By Germain Tanoh, PhD, The Afro News Vancouver
In addition to dealing with funding challenges, the healthcare industry is also confronted with repeated fraud and medical identity theft. According to the Canadian Health Care Anti-fraud Association, healthcare fraud costs Canadians between $5 and $15 billion each year. That’s enough money to hire approximately 20,000 new doctors or purchase more than 5000 MRI machines. In the United States the Federal Bureau of Investigation (FBI) estimates that in 2008 between $70 billion and $234 billion was stolen from the American public through healthcare fraud schemes. To put the size of the problem into perspective, $234 billion is roughly equivalent to the Gross Domestic Product of a nation the size of Columbia or Finland. The financial cost of healthcare fraud includes higher premiums and increased taxes, as well as reduced medical coverage.
A Huge Threat to Public Health
Healthcare fraud represents a serious threat to the quality of care and the delivery of healthcare to those in need. The victims of identity theft may have their medical records falsified to include incorrect information on blood types, allergies and other aspects of patients’ medical profiles. In some cases, like this woman in British Columbia who died after being given counterfeit prescription drugs, it can cost you your life. An FBI financial crimes report stated that, “One of the most significant trends observed in recent healthcare fraud cases includes the willingness of medical professionals to risk patient harm in their schemes. FBI investigations in several offices are focusing on subjects who conduct unnecessary surgeries, prescribe dangerous drugs without medical necessity, and engage in abusive or sub-standard care practices.”
Healthcare fraud has numerous insidious side effects that cannot be seen until years after the crime is perpetrated. For instance, doctors will likely prescribe an incorrect medical treatment based on information from a falsified medical record. The same record may prevent the patient from obtaining individual health insurance. More frustratingly, medical identity theft may reduce the victim’s health insurance benefits.
How to Fight the Crime
What makes health care fraud so pervasive is the fact that it can be perpetrated by virtually any user of the health care system, such as patients, health care providers, staff, administrators and medical device manufacturers. In April 2010, a CBC News investigation in the Toronto area found that beauty spas are offering aesthetic treatments that are paid for through health insurance fraud. Alistair Forsyth, a senior researcher at the Canadian Health Care Anti-Fraud Association said, “It’s impossible to detect in those situations, because documentation is for all intents and purposes legitimate, and if you don’t have somebody to blow the whistle on it, then it’s, as I say, virtually impossible.”
Health insurance companies, including the Canadian Competition Bureau provide a whistleblower hotline as a means to fight healthcare fraud. Although this enables people to report suspicious fraudulent behaviour, it is not effective to rely solely on whistleblowing to fight the crime. Proactive response to healthcare fraud is possible via predictive modeling and real-time analytics to detect emerging fraud patterns and schemes in a timely manner.
The Role of Predictive Analytics
A careful analysis of patient data and transactions can uncover fraudulent activities much sooner and stop it before the fraud causes harm and financial damage. The most successful fraud detection system is built on historical data to establish norms, rules and patterns. Thus, unusual activities become easy to characterize by relating them to symptoms associated with fraudulent activities in the past. Predictive applications are capable of identifying unusual or abnormal patterns of claims by physicians, laboratories, clinics and others. Among other things, these applications can highlight inappropriate prescriptions or referrals and fraudulent insurance and medical claims.
Policymakers in the United States are adopting analytics as part of their arsenal to win the fight against healthcare fraud. Ten states have been selected for the application of predictive analytics in fraud detection and the implementation thereof shall commence on July 1, 2011. On September 22, 2010, at the congressional subcommittee hearing, Health and Human Services Inspector General Daniel Levinson stated, “We are committed to enhancing existing data analysis and mining capabilities and employing advanced techniques such as predictive analytics and social network analysis, to counter new and existing fraud schemes.”
Canada should follow the lead of its neighbour. Since spending on health care is projected to rise rapidly over the next ten years, the cost of health care fraud is likely to rise as well. In other words, health care fraud is already a massive problem and will continue to get worse, unless more coordinated efforts are made to prevent and minimize it.
About the Author: Germain Tanoh is the founder and President of Quantimal Consulting. He is a dedicated consultant with expertise in business analytics, project management, and strategic planning for business growth. He can be reached at email@example.com or visit Dr. Tanoh’s website at www.quantimal.ca