Jeremy Clopton, CFE, CPA, ACDA
Owner, What’s Your SQ
As the two most recent Reports to the Nations have indicated, data analytics is one of the most effective anti-fraud controls an organization can use. It’s worth noting, however, that data analytics are also incredibly effective at fraud detection as well. Organizations in all industries, including government, have been implementing analytics for years. According to the Department of Justice’s (DOJ) 2017 Year in Review, they are no different. They recently revealed that their Healthcare Fraud Unit launched a Data Analytics Team for tackling health care fraud. This team is not simply addressing basic shell company schemes; it is providing analytics to address the latest and greatest fraud trends in the industry. In addition to investigations, the team will be responsible for providing health care fraud analytics–focused training to U.S. Attorneys’ offices across the U.S. and providing prosecution assistance.
Health care fraud types
Health care fraud can take many forms. Some of the traditional fraud schemes — shell vendors, ghost employees, financial statement fraud and others — are prevalent in the health care industry. However, the new Data Analytics Team is said to be focused on identifying “outlier” transactions, as indicated in the article. Many of these transactions will likely be found in the patient accounting, claims and electronic medical record files. This will allow them to focus on some of the more health care specific fraud schemes, such as:
- DRG creep
- Unbundling and fragmentation of procedures
- Billing for mutually exclusive procedures
- Fictitious services
These schemes, and so many more, are identifiable through analyzing claims and billing details, either filed by a single institution or across multiple institutions for the same patient. With the deployment of this team, it is safe to say health care specific fraud cases will likely increase in coming years.
What you should do
If you’re a health care institution, you should be looking to take a similar approach. By implementing analytics internally, you can work to get ahead of the DOJ and other regulatory bodies such as the Office of Inspector General (OIG). Being proactive in your application of analytics doesn’t mean trying to circumvent the authorities. Rather, organizations, businesses and practices will be better able to identify issues before they rise to the level of warranting a DOJ or OIG investigation.
Your plan for implementing analytics should be built much like the plans of these oversight organizations. The DOJ and OIG, among others, provide context regarding areas of enforcement, reports from recent public cases, and their work plans for current and past years. These should be used in the planning and risk assessment so your organization can implement health care fraud focused analytics to effectively combat fraud.