Self insured employers who fund their employee group benefits plans could be doing more than most of then are doing now to root out fraud, waste, and abuse. They do not need to actually prove fraud, which can be difficult, but they do need to identify suspicious overpayments that were approved by the company administering their plan. That can easily be done if they can get hold of their claims data, which they have a right to do as they are paying the bills.

For example, the administrators running New Jersey’s School Employees Health Benefits Program could see their plan was being exploited when they analyzed their out of network payments to acupuncturists, chiropractors, and physical therapists. The plan had virtually no limit on those payments, and this critical loophole created a feeding frenzy of clinics trying to lure in as many teachers as possible for treatment. One practice delivered free bagels and orange juice to local schools. Another provided free chair side massages on site at local schools. The acupuncturists , chiropractors and physical therapists donated cash, and supplies to local schools. The leaders administering the health plan, which covered about 158,000 educators and their loved ones, could see that the plan needed to be redesigned. By their estimates the plan overpaid for the services by about $130 million a year. The claims data showed that some acupuncturist and physical therapy sessions were paid on average at over $600 per visit. More than seventy of them earned more than $200,000 annually from the teacher plan alone. The situation  may not have been fraudulent , but it certainly involved  exorbitant payments. The teachers union initially blocked the redesign of the plan, but after a Pro Publica investigative story ripped the cover off this scandal the teachers relented . The plan was revised to limit such payments resulting in significant savings which in turn allowed premiums to go down , which led to a membership increase.     

Employers may want to hire experts who specialize in analyzing claims for overpayment and fraud. This service is provided by a growing number of companies and they can pay for themselves by preventing a healthcare plan’s money from being squandered. One such expert is Dr. Eric Bricker, an internal medicine doctor who also has a healthcare finance background. He has helped thousands of employers manage their benefits. He cofounded the company which is now known as  Alight Solutions , (https://www.alightsolutions.com) which  helps employers and their workers find quality health care at the best value.   

To root out fraud and abuse, Dr. Bricker suggests the following steps.  Self funded employers should  first get hold of their claims data and find out how many claims are paid to each doctor or hospital  and check  how much each provider charged and was paid for each visit. Analyze the high volume providers even if the amount charged or paid was low. Sort the data by the number of claims for each provider to identify  which providers have the highest number of claims. The largest hospital in your area will be high volume, but perhaps there is an obscure doctor or clinic  showing up in your claims data that has submitted hundreds of claims within a calendar year, with a high dollar charge per claim. It is easy for such individual providers to rack up half a million dollars in claims, says Bricker.  Then divide the number of claims by 260 which is the number of work days in a year. Is there a lesser known provider who sees many of your employees per day? If so, that would be suspicious. If the volume for any one provider is impossibly high it may be that the provider is waiving the out of pocket costs from your employees.  That may be a sign the provider wants to make an excessive charge to the health plan and needs to incentivize the patient to allow it to happen. If the suspected abuse is happening with an out of network provider , move to a point of service (POS) plan which does not pay out of network claims. Demand itemized bills that detail the charges for each drug or treatment or procedure that took place.

Employers may want to incentivize their employees to examine their explanation of benefits (EOB) statements  and report erroneous  charges for any service that either did not take place or was overstated. Consider letting employees  share in savings when they discover a charge that should not be made and make them understand the correlation between plan savings and lower premium costs. If you can, move the plan to a third party administrator (TPA)with a lower threshold for  examining individual claims . The major carriers  might have auto adjudication levels of $2000 a claim or higher, meaning they do not examine claims of lesser amounts. But a different  TPA might examine any claim over a much smaller threshold, say $500. The suspicious claims can then  be caught before they are paid and/or the plan is redesigned to prevent reoccurrences.      

The appendix contains information to identify the variety of  resources described in this website which can help self funded employers  design efficient and affordable healthcare plans as well find  disinterested administrators for such plans.

The appendix also contains a list of questions employers can ask their current brokers to uncover any conflicts of interest in their dealings with insurance companies.  Insurers are required to provide such  information in some  states . If your broker declines to answer, is evasive, or discloses substantial ties to industry vendors, then it may be time to look up any of the fee only consultants referenced in this section and in Section 6, with additional resources available through the National Alliance of Healthcare Purchaser Coalitions .