment and the provider • Excess medicines billed for

38. In reimbursement claims……….contd • Irrelevant investigations billed • High tariff • Manipulation in the bills • Manipulation in ailment history • Manipulation in dates • The claim documents do not contain proper qualification of the doctor • There is no landline telephone number mentioned on the hospital and pathology documents • The registration number of the hospital is not mentioned in the claim documents.

39. In Life Insurance or Death claims • Claim in first year of policy • High value claim • Manipulation in the medical documents with respect to history of ailments. • Death due to Liver Disorder to rule out alcohol consumption. • Death due to chronic disorder and claim in first year of policy. • Suspicious cases to rule out self-inflicted injuries e.g; accident at railway track…… etc.and/or homicidal cases.

40. Process followed for Fraud detection Cashless Claim Investigation: • Visit is made to the hospital/nursing home by the investigator at the time of AL issuance and after AL issuance on case to case basis. • The insured admitted is verified with available ID. • The ICP is checked and the line of treatment verified with the admission request note. • The class of admission is verified with that mentioned on the admission request note. • The probable date of discharge is found out from the treating doctor. • The investigations carried out are verified with the ailment mentioned. Reimbursement Claim Investigation: • Suspicious claims are studied and the line of investigation is decided and initiated. • Visit is made to the hospital/nursing home, pathology centers, medical stores for verification of medical data included in the claim file.

41. Visit is required to be done to the insured’s residence, neighborhood, place of work, attendance needs to be checked at schools and place of work as the case may require. • Existing data of claim history related to hospitals/nursing homes, blacklisted hospitals, insured incurring multiple claims, pattern of claims arising from particular hospital ,claims arising from particular geographical area ,from particular agent, is checked for which gives fair idea on the mode of investigation to be followed. In Life Claim Investigation: • Verification of Death Certificate • Verification of Insured Identity and statement from the relatives • Verification of hospital records for history of ailments • Verification from local pharmacy, general practitioner and neighbors • Verification from police records in case of suspected suicide or homicide • Expert opinion e.g;Medical Specialists like Cardiologists,Neurologists,Forensic experts,etc.

42. Fraud and Abuse Claims %

43. Sample cases Case 1 Claim Amount:Rs.25144 Case Details:Manipulation in main hospital bill to increase the claim amount

44. Case 2 Claim amount:Rs.110480 Case details:Hospital bill amount was enhanced.Revised bill obtained from the hospital

45. Case 3 Claim amount:Rs.26850 Policy type:Individual Case Details:As per written confirmation from the Pathologist the pathology reports have not been signed by him and the signature and rubber stamp have been manipulated.

46. ... Thank You ...