When it comes to the health insurance premiums you or your company pay, there are numerous influences that can impact the overall price. In fact, many countries are seeing continually increasing premiums, and one contributing factor to this is health care fraud. It is estimated that in the US alone, that fraud amounted to USD 278 billion across the entire health care system. One report, published by BDO LLP stated that worldwide, fraud is costing the health care system USD 487 billion per year.
While this is certainly enough to raise eyebrows, there can be somewhat of a disconnect between how this impacts the insurance industry and, therefore, the premiums you pay. To help, we have defined the three most common types of fraud below, why it’s a big deal, and what you can do to limit it from happening.
Three most common types of health care fraud
Before defining the three most common types of health care fraud, it is important to define health care fraud itself. Simply put, it is the act of trying to make money from the health care system through the misrepresentation of facts or outright lying, of which health insurance is included.
The three major types of fraud are:
- Abuse - Practices that are not medically necessary, or do not achieve professional standards or sound business practices. A common example of this is a doctor over prescribing unnecessary drugs.
- Waste - Overutilization of services by patients, or excessive care provided by doctors, which results in increased costs for all parties involved. An example of this is a doctor ordering a CT scan for a patient who is visiting them for the first time with a headache.
- Intentional fraud - The intentional act of deceiving, concealing, or misrepresenting information with the goal of receiving bigger payments. For example, this could be a patient filing an insurance claim for medical care they did not receive with the hopes that the insurance provider will pay out.
Why is this a big deal for businesses with expats?
In general, if fraud is present, it means that insurers will pay out more, on more claims. This increased cost, shouldered at first by the insurer, is passed along to policy holders in the form of increased premiums.
When it comes to businesses with group policies, this means increased premiums across the board and possibly decreased profits. To avoid this, businesses normally decrease coverage options, set limits on who is covered, and increase deductibles. While this can work in the short-term, many countries are implementing, or have implemented, mandatory insurance which makes these tactics less viable.
Regulations like this can really put businesses in a hard place, especially if margins are tight. So, what can you do to ensure your, or your business’s premiums don’t increase due to fraud?
What is being done by governments?
Before looking into what you can do, it would be a good idea to look into what governments and regulatory bodies are doing to try to decrease health care fraud. One of the most popular methods being implemented by various governments, insurance providers, etc. around the world is the use of big data and advanced analytical software.
While this is not the only thing being done, this is one of the most talked about. The idea here is that insurance providers, hospitals, and regulatory bodies use advanced analytical and data tracking software to track claims, monitor diagnoses, clinical outcomes and prescriptions, and assess overall financial performance. This software has been written with the idea of identifying wasteful and fraudulent activities, and flagging them for review before insurance providers, patients or hospitals pay for procedures.
For example, with this system in place, when a normally healthy patient is recommended for a chest x-ray for a common cold, it will be flagged by the system for both insurance providers and the hospital to review.
Will this work?
It is hard to say whether this will be effective or not. If it is established correctly and monitored fairly, then it should stand a good chance at identifying issues. That being said, it is highly unlikely that we will see insurance premiums drop directly because of this. If anything, we will likely see premiums increase, but in lower amounts than before systems like this were implemented.
What can my company do?
One of the first things you can do is make sure that your employees are clear on what is covered, while also providing an overview of claims and how to submit them. An effective way of doing this is via an online or intranet-based portal which is accessible to all staff and has the information they will need.
The second thing you should do is educate yourself and your employees. This includes topics like how to identify common fraud techniques, what is and isn’t covered by your group plan, common regional health issues and how they are treated, treatment options, and dangers of over care or over prescription, etc. If your employees are more aware of what constitutes fraud, how it is dealt with, and the consequences, the chances of fraud actually happening will decrease.
The third suggestion we have is to learn more about the needs of your employees. From there, you look for plans that best meet the majority of the needs identified. The reason for this is because if employees feel that the plans available to them are adequate, there is less chance of them committing health care fraud - intentionally or unintentionally, which could result in a lower fraud related impact on insurance premiums.
The fourth is to work with a company like Pacific Prime. We can help not only to find the best plan, but also answer any questions staff may have regarding what is covered, or how to spot fraud. Contact us today to learn more.