Blue Promise: Could You be a Victim of Health Care Fraud?

We’ve all heard the horror stories of fraudulent behavior by business professionals across the country. But how common is it in the health care industry? Could it happen to you? The answers might scare you. Learn how to protect yourself in this episode of Blue Promise, featuring Ryan Zarfoss, formerly employed by the FBI and now serving as senior manager of special investigations at Blue Cross and Blue Shield of Texas. If you suspect fraud, there are ways to report it. Call our fraud hotline at 1-800-543-0867 or visit our website. 

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Blue Promise is a podcast and online video blog that aims to address complicated health issues with candid conversations from subject matter experts. New editions are published regularly and are hosted by Dr. Dan McCoy, President of Blue Cross and Blue Shield of Texas.

Show Transcript

DAN: We've all heard the horror stories of fraudulent behavior by business professionals across the country. But how common is it in the health care industry and could it happen to you? The answers might scare you. Thanks for tuning into Blue Promise. I'm Dr. Dan McCoy and I'm the president of Blue Cross and Blue Shield of Texas. I'm joined in the studio today by Ryan Zarfoss. He's our senior manager of special investigations here at Blue Cross. OK Ryan, start off here, what's Special Investigations? 

RYAN: Ok, Dan. Special Investigations is really the group that any insurance company has to look further at fraud, waste and abuse. We don't really have a requirement to have an SIU or special investigations unit but there are clear rules that say an insurer like us has to have a way to detect and prevent fraud, waste and abuse. 

DAN: OK. So, before you started to, so these terms, I think most people kind of group them all together. It's kind of like you know it's just a waste of money. People are stealing money, things of that nature. But what is fraud, waste and abuse? 

RYAN: OK. Great question, really simple. Fraud is intentional, and fraud is a misrepresentation.  Here at Blue Cross we get thousands of claims a day. Most cases of fraud means that somewhere on that claim form that we process there's probably something that's not true. Not in every case, but in most. So, it's intentional and there's a misrepresentation to try and get paid  

DAN: So, is that a crime? 

RYAN: Very often it's going to be a crime. It's a federal crime. It's also a crime at the state level under a number of different statutes. 

DAN: Ok, so let's go about waste. What's waste? 

RYAN: Waste is just excess or sloppy use of resources. I mean think of it as, ok, you're going into an O.R., they use up a lot of surgical trays equipment. You're doing needed work but maybe you're inefficient and you really use up too much stuff.  That's waste and it can often get billed and paid for by an insurance company. 

DAN: And eventually a customer. 

RYAN: And eventually a customer. 

DAN: Or a patient. 

DAN: Right. What about abuse? 

RYAN: Abuse is really just performing services that you really shouldn't, that you really don't have entitlement to. Kind of like misuse of things under fraud, but with abuse there's no intent. You might really be doing the services, but they're just not really needed.  

DAN: Ok, so why is this important?  

RYAN: Why is it important? There's a real cost to all of us whether we're the members, whether we're employers. There's a real impact to us that ultimately trickles down to who pays. 

DAN: So, any idea on what the impact of that cost would be? 

RYAN: Oh sure. You know we have investigations in our department which span all types of cases and there is one where it's still ongoing. There's an impact of about $20 million to a single employer group because a certain number of people got hold of our member I.D.s and put them on the resale market, and that went very quickly and spun into lots of unnecessary services that our members initially did not even know about. And that cost about 20 million dollars to one employer group. 

DAN: So, these kinds of fraud in schemes if you will, sound pretty sophisticated. So, tell me a little bit about the team that we have here, and the industry usually has, to kind of help detect this? It seems like it would require some special expertise. 

RYAN: It does and we're very fortunate in Blue Cross Texas to have a really, really complimentary group of people. I'll start with our data analytics folks. We have people that their sole role is to look at what's going on with claims and other information coming to our company and to see anomalies, to see things that don't look right, and they identify schemes in many cases right off the bat from doing that work. And they lead to investigations in the company. 

DAN: This might be an example that you probably don't need 20 wheelchairs within a three-week period? 

RYAN: It could very well be something like that. They pick up on things that don't meet the norms that we see across industries or provider types and they refer them over to the investigation side. So, we're strong in that area.  

Another group that we have is, we have people with professional experience in this company whether it's claims processing, coders often have clinical backgrounds. They're the ones that answer the questions. Does this actually look right the way it's presented to us? They know what the right answer is. They're part of SID. 

DAN: So basically, that's a little bit of a tacit knowledge of just people being in the industry for a long time. They can look at the smell test. 

RYAN: You need that. It's absolutely essential in what we do because we also have medical directors as part of Special Investigations. They're the ones that are reviewing the medical documentation under those claims when we ask for them to make sure that people are following those medical policies. And also, our reimbursement policies. We have attorneys in SID, as well, to make sure we stay on track legally. And then there's the last part that's, you know, I'm one of the investigators, or part of the investigative team, and we get those from people who have been in the industry a long time. We also have investigators with a little clinical background as well. And then there's people like myself again who come from law enforcement. 


DAN: But really it takes that kind of team approach because it I'm going to kind of make a suggestion here and you tell me if I'm right. Health care is complicated, and that complicated nature probably lends itself to fraud, waste and abuse. 

RYAN: It does, health care like we were just talking a minute ago, there is a tremendous learning curve in addressing fraud. So, it takes it takes knowledge of what a fraud scheme is. It also takes knowledge of what the health care industry is all about. It's a lot of moving parts that you have to put together to understand, is what I'm seeing right or is what I'm seeing a real problem. 

DAN: It also seems to me in maybe as a physician that a lot of what happens in health care is based on trust. So, you trust your doctor, you trust the pharmacist, you trust the nursing, you trust the billing that comes from the office. So, a lot of people are kind of they don't even think that it crossed their mind that this activity this procedure, this bill, could actually be fraudulent.  And that's one of the challenges isn't It? Because getting people to actually think about it because they're there in this trust relationship. 

RYAN: It's absolutely a trust relationship and it's a problem if you ignore what's going on underneath just your visits to a doctor. What I mean by that is, when we send out those explanation of benefit forms it's a really good idea for you to look at those to understand what's being billed and what's being billed by whom. Just doing that is a great deterrent or a great indicator to somebody that hey is there a problem, maybe I just need to call my doctor and find out what's really going on here. Or maybe there is a bigger problem and I need to report it. 

DAN: So basically, what may need to happen is somebody may need an explanation of that explanation of benefits right?  

RYAN: Correct.  

DAN: It's nothing wrong with calling up and saying hey these codes on here I don't really understand. Does this make sense to me? I mean I just had, I just was on an airplane and a member you know said hey and they always show me their Blue Cross card when they find out what I do. And they said you know I just got home from vacation and I had a whole list of pharmaceuticals that were delivered to my door that I didn't order. Right. And I realized that I'd been gone for three months and I had been paying I've been getting billed for three months for these pharmaceuticals, what do I do? And I told them that you know I said I’m from Blue Cross, pull out your card and call the number. But tell us, what do you do if you're a patient and you think you're a victim of fraud waste or abuse? 

RYAN: OK. There's a number of things that you can do. First, we talked about, hey, maybe it just needs to be a call to your doctor to understand what's really going on. It could be that, ok, I still don't understand what's happening. Now, I really do want to report this as suspected fraud. That's a little sometimes challenging for people, it may unnerve them to do that, but we provide multiple ways to do that. There's a phone number that you mentioned, you can go on our website and make an online report. You can report fraud to even the Blue Cross Association or even a local investigative agency. But it's important once you become convinced that there is a problem that your doctor can't solve for you, that you consider reporting it. 

DAN: And it's also not just physicians, either, right? I mean the interesting thing about health care today, a lot of other components of what people pay for health care, everything from home health to pharmaceuticals in nature so that also lends itself to that complexity too. 

RYAN: It absolutely does. There is a lot that goes in to formulating claims, to sending us things that really, like I said, it's a learning curve for everybody involved not just in the company but in SID to get a hold of what might be the new problem, the new type of issue of the day or the year. 

DAN: Well, so the person on the airplane has an interesting story and she said you know I don't know that I want to do that because I really like my doctor, so I want to keep my relationship, right. But I have a feeling that if they pick up the phone and they call that number and they want an explanation, you don't just run out and arrest the doctor. 

RYAN: No, no, we don't do that. Here's really what happens when you call. First of all, every call to our fraud hotline, for example, gets answered and every one of those gets forwarded to Special Investigations. At that point, we've got some of those people I mentioned earlier, those people with a long-in-the-tooth company experience who understand the claims process. They look at those and say, hey, maybe this is a service unit issue where we need to send this back to the right expert here, to give that member a call and explain to them what's really going on with this claim. Others, they might be indicators of fraud and that's when I look at them and there's quite a few of those. And my job is to really either decide this is something we need to handle, or this is something that might even already connect to an ongoing investigation or department. I spend a lot of time on that prioritization, on that connectivity issue with figuring out what do we do with this member's complaint or concern. 

DAN: Let's walk through a couple of scenarios. It can be interesting for our audience. Let's say, for instance, that airplane neighbor of mine sitting next to me, you call, and you look at the information and it looks like they may be using a few too many surgical trays and you know you look at the rest of the data and it’s not much there. What do we do? Do you educate the provider, or I mean what's the next steps in that in that scenario? 

RYAN: Education is a core component of what our mission is. Not everything that we do leads to a refund or recovery or even a law enforcement referral. We do what we call a peer-to-peer education with our department. If it's something that we initially look at and spend the time analyzing or even investigating, and then we basically determine, look, this is really just the provider not understanding exactly how their work is supposed to fit in with, you know, our company policies that we do, and we connect with them, but we do the education. It might be in person. It might be you know on a WebEx or some other electronic form, but we attempt to do this in person as much as possible and we'll review step-by-step medical director to that provider. What the concern is, what the right way to go is, and then we'll probably be monitoring that situation after that point to see if there's any change in behavior. 

DAN: Because over the years, I've known your group for a long time here and got to know you, many of these things that happen are it could be it's always been done that way but the policy's changed. I went and saw a coding consultant who showed me how to raise my revenue and said it was OK. Maybe one of my buddies, I joined the practice and that's what they do in this practice. And so, I just sort of followed suit or maybe I don't even look at my bills. Is it fair that some degree some of this may just be not oversight in not knowing the rules. 

RYAN: It is very fair to say that, you know, not everybody is a coding expert. There is a lot of opinion on what is correct coding. In fact, there are examples to add to the complexity. Not every payor has the same set of rules. And if you're a provider and you are billing this company and that company, there are some differences. And that's why we take the education component seriously to make sure providers can, you know, if necessary, refocus and understand exactly what the Blue Cross policy is on that issue. 

DAN: And there's absolutely opportunities where clearly, though, this was an intentional way to take money from the patient either through their premium, through their insurance product or directly from the patient. And what do you do about those? 

RYAN: OK. You're really talking about fraud -- those cases that are clearly, clearly not accidents, are not just lack of education, those we carry further. And another one of our core roles is when a case meets the level of fraud that we believe, we will refer it to a law enforcement entity and we want to do two things when we do that. We not only want to be able to clearly state where the fraud is that we see, we want to give some pointers and guidance to those law enforcement entities on, we think if you look here, you will find additional places where the fraud that we allege is being supported. You know, we're an insurance company, we can't do everything that law enforcement does. But one of the nice things about having this former law enforcement, we can kind of project and go, we know where we would go next in this type of investigation. So, we want to tell these entities here's what we think you would find if you go elsewhere and look in these logical places.  

DAN: And actually, just to be complete here, you know we've kind of picked on the provider community, we've used doctors in these examples but, it’s not just physicians, right?  Even people that hold the card, members can commit fraud. I mean it's, unfortunately, it's something that's kind of open door for a lot of people to walk into. 

RYAN: This is one of, again, the many challenges we've already talked about, a few of them, but you have not only doctors, you have marketing companies, you have unlicensed individuals that acquire ownership of some of these service companies, whether it's durable medical equipment, home health agencies, whatever you want to list there is, the door is open for all kinds of players not just those certified, licensed, and credentialed people. 

DAN: And I think also it's fair to say that in my role, we learn from these schemes and make our systems better. Right? I mean, that's one of the big take homes from your department. 

RYAN: We do and part of that education process that goes on is that's also being reported up through SID into these other entities that we work with within the company. We have regular connection, you know, with network representatives, with our legal department. They're fully aware of what we do in certain settings that we have regularly with them. So, there is that learning component so that we can improve our process and improve our products. 

DAN: So, one of the challenges that I've heard before and it would be interesting to get kind of your thoughts on, that is that I've had people say, well, why don't you just look at every claim or how come you don't catch all the fraud that goes through there? But there are some challenges to that. 

RYAN: There is, there is a lot of challenges. We process of course a tremendous number of claims on a daily basis. And here in Texas, we are also subject to some pretty rigorous prompt pay rules. We just don't make arbitrary decisions about taking our time to pay claims, we pay them in a timely manner because the law says we have to. And, because fraud detection and fraud reporting take a little work and a little effort, we don't always know at the get-go that, you know, hey, this entity out there that's billing us is conducting fraud. If it takes a few months for us to identify it or for us to have that reported to us. Fraud can already be recurring, can already have been paid. And in a number of cases that's what happens. 

DAN: So those prepay laws are really kind of, in some respect, they limit the ability to do fraud detection? 

RYAN: They are a challenge to doing fraud detection. They don't, it's not a hurdle we can't cross. But it does make you look at some cases and go, OK, we've already had fraud. We can see it. It's that money is out the door. So maybe in what we're doing we need to shift gears and have a component of, we're going to try to get that money back somehow. It may be internal process, it may be working with law enforcement. 

DAN: So, Ryan, it’s been, it's really been a great discussion. So, if I'm listening and I'm a patient, what can I do to prevent fraud, waste for abuse from happening to me? 

RYAN: There's a couple of things you can do. First of all, we talked about those Explanation of Benefit forms. I know a lot of us get them electronically now and they might come online. But please take a look at them, review them, just understand that, hey, does this actually connect to a real service I had? Is this provider really one that I recognize? Doing that goes a long way. The next thing that you should do is be very, very aware that you just don't hand out your insurance information. There's all kinds of scams going on where people are soliciting via the phone and online to get that number off of your card and your name. You should only be giving it out when you're seeking medical treatment and services and then you just educate yourself on, you know, the best practices that you can go through for fraud. If you don't know how to do that, go to our website, go to Blue Cross and just type in fraud, you'll find all kinds of tips to remind you how to stay aware of fraud schemes and how to protect yourself from unnecessary costs. 

DAN: Well Ryan, this is great information for our employers and great information for everyone. Thanks for joining us today and thanks for joining us for this episode of Blue Promise. 


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