Health care spending is ten times that of national defense in North America. Delivery of health care is unique. It is build on a trust-based billing system. There are similarities with United Kingdom, much of western Europe, Australia and New Zealand. With over a decade of consulting inside a major health care system and background in prevention science, we draw a fundamental distinction between controlling for billing misfeasance by trusted insiders; and the predatory nature of fraud.
BILLING INTEGRITY CONTROLS: Reducing defection by insiders is highly complex. "Cheating" is a term used by behavioral biologists and ethologists to describe the trait in all organisms to cheat a little bit in order to gain competitive advantage. The most successful organisms do so in reciprocally cooperative (altruistic) environments. It is likely that the financial harms from everyone gaming the systems a little bit is more costly than predatory fraud by outsiders.
FRAUD CONTROLS: Countering predatory fraud is a horse of a different color. Over hyperbolic counter-fraud language and communication about trusted insiders has profound implications on cooperation. The language and deeds to tackle fraud are not the same as the policy, language and deeds required to reduce financial harms to the payment systems from natural defections by trusted insider. Countering fraud is the nasty business of intelligence gathering, criminal investigations and prosecutions.
the ATRiM Group recommends a Chinese Wall be placed in policy, words and deeds between the billing integrity payment system controls and the counter-fraud culture. This division should be both in reality and the perception of it by trusted insiders. John Lyons, Prevention Science Practitioner
The Issue
The Organization of Economic-Cooperation (OECD) states that the rise per capita in health care spending - as a share of GDP - is troublesome. Preliminary health spending estimated for a group of 16 countries suggests that per capita health care delivery increased by around 4.9% (OECD Health Statistics 2021). The United States was already spending in excess of 16.8% of GDP and Canada reported 12.7 % of GDP on health care spending. Australia is on a similar path at 16.7% of GDP, while New Zealand and some other European Union nations are in the 9 - 11% range. With global warming a reality, it is not unreasonable to foresee SARS and COVID style pandemics with increased frequency, which are bound to add additional levels of financial pressure to health care systems.
BILLING INTEGRITY CONTROLS: Reducing defection by insiders is highly complex. "Cheating" is a term used by behavioral biologists and ethologists to describe the trait in all organisms to cheat a little bit in order to gain competitive advantage. The most successful organisms do so in reciprocally cooperative (altruistic) environments. It is likely that the financial harms from everyone gaming the systems a little bit is more costly than predatory fraud by outsiders.
FRAUD CONTROLS: Countering predatory fraud is a horse of a different color. Over hyperbolic counter-fraud language and communication about trusted insiders has profound implications on cooperation. The language and deeds to tackle fraud are not the same as the policy, language and deeds required to reduce financial harms to the payment systems from natural defections by trusted insider. Countering fraud is the nasty business of intelligence gathering, criminal investigations and prosecutions.
the ATRiM Group recommends a Chinese Wall be placed in policy, words and deeds between the billing integrity payment system controls and the counter-fraud culture. This division should be both in reality and the perception of it by trusted insiders. John Lyons, Prevention Science Practitioner
The Issue
The Organization of Economic-Cooperation (OECD) states that the rise per capita in health care spending - as a share of GDP - is troublesome. Preliminary health spending estimated for a group of 16 countries suggests that per capita health care delivery increased by around 4.9% (OECD Health Statistics 2021). The United States was already spending in excess of 16.8% of GDP and Canada reported 12.7 % of GDP on health care spending. Australia is on a similar path at 16.7% of GDP, while New Zealand and some other European Union nations are in the 9 - 11% range. With global warming a reality, it is not unreasonable to foresee SARS and COVID style pandemics with increased frequency, which are bound to add additional levels of financial pressure to health care systems.
Insider Defector Controls
Diagnosing physicians, other health care professionals and their Colleges are the backbone and soul of high quality, trust-based health care systems. In the same way that the lessons of SafeGrowth teach us that engaged, informed citizens in their neighborhoods are more effective in reducing harms than the police and courts; trusted insiders cooperating with health care administrators are likely more effective in reducing financial harms to health care plans.
Any breakdown in trust between payment plan administrators and trusted insiders is costly. Not only must insider billing integrity controls be just and fair; they must be seen and felt to be just and fair by trusted insiders. The nonlinear world of trust-based systems is complicated. How billing integrity and verification audits are framed, undertaken and escalated has a huge impact on cooperation.
the ATRiM Group and our like-minded associates think about billing integrity and fraud controls from a prevention science perspective. Some emerging insights from science:
Any breakdown in trust between payment plan administrators and trusted insiders is costly. Not only must insider billing integrity controls be just and fair; they must be seen and felt to be just and fair by trusted insiders. The nonlinear world of trust-based systems is complicated. How billing integrity and verification audits are framed, undertaken and escalated has a huge impact on cooperation.
the ATRiM Group and our like-minded associates think about billing integrity and fraud controls from a prevention science perspective. Some emerging insights from science:
- said to be an evolutionary building block, biologists posit everything in nature cheats a little bit; right down to cell division. Thus, it is highly unlikely insiders are not immune to cheating. We are learning that there is no such thing as "free will"
- psychologists and behavioral biologists have determined when people think others are cheating, their cheating increases. When reminded of their morality close to the time of the temptation, cheating decreases
- when resilience is depleted, it is harder for people to resist when tempted to do bad things
- the farther away from face to face cash transactions, people tend to cheat more
- aggression is a predictable response to perception of being aggressed
- Without mindfulness in how misuse/abuse and fraud controls are implemented, normally honest people are more able to rationalize their behavior and come up with excuses when they are tempted to do bad things that are confronting their moral code
- When people feel they have been treated unjustly or unfairly it is innate to plan revenge. Planning revenge excites the pleasure center of the brain. This can manifest in workplace sabotage, occupation fraud, corruption and in the extreme, workplace violence
Predation (Fraud) Controls
There is little empirical evidence to support that linear enforcement and prosecution reduces crime. This type of study has never been undertaken on health care fraud. There is ample evidence that multiple simultaneously deployed strategies to counter persistent geographic or situational specific patterns of crime can reduce crime. Put succinctly, using a broad range approaches to inform a focused course of action produces crime reduction results. There is no evidence that situational fraud prevention is being applied in the health care sector.
Sometimes corrupted billing insiders cross the Rubicon for cheating a little bit to more serious predatorial activity. In other cases they have been corrupted by outsiders or were pathologically predatorial from the get go.
Why fraud and corruption are horses of a completely different color than insider cheating.
Fraud is a deliberate and effortful act of predation. Thus, it is a different game to be played by problem-solving auditors and internal investigators than controlling payment system cheating. This specialized group should report directly to highest levels of the organization. The standard is set by COSO for countering occupational fraud and corruption.
How big a problem is health care fraud?
Committees’ of the United States Congress heard healthcare fraud testimony during the 1990s during the Clinton administration. The Committee listened to the "health care fraud around every corner" hyperbole. They noted that no one really knew how big the problem was! Here we are over forty years later and we still don't know. Misfeasance and fraud attacks to payment systems are insidious. It's not what we know that is important. Its what we don't know that is important.
The good news is that there are best practices for countering health care fraud. Harvard University's Malcolm K Sparrow identified some fraud rates at over 30% by looking at problems situationally. the ATRiM Group subscribes to a situational fraud problem-solving approach that identifies and tackles the root causes (the attractors to crime) behind clearly defined outlier criminal behaviors ('patterns' and 'hot spots'). This is an important key for transition to evidence-based, health care fraud controls.
Why work with us?
Sparrow cited problem-oriented policing (POP) as a model for countering health care fraud. POP applies situational crime prevention to successfully reduce crime. At the ATRiM Group we boast practitioner-based experience with POP and with situational crime prevention. We created a health care specific situational fraud prevention matrix as a base template for helping heath care fraud problem-solvers get started. It will evolve from your own problem-solving efforts into a body of best practices specific to your threats.
Please contact us about our discoveries from thirteen (13) years research and experience evaluating and making recommendations on health care fraud controls.
Contact:
John Lyons email: jlyons.atrim@gmail.com, or through our CONTACT US link.