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How Serious a Problem is Fraud, Waste and Abuse in International Health and Travel Insurance Markets?

In this iPMI Global Cost Containment In Focus article we talk with the movers, shakers and deal makers from the international assistance and cost containment market, and ask, how serious a problem is fraud, waste and abuse in the business?

According to the FBI, Health care fraud is not a victimless crime. It can affect everyone from individuals to businesses. Healthcare fraud causes tens of billions of dollars in losses globally every year, and may help raise health insurance premiums, expose patients to unnecessary medical procedures and increase taxes.

Jennifer Milton, Compass Point Assist: Yes. Fraud and abuse in the travel insurance industry can be a significant problem, but the extent and seriousness of the issue can vary depending on several factors, the specific insurance provider, are they known for their lax oversight or lenient claim processing? Or insurers in developing countries may lack resources to combat fraud; their internal KII´s and the corresponding “human” workflows, i.e., how have the employees been trained to recognize fraud; the types of claim systems and level of or lack of technological advancements used within the claim processing; internal oversight set-ups, as well as the type of travel insurance involved, i.e. high tourist traffic or a high volume claim influx such as the Thomas Cook incident.

Gitte Bach, New Frontier Group: Fraud and abuse are significant concerns in the insurance industry that lead to billions of dollars in losses annually. This not only affects company profits but also leads to higher premiums for policyholders. There are some “bad actors” out there who can have a drastic impact on healthcare finances.

John Spears, Global Excel: Fraud, waste, and abuse (FWA) are a big problem in our industry. Healthcare fraud costs the USA between $68B and $230B annually. Four in five U.S. medical bills contain coding “mistakes,” including miscoding “errors”; charges for cancelled or refused services; data entry “mistakes;” date and length of stay errors; code unbundling or upcoding, and duplicate charges.

Overtreatment currently accounts for 1/3 of all medical costs, with fear of malpractice, profit, and patient pressure as the primary motives.

Naturally, FWA takes different forms in different parts of the world. We manage claims worldwide and our clients expect us to have systems and processes in place, not only to identify and correct potential issues, but also to have strategies in place to prevent these incidents from occurring in the first place.

Dr Ilya Rapoport, AP Companies: While the impact of fraud and abuse may not be as pervasive as in some industries, it remains a serious concern for our industry. The consequences of fraudulent activities can be severe, affecting not only the financial well-being of insurance companies but also the quality of healthcare services provided. At AP Companies, we recognize that medical fraud is a significant driver of rising medical costs for insurance companies, making it imperative to address these challenges proactively. As a trusted Cost Containment partner, we take our responsibility seriously. We are committed to developing and implementing efficient strategies to mitigate and combat fraud effectively, ensuring that we play our part in containing costs for our valued clients. Our dedication to this mission is unwavering and is a fundamental aspect of our service delivery.

Simon Cook, Charles Taylor Assistance: Fraud is a historic problem in the insurance industry and, today, we’re seeing an increase in both fraud referrals and fraud savings. Much is written about the impact of the current economic climate on global fraud and, although this is hard to quantify, there’s certainly a heightened awareness of fraud.

In this context, it’s essential for insurers and their partners to constantly redefine fraud strategies and controls and to train front line claims staff so that fraud is always at the forefront of their minds. Celebrating fraud successes, sharing findings and publicising trends are all important. When it comes to fraud, we can never be complacent.

Scott Rosen, MDabroad: Unfortunately, Fraud, Waste, and Abuse (FWA) is deeply embedded in the industry, especially in the United States. This issue of cost containment, which is a highly profitable business, wouldn’t be necessary if this paradigm didn’t exist. The complexity of FWA cannot be overlooked. The legal interpretation of fraud can differ across various jurisdictions and proving it in court in the U.S. is particularly challenging without clear evidence of intent. It’s crucial to differentiate between systemic issues of waste and abuse and fraud committed by specific bad actors. A major risk factor is the pricing disparities that exist, treating different payer groups unequally. This is more a systemic problem in the U.S., whereas it might be seen as opportunistic or predatory behaviour by providers in other markets. In the U.S., the stark contrast in pricing, where self-pay patients might receive discounts ranging from 50% to 82% off standard prices, while insurers are charged at significantly higher prices. While this might not legally qualify as fraud, these practices certainly border on abusive, unfair, and capricious.

Related Reading: Insurance Fraud, Waste and Abuse Strategies Round Table

Editors Note: The above answers are published alphabetically, by company name.

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iPMI Global is the leading business intelligence provider for international private medical, health, travel and expatriate insurance markets worldwide. Due to the nomadic nature of the international private medical insurance (IPMI) market, iPMI Global is an internet based news service for worldwide insurance and medical assistance professionals who need to understand the impacts of insurance and healthcare policy, regulatory, and legislative developments.

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