Anti-fraud efforts removed from MLR

Keeping in MLR improves healthcare for everyone

Health insurer anti-fraud expenses will be left from the Medical Loss Ratio  in a rule released by the feds. This decision deals with Medicaid managed care, and frustrated state and federal fraud busters. The impact will spread throughout the world of healthcare.

First, a short history: The Affordable Care Act requires health insurers to spend 80 or 85 percent of costs on claims and health services. This limits how much insurers can spend to run the business.

Regulators were left to decide what insurer expenses will be included in the MLR. The Coalition and other fraud fighters diligently tried to show federal and state regulators why anti-fraud expenses should be included. Effective fraud fighting is directly linked to the quality of healthcare that consumers receive in many cases.

What makes this decision a bit grating is that federally funded health programs like Medicaid are required to have anti-fraud efforts. Yet those expenses are excluded from the MLR, and thus, health plans have little incentive to invest more in combating fraud.

This decision has impact well beyond state-federal Medicaid.

States usually look to the feds for guidance when writing their own regulations. If the feds exclude fraud expenses from the MLR, then states will be reluctant as well.

We’ve urged insurance regulators to include the MLR. They’re often sympathetic, yet gamely stick to excluding anti-fraud expenses.

Fraud fighting is essential to quality patient care; this isn’t mere overhead. Scams often harm patients with worthless and botched treatments that also can max out their policy limits. Stopping money-draining schemes also helps reduce the cost of health services. This benefits everyone.

That’s the rub. Fraud fighters know that good anti-fraud efforts reduce healthcare costs and improve services. Yet regulators stubbornly stay reluctant to even consider including anti-fraud expenses in the MRL.

It’s time for fraud fighters to speak out, and tell regulators and policymakers that fraud-fighting expense should be included in the cost of paying healthcare claims.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

New Jersey court gets it right about insurer/fraud bureau partnership

But too close a relationship could harm public interest

Accused fraudster Harshad Patel said his rights were violated because New Jersey’s anti-fraud agency works too closely with insurers to root out fraud. The Office of Insurance Fraud Prosecutor “outsources” investigations to insurers because it lacks financial resources to fully investigate on its own, Patel contended.

So he sued the state, alleging his constitutional rights were violated.

A U.S. Court of Appeals tossed the case this week. Patel didn’t prove he was harmed by the relationship between the fraud bureau and insurers, the court ruled. But the judge left the door open to revisit this issue in the future.

Other fraud defendants have claimed a fraud bureau has gotten too chummy with insurer investigators to beat up on citizens. Yet their legal challenges all failed.

Still, future challenge could succeed if fraud bureaus and insurers cross a line in working together. As state agencies, fraud bureaus need to make their own decisions about which cases to investigate. And they must conduct their own investigations.

Insurers can and should provide case information and offer assistance, such as providing pretext policies and bait cars.

But insurers should never attempt to direct a fraud bureau investigation or in effect, become an investigative arm of the state. It’s bad public policy. The legal and public-relations consequences also could be disastrous.

Patel’s ill-conceived challenge was a stretch. Yet it reminds us that state and private investigators must stay vigilant.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Insurance fraud … violent crime

Mob-style hits sought in name of insurance money

If police are right … foot doc Ira Bernstein tried to use Mafia-style head-knocking to beat up two insurance-fraud investigators and throw them off the track.

Bernstein and his girlfriend allegedly met with someone they thought was a hitman to kill his wife Susan — and rough up the investigators. The investigators were looking into whether he’d bilked health insurers.

The supposed hitman was a snitch who spilled the suspected plot to police.

Cleverly … police applied makeup so the investigators would look mugged. The snitch then showed Bernstein and his girlfriend the seemingly grisly photos to string the suspects along.

They could be innocent; that’ll come out in court.

Yet the case shines a light on something that should challenge many people’s belief that insurance fraud is a tame, white-collar prank.

Violence …

Against investigators … judges … witnesses … and other hardworking folks just trying to do fair justice.

An unhinged insurance agent shot and killed two fraud investigators who were looking into his practices. Rhett Jeansonne and Kim Sledge were with the Louisiana insurance department. John Melvin Lavergne gunned them down at his agency, then shot himself.

Insurance regulators around the U.S. beefed up procedures for how investigators can stay safer in vulnerable situations such as when visiting a suspect’s office or home.

Sallie Rohrbach died doing her duty as well. She was an auditor with the North Carolina insurance department. A troubled agent clubbed her to death with a chair while she was in his office looking into possible theft of client premiums.

Tyesha Towanda Roberts offered to hired someone to shoot a witness involving insurance torchings of a home and two vehicles. The Baltimore woman wanted $10,000 to set up the murder. A cohort decided that her proposed hitman couldn’t be trusted. He offered to help shoot the witness himself. Except that Roberts and her cohort were spilling the plot to an undercover officer. Roberts will be sentenced in August 2016.

Nightclub insurer mogul Jeffrey Cohen plotted to rub out the judge overseeing the insurer’s liquidation.

Cohen deceived regulators into thinking his fizzling insurance empire was financially solid.

A former nightclub bouncer, Cohen drew up a hit list of Maryland and Delaware officials involved with his case. And driving directions to the home of the judge overseeing the insurer’s liquidation.

Seven assault weapons were seized at Cohen’s home. “Society needs to look at the fact that killing isn’t wrong in certain circumstances, and killing culls the weak,” he said in the recording. Cohen was handed 37 years in federal prison.

So when you think of insurance fraud as a soft and forgettable crime … just visit Sallie Rohrbach’s grave. She’s buried in Raleigh Memorial Park in Fuquay-Varina, N.C.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Pay me now or …

Police are responding less and less to minor auto accidents

If you crash cars for a living in New Orleans, your life may be getting a bit easier.

Thanks to a bill in the state legislature, police in the Crescent City may no longer be required to respond to fender benders. If you’re involved in a minor accident, just head over to your local police station, give them the details, and they’ll  hand you an accident report you can use to file your insurance claim.

Crashers will no longer need to  stage a collision. Just report it. How convenient.

The bill aims to relieve the cash-strapped city so police can focus more on violent and more-serious crimes. Responding to some 14,000 minor accidents each year is a drain on city resources, according to news reports.

That argument is hard to argue with. And it’s one that more and more jurisdictions are grappling with as cities continue struggling with adequate funding for police.

The extra dollars residents likely will pay in auto premiums rarely gets discussed in these deliberations. It’s a hidden tax that’s better spent paying for more police.

So while fraud fighters likely won’t win this policy battle, they can try to minimize the losses by educating the public and beefing up anti-fraud training of claims reps.

Pay now or pay later. Either way, this legislation will cost taxpayers and consumers.

About the author: Dennis Jay is executive director of the Coalition Against Insurance Fraud.

Partnering to combat workers-comp schemes

Joint efforts magnify impact and boost efforts against premium cons

Dollar for dollar, workers-compensation premium scams may be larger than bogus work injury claims. At least that’s what many expert say. And the problem seem to be getting worse, especially in urban centers with deep underground economies.

The Coalition met recently with an unlikely ally in this effort: the United Brotherhood of Carpenters. It represents organized labor in the building trades. The union believes premium-avoidance schemes harm workers and cost governments mightily in lost revenue.

Why lost revenues?

Shady businesses lowball how many workers they have, and their payroll size. They often pay workers in cash, under the table. All of this helps dishonest employers avoid paying full workers-comp premiums, plus a bevy of federal, state and local taxes.

So, governments lose tax revenues. Workers are cheated out of workers- comp protection, wages, overtime, unemployment benefits and Social Security. Honest employers lose business and income because cheaters use the illicit savings to underbid them for contracts. And, workers comp insurers lose premiums.

Our recent meeting with the carpenters union revealed disturbing examples of prominent building jobs that included premium-avoidance schemes: A building at the University of Connecticut, a Florida hospital, construction at the Atlanta airport, and a building at the Walter Reed military hospital complex in suburban Washington, D.C.

The latter hits close to home — I drive by the hospital complex almost daily.

The carpenters’ proposals for comp insurers are a primer on why partnerships could be a great resource to move an anti-fraud agenda forward more decisively:

  • Work together on best practices for conducting audits and investigations into premium-avoidance schemes;
  • Adopt procedures to red-flag potential premium fraud; and
  • Cooperate with stakeholders on investigations.

Workers-comp insurers already appear to be doing much of this. Yet it  needs repeating that expanding everyone’s knowledge of schemes is a force multiplier. This will help identify more plots schemes, and boost the entire anti-fraud effort.

Fraud fighters must work with allies to educate state policymakers to better stop costly comp scams — premium avoidance and bogus injury claims.

We can make greater progress by including non-traditional allies such as the carpenters union. The more influential allies that are brought together, the stronger the efforts against comp scams will become.

The carpenters union is a clarion call that effective partnerships will help everyone better combat workers-comp schemes of every kind.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

 

$1 billion (in savings) or bust

The Healthcare Fraud Prevention Partnership aims high

When the ground-breaking anti-fraud partnership between the federal government and the private sector was launched in 2012, there were grand expectations that they could jointly combat fraud much more forcefully that going it alone.

More than 60 organizations have teamed up to share strategy and exchange data. They include federal and state agencies, health plans and p-c insurers. Billions of bits of information have been pooled through a trusted third party.The results are encouraging.More than $260 million has been been saved in recoveries and fraudulent claims not paid.

The HFPP executive board met two weeks ago. It set a goal to expand savings to $1 billion by this time next year. It’s an ambitious goal, yet achievable given the early success of this collaborative effort.

The potential success in future years could far surpass $1 billion as more data is shared and more partners sign up., And it should, seeing that healthcare fraud totals tens of billions of stolen dollars each year in the U.S..

The ultimate goal is to get so effective in combating healthcare scams that fraudsters will view the risks too high to even try. We’re a long way from that day, but collaborative efforts and advanced technology offer the best chance of getting us there.

About the author: Dennis is executive director of the Coalition Against Insurance Fraud and serves as co-chair of the Healthcare Fraud Prevention Partnership. 

Getting riled up for fraud in Twittersphere

Useful for egging on scams, teaching about dumb choices

Fraud braggadocio is alive and kicking on the Twittersphere, as we recently reported in FraudBlog. Now for another frontline dispatch …

Easy money … fun … risk-free. Like a video game — only for stealing real insurance dollars. That’s a frequent voice vote by consumers in our daily Twitter and Facebook convos.

Tweeter riled up folks about slipping and falling his way to illicit payoffs in a recent thread using the hash tag #BoutToSlip. He said:

“I prayed and asked God to increase my finances and BEHOLD I found a wet floor with no sign in sight. #BoutToSlip”

Others used the same #BoutToSlip hash tag and chimed in:

“A wet floor with no sign at work? I prayed for this come up #BoutToSlip” 

“God is good. I asked the Lord to finance my college and I see this unsalted and not shoveled pavement. #BoutToSlip”

We don’t know if these people made illegal claims. Yet mere braggadocio might click on a crime lightbulb and convince other Twitter followers to try an insurance scam. The thread above was retweeted 17,000 times. Fraud looks like so much fun. Why wouldn’t others wet their lips and try a seemingly easy grab for insurance payouts?

Until the real world steps in. Make dumb choices, make time for a permanent criminal record. That’s a big deterrent message we share on Twitter.

Doses of dumbness showed up in our recent live Twitter chat. Workers-comp investigators advised how to thwart fake injury claims.

The nub — bilk your employer at your peril. Surveillance videos posted and retweeted during the live chat drove home the point. Like the rocker who did a Beatles tribute concert while “injured.” … Or the guy who said he couldn’t turn his head yet had a sweet swing on the golf course.

A worker stomped a hole in the floor and claimed he fell in it.

Twitter is a great forum for bragging and egging people to try an insurance scam. It’s an equally useful way to show people that dumb choices can earn a permanent price. Is a criminal conviction really worth it?

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Tag team is winning formula for fraud bills

Investigators wield impact as expert constituent voices

A couple of years ago I blogged about how fraud investigators can be key to enacting strong fraud laws.

The state legislative season is heating up, so let’s revisit. We need to think of how to mobilize for action.

Lobbying legislators can be top-down and bottom-up.

Top-down involves national groups like the Coalition or insurers raising the issues with legislators. Often we testify before committees or the full chamber. That carries weight. We discuss the big picture, and how a state bill is good (or bad) for combating fraud from a larger viewpoint.

The bottom-up approach is the grassroots level. Investigators and other frontliners can take a lead role.

Investigators can wield great influence. State lawmakers listen to constituents. Local people put a local face on fraud bills. Investigators also are respected crime-fighting experts. That voice speaks convincingly to lawmakers. They may know little about a fraud bill — or the crime it combats.

A tag team is the best formula for rallying support for fraud laws: Local investigators work with national groups like the Coalition. We all bring vital strengths to the table.

State legislators usually don’t receive letters or messages about fraud issues. So when an investigator writes a letter, that could be the first time a legislator hears about the fraud bill, and why it’s good for the state.

This leads to my Rule of Five. One constituent letter raises few eyebrows in a legislator’s office. Five letters, and the legislator thinks about the issue. And 25 letters signals a groundswell of support. That can convince a legislator to support a fraud bill.

Enacting strong fraud laws has four positive goals. 1) Create an infrastructure for insurers to investigate and report scams; 2) Give fraud fighters laws and regs that are pillars for chasing down swindlers; 3) Oppose weak bills that undermine the fraud fight; and 4) Educate lawmakers about the benefits of strong fraud laws.

Together, our influence can place more fraud laws onto the books. We will educate lawmakers about how strong fraud laws benefit consumers throughout a state.

So let’s add a fifth goal for fraud laws: Empower consumers and insurers to better fight back against insurance fraud.

About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.

Why worry about fraud?

Victims and damage revealed in Hall of Shame

Ok, so insurance fraud steals $80 billion a year.

Impressive number. Helpful to know — though hardly a rousing battle cry.

As a wise person said … Stats are like a drunk using a lamppost — for support, not illumination.

So what makes our blood boil? Let’s look at true-life fraud cases. They show how seedy and sleazy fraud really is. And the innocent people who are damaged by this supposedly victimless crime.

Check out the Insurance Fraud Hall of Shame — the No-Class of 2015. Real cases … real victims … real damage.

Will you be next?

Financially strapped, Mark Leonard tried to burn down his Indianapolis home for $300,000 of insurance money. He blew it — literally. The home exploded, leveling much of the neighborhood and incinerating two neighbors.

Dion Longworth lived next door. He was trapped inside his burning basement, begging firefighters to free him. Too late — Dion was burned alive. His wife Jennifer died when the super-heated insurance blast first crashed into their home.

Gloria Lee tried to burn 28 terrified puppies in their cages at her Las Vegas pet store. Luckily Lee’s own fire sprinklers helped douse the flames in time.

Spine surgeon Dr. Aria Sabit sliced open perfectly healthy people, pretending to operate on their spines. The Detroit doc also botched surgeries of patients who needed spine fusions. All for $32 million of insurance money.

Patients were left disfigured and in permanent pain. Some needed more pain-filled surgeries to correct the damage Sabit caused.

Sure, these are the extremest schemers … the masters of disaster. Yet many more innocent people are being scammed around the U.S. Some more, some less — though victims all.

So why worry about insurance fraud? We all could be next. In fact you already are … higher insurance premiums are draining your bank accounts.

Stay alert and fight back. Let’s all help make insurance fraud a dead-end street instead of a fast road to riches.

About the author: Jim Quiggle is director of communications for the Coalition Against Insurance Fraud.

Committing insurance fraud is funny, no big deal

That’s the message of crude TV programs

I’m no fan of Fox TV’s The Family Guy. To me, it’s crude, moronic and not very funny. But I recently found myself watching a rerun that featured a plot involving insurance fraud. The three main characters got caught burning down their friend’s financially troubled pharmacy.

They pleaded with the arresting officer to let them go. “Insurance agencies are all scumbags. They deserve to get hurt,” one character says. After thinking about how his health insurer had screwed him, the cop destroys the evidence and lets the trio go on their merry way.

https://youtu.be/V04IFm9_-e8

Cringe factor aside, I realize that this is only a cartoon and few people take the messages seriously. Yet, those messages do have an impact. They plant seeds. And over time, as other similar messages pile on, they reinforce the idea that committing insurance fraud is no big deal.

More than five million people watched this episode of The Family Guy when it first ran — the most popular program on TV that evening. The fraud-fighting community struggles to reach five million people in a year with anti-fraud messages.

I was reminded of this episode today when I saw the tweet below from a young woman who wants to secretly push her car off a cliff. How did these ideas form in her head? How can we discourage such destructive thinking?

For one, public outreach needs to be beefed up bigtime. And secondly, let’s keep our young children from watching such crude and socially irresponsible TV programs like The Family Guy. What shows are your kids watching?

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About the author: Dennis is executive director of the Coalition Against Insurance Fraud and serves as co-chair of the Healthcare Fraud Prevention Partnership.