What Highmark's disclosure reveals about fraudulent billing claims

Health insurer Highmark Health said it saved over $245 million last year by rooting out fraud, waste and abuse, a disclosure that quickly riled up doctors.

The Blue Cross Blue Shield Association requires that its 35 member companies have such programs to detect improper claims, but it doesn't release aggregate results publicly. Pittsburgh, Pennsylvania-based Highmark said it wants to be open about the savings its program is generating, which total almost $1 billion since 2017.

"We think it's important to help our consumers really understand what we're doing to help them lower the cost of healthcare," said Kurt Spear, vice president of Highmark's Financial Investigations and Provider Review department.

On its face, fraud detection might not sound controversial. But Highmark's report highlights the tension between insurers undertaking what they deem routine claims inspections and providers feeling those efforts are overly aggressive and chipping away at their revenue.

Highmark's report drew a strongly worded response from the powerful American Medical Association. AMA President Dr. Gerald Harmon said in a statement that fraud and abuse efforts should be guided by transparent rules that distinguish intentional acts to defraud from occasional or accidental billing or coding errors.

"Health insurers should not be allowed to subject practices to burdensome administrative processes or intimidate physicians who are merely victims of confusing, complex and nontransparent health insurer payment rules and requirements," Harmon said.

Most of what gets picked up through programs like Highmark's are routine billing errors: a former member switched jobs or a bill should have gone to an auto insurer, said Nathan Ray, a partner in West Monroe's healthcare and life sciences practice. Highmark's numbers would be more helpful if they showed what proportion were accidental billing errors versus intentional fraud, he said.

The AMA posts content to help doctors understand how to complete claims correctly, Ray noted.

"So they themselves understand there is an appropriate decorum for how you process a claim and if those things aren't met, a claim shouldn't be paid or should be reviewed at least," he said. "That, by and large, is where these types of dollar figures are coming from."

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The vast majority of cases his program detects are simple billing errors, according to Highmark's Spear. For example, a medical practice that submitted an incorrect code that rendered the claim inaccurate.

The COVID-19 pandemic, however, prompted a number of providers to invent schemes to inflate reimbursement., Spear said. Some opened drive-through COVID-19 testing sites or vaccination clinics, but billed for add-on services like expensive respiratory panels. Others required patients to become members of their practices in order to get COVID-19 vaccinations, he said.

In cases of true fraud, Highmark gets law enforcement involved, Spear said. If the issue is drug related, the company works with the Federal Bureau of Investigation or the Drug Enforcement Administration. Highmark said since 2014, its findings have resulted in 94 arrests, indictments and convictions across 29 states.

Of the $245 million Highmark saved through the program in 2021, about $152 million was related to employer-sponsored insurance, $49 million was from the Blue Card program, which provides Highmark customers access to national Blue Cross Blue Shield networks, $19 million came from Medicare Advantage, $16 million came from Affordable Care Act exchange plans and $9 million came from the Federal Employee Program. Most of 2021's savings—$184 million—were related to fraud, waste and abuse in Pennsylvania. Another $25 million were related to cases in West Virginia, and $23 million were in Delaware.

Highmark's program has been in place for at least 15 years, and it saves around $200 million each year, Spear said.

Highmark's annual return on investment is about eight to one for its roughly 80-person fraud team, he added. Highmark drew $18 billion in revenue in 2020.

Eight to one is a "very good" return on investment for a fraud program, said Adam Block, assistant professor of public health at New York Medical College who also runs a return-on-investment consulting practice. Four to one is the "bare minimum" threshold that makes a fraud program worth continuing, he said.

It's no wonder Highmark makes its results public: They demonstrate value the company provides to consumers, Block said.

"When you are weeding out fraud from the claims process, you're reducing premiums, you're showing the providers not to try it with your organization, otherwise you're doing to get called out on it," he said. "I'm not surprised they would release a press release because there is really nobody in favor of fraud and abuse."

That said, it's an open question whether all the items Highmark called out are actual examples of fraud, waste and abuse, Block said. Say a provider does a lot of magnetic resonance imaging for low back pain. Even though the practice is not supported by scientific evidence, that doesn't mean it's not billable if a provider believed it was necessary, he added.

"It could be a legitimate expense that gets picked up by a fraud, waste and abuse detector and claims get denied but the utilization was not fraudulent," Block said.

Spear touted Highmark's use of artificial intelligence to identify potential examples of fraud, waste and abuse. The insurer also has a team of medical professionals and coders that review any claim that's flagged by the program.

AI and machine learning are valuable tools, but West Monroe's Ray said these cases still involve actual humans going through and reviewing the claims.

"These tools are, I think, important, but the idea of AI is no different from the idea of being able to identify things that need review," he said. "Nothing happening through AI is creating an activity that is completely human-less through fraud, waste and abuse."