The power of predictive analytics lies not solely in the power to identify fraud risk, but rather in the ability to act on that information faster. Capturing real time data, and utilizing it to enhance underwriting processes, to assess and target claims fraud is a powerful tool for insurance providers, but the real value comes from being able to act on that insight faster, cutting off fraud before it causes true financial damage.
For some insurers, this can prevent millions in losses.
The Baptist Health System settlement in Florida highlights this risk and potential reward. The Department of Justice revealed that the network of hospital and medical providers agreed to pay a $2.5 million settlement on allegations of violations of the False Claims Act. These allegations include fraudulent filings by two neurologists within the system for unnecessary services and drugs against Medicare, Medicaid, TRICARE and the Federal Employees Health Benefits Program between September 2009 and October 2011. The claims stemmed from misdiagnoses of numerous patients.
“These health care providers did not only violate the laws of the United States – they violated the trust placed in them by their patients,” said Inspector General of the U.S. Office of Personnel Management Patrick McFarland. “Federal employees deserve healthcare providers, including hospitals, that meet the highest standards of ethical and professional behavior. Today’s settlement reminds all providers that they must observe those standards, and reflects the commitment of federal law enforcement organizations to pursue improper and illegal conduct that may put the health and well-being of their patients at risk.”
The DoJ noted that this settlement marks a success for the Health Care Fraud Prevention and Enforcement Action Team initiative, a multi-departmental effort to reduce fraud in the Medicare and Medicaid systems. Since its enactment in January 2009, the initiative has been able to recover $19.1 billion through False Claims Act cases, with around $13.6 billion of that amount from cases involving fraud against federal healthcare programs.
For insurance providers, this case is an important milestone in the recovery of lost funds through claims fraud, but the best way to fight these illegal activities is to address them before they even happen in the first place. Investing in a high-quality business intelligence platform, integrating predictive analytics with underwriting and claims management processes, can provide a strong foundation for claims assessment and loss prevention. The ability to detect fraud before it causes a loss, rather than fight to recover funds after the fact, places a powerful tool in a firm’s arsenal, optimizing workflow around active retention, rather than reactive recovery
Ultimately, there is more to medical professional liability insurance optimization than predictive analytics software, but adding such a useful tool can help drive the progress providers need to kick start their other initiatives and start cutting their lossesturning up the value of underwriting, a serious area in need of improvement for many insurers.