One way ACA may aid p/c insurers

New entity to validate efficacy of medical procedures may reduce costs

Why do property/casualty insurers sometimes pay for questionable medical procedures that Medicare and health plans routinely deny?

In part, auto, workers comp and liability carriers are subject to state laws that require them to reimburse medical providers for sketchy procedures. And in other cases, insurers don’t have enough evidence that such procedures are more for enriching doctors, clinics, hospitals and labs than for the health of the patient.

But thanks to the Affordable Care Act (ACA), insurers may have more evidence to deny costly and unnecessary treatment in the future.

The ACA helps fund an entity called the Patient-Centered Outcomes Research Institute (PCORI), whose mission is to find out what really works and what doesn’t in healthcare. With access to electronic medical records, PCORI will be able to analyze mountains of data and pinpoint ineffective procedures that do not lead to the best health outcomes.

As a Washington Post editorial Sunday asks, “Should you get surgery for your back pain or stick with physical therapy? When is heart surgery preferable to drug treatment? And which drugs should you take?”

Unneeded treatment, tests and drugs cost the healthcare system billions of dollars each year. PCORI has potential to bend the cost curve and reduce medical costs — for government, health plans and, yes, even property/casualty insurers. Carriers should follow PCORI’s work closely and see how it can potentially reduce loss costs, lower fraud and help keep property/casualty insurance affordable.

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

Software not soft on fraud

BLOG_mailAs crime increasingly becomes the domain of organized gangs, crime fighters of all stripes are deploying ever-more-powerful technology to discover and break down their shady operations.

Credit-card firms, for example, rely on software that’s extraordinarily skilled at mining vast piles of granular data for suspicious buying patterns. I was refueling my car at a gas station in Washington, D.C., where I live. The pump apparently refused my card because the gas station was located about half a mile outside of the cluster of stations I normally frequent.

The same card refused my purchase at an athletic-clothing store in downtown D.C. likely because I normally shop uptown. So it was no surprise that my alert credit-card company recently called me at my office in D.C. to ask whether I’d just purchased baby clothing in Riyadh, Saudi Arabia.

The software was remarkably sensitive at detecting minutely deviant buying patterns. And it caught those anomalies in real time, down to the second. Unreal.

Insurance fraud fighters are seeking the same technological edge. Insurers as a whole have yet to reach the remarkable sophistication of credit-card companies, but they’re working steadily in that direction.

They need to. Organized gangs are infiltrating the insurance fraudscape with growing force. I no longer blink when I read about a $50-million or $75-million Medicare scam. A staged-crash gang in New York allegedly tried to steal $400 million from auto insurers. Many of these same gangs are probably trying to work over credit-card companies, banks and other enterprises.

The encouraging part is that that nearly half of insurers use advanced fraud-catching software such as predictive analysis, text mining and datamining. The discouraging part is that nearly half of insurers don’t use these tools.

That’s one conclusion that can be drawn from a new study of insurer use of technology. It was conducted by the Coalition, with assistance from the business analytics company SAS.

Software of this high-impact ilk is capable of near-miraculous work by today’s standards. Predictive analysis in theory can catch suspicious insurance transactions in real time − instead of waiting until the insurer has paid the claim and the trail is growing cold. Text mining can pore through volumes of relatively mushy data such as an adjuster’s sketchy field notes.

The insurers who use these tools are better armoring themselves against false claims from serious criminal elements who are making a graduate-degree science of scamming. It’s a science that’s raising premiums for honest policyholders. These insurers have made an institutional decision that fraud is a significant enough drain on their and their policyholder resources to require this level of technology.

Not all insurers routinely face a caliber of crime that requires the often-expensive investment in such software. But with several thousand insurers in the U.S., it takes little imagination to conclude that more than a few insurers could and should use these tools but have yet to reach that needed decision. That’s the discouraging part.

The Coalition’s study tells us other things about insurer mindsets regarding technology, and the crime it’s supposed to catch. A large swath of insurers are wide awake to the oncoming peril of organized crime: More than half say the chief benefit of technology is to catch such fraud rings.

Nearly all insurers use at least some form of anti-fraud software.

Predictive modeling and text mining are the top two areas in which insurers plan to invest in the future. But one of the thorniest barriers to fully investing in technology involves how to prove these tools are worth the investment, the insurers say. How do you quantify, for example, the value of dishonorable claims that are never made because some criminals don’t want to take on an insurer that’s known to be so well-defended?

Insurers as a whole may still be playing catchup with their brethren in the credit-card industry. They need, with growing urgency, to step up the pace. But the encouraging part is that more insurers appear to be taking those steps against a criminal underworld that grows more sophisticated and greedy with each passing month.

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

Stopping fraud with fun?

BLOG_viralvideoMost YouTube videographers dream of making videos that go viral. Advertisers strive to create spots that people remember and relate to.

In the anti-fraud world, the goal of advertising is to help consumers make more ethical decisions. A few successes attest to the viability of this endeavor. In a recent article in the Journal of Insurance Fraud in America, Ralph Burnham showed how advertising is key to prevention. Making people aware of fraud and its consequences led to a measured decline in fraud approval by some Pennsylvania consumers. In California, the District Attorney’s office in San Diego has found a direct link between anti-fraud outreach and decreasing workers comp fraud.

So advertising has had measured success in local markets, but what would it take to create a national campaign that sticks? A look at successful campaigns gives us some clues.

1. Get their attention. In this information-saturated era, the first challenge is for space. Creating a video that spreads by word of mouth is key. In online video, every second counts, an element of mystery can keep viewers watching through to the end.

2. Entertain. The difference between an ad that is spam, and one that gets shared by friends starts with entertainment.

3. Offer a new take on something personal. There are some things everyone can relate to. Father and sonsMothers and childrenunusual wedding proposals. What does insurance fraud have to do with normal citizens? We all pay for it. Our anti-fraud story could begin with tight finances.

4. Use Emotion. Try humor. Emotions guide many of our actions, joy, fear, hope, stress, excitement, inspiration. And humor? Pages and pages have been dedicated to to making people laugh. Some of the most-viewed YouTube videos just make people laugh. Can we present a serious topic with an element of humor and still have the desired impact?

Most ads that are broadcast on TV are posted on YouTube as well. Unlike TV ads that are in some way forced on viewers, ads on YouTube can be found by an audience that actually chooses to watch. So looking at what has been successful on YouTube can shed light on consumers’ interests.

Successful public service announcements, such as anti-drug campaigns or anti-smoking campaigns often deliver a serious message with shocking or memorable graphics. Though the point gets across, they seldom get shared or go viral as the more amusing ones do (Kony being one notable exception, successfully using emotion).

So we have a challenge in the fraud fight, if we are able to reach consumers to stop insurance fraud, how can we create a message everyone will want to watch and share?

CARTOON_jenny

About the author: Jennifer Tchinnosian is communications specialist for the Coalition Against Insurance Fraud.

6 mobile apps with fraud-fighting potential

BLOG_crashAppsA suspect vehicle suddenly swoops in front of you and jams on the brakes, causing a rear-end collision. Funny, you were going slow, and that car appeared out of nowhere. You think you’re being scammed, but what can you do? Having a smartphone may help. Not only do these devices make calls, track to-do lists, and help you find the nearest restaurant, a few recent apps may even help fight fraud. Some have been created for other purposes, but have fraud-fighting potential. Here we’ve chosen a few of our favorites.

1. iCarBlackBox 
What it is: This app turns your phone into a virtual black box. Using GPS, video, audio, and an impact sensor, iCar Black Box can record all the details of a crash as it takes place. Using the phoneʼs accelerometer, the app can tell when thereʼs been a sudden stop, and will verbally ask the user if they wish to save the footage of the incident. It only saves footage when instructed to do so, thereby conserving space. Users can check the speed of the moving vehicle, date and time, location, road conditions and more through audio/video.

Why it’s a fraud-buster: If you can show what really happened, you might have a better case of proving fraud.details of a crash as it takes place. Using the phone’s accelerometer, the app can tell when there’s been a sudden stop, and will verbally ask the user if they wish to save the footage of the incident. It only saves footage when instructed to do so, thereby conserving space. Users can check the speed of the moving vehicle, date and time, location, road conditions and more through audio/video.

2. iWrecked
What it is: iWrecked allows users to log all the details of a crash, including unlimited pictures, other driver’s insurance information, police information, even witness data and weather conditions. It allows users to create crash diagrams. The app can then generate a pdf report detailing the accident, and send directly from the app to the user’s insurance company.

Why it’s a fraud-buster: Knowledge is power. The app’s reminder to get witnesses’ contact info, capture photos, and take down all the details of a crash may help provide a more comprehensive report.

3. NICB fraud tips

What it is: Reporting fraud just got way easier. This app allows users to anonymously report fraud from the convenience of their phones, on the go. Users can have a chat-style conversation to explain their circumstances, or send an anonymous email-like message including pictures and descriptions.

Why it’s a fraud-buster: Convenience is key, and users are can now snap pictures on their phones, or discuss a fraud tip without making a sound.

4. DBPR Mobile
What it is: Floridians who are approached by shady contractors after storms now have an instant licensing check on their phone. Consumers can verify whether businesses and professionals are licensed, searching by name or license number.

Why it’s a fraud-buster: It’s the first step in determining who to work with. Consumers are still advised to contact their insurer to get referrals on trusted contractors, but turning to this app can give an instant read on what contractors are being honest about licensing.

5. Oklahoma Insurance Department app
What it is: An Android-based app, this allows users to carry important insurance information with them. Consumers can report fraud, search for seasonal insurance topics, check licensing, nominate an insurance professional of the month, and contact the department directly.

Why it’s a fraud-buster: Users can check key fraud info, and can report fraud if they catch it.

6. Scam Detector
What it is: An app that allows users to verify telltale signs of scams to protect themselves from being defrauded. Detailing more than 525 scams, organized by industry, it’s updated in real time. The search function also lets users browse based on their circumstances. Auto scams, internet scams, financial scams, property scams and more.

Why it’s a fraud-buster: Knowing about a fraud can stop the crime in its tracks, and allow users to take action.

Are there any similar apps you are using that should be on this list?
Let us know in the comments.

Lie detection technology and fraud

liarEngland is a longtime user of voice-stress analysis, the system that’s touted to detect when someone strays from the truth. British insurers as well as government agencies have used the technology to question claimants: it detects changes in voice stress, supposedly a reliable indicator of lying.

The technology has its supporters — and critics — on both sides of the Atlantic. There has been little published data to indicate how well the technology works with insurance claimants.

One borough of London recently released data on the first 1,000 disability claimants on which the technology was tested. Of the 1,000 subjects, 43 — or 4.3 percent — were flagged by the system and all of these were found to have filed false claims or displayed a high potential for committing fraud.

Even more impressive: Another 281 claimants withdrew their claims after they learned about the use of the technology. The withdrawal rate is twice what it was before the technology was used.

So users now claim that voice-stress analysis is not only a detection tool, but a deterrent as well.

Officials say no claim is ever denied solely on the basis of voice-stress analysis, but it does help to direct investigators to claims that merit more scrutiny. It’s also said to help speed claims payments to truthful claimants.

So, is America ready for this technology? In an age when cameras catch red-light violators and the FBI can monitor phone calls and e-mail at will, perhaps Americans would accept this technology — if it helps to keep premiums in check.

I’d like to see the results of more thorough testing first.

Can MRIs really detect lies?

brain scanI have much faith in technology and believe someday scientists will develop a lie detection method that is nearly foolproof and practical for fraud fighters. Every few years a new method promises to be the holy grail of determining deception, but the hype rarely lives up to reality. We’ve seen everything from truth serum to polygraph to voice-stress analysis, but none has been deemed worthy enough to be accepted by courts as evidence in a criminal trial.

The latest method to create a buzz is the “No Lie MRI,” a system used to measure physiological changes in the brain, which when analyzed, can determine whether someone is lying, according to the owners of the system. In fact, they claim 90% accuracy in recent tests, and are now signing up MRI centers across the country to offer this new service.

The technology came to our attention after we learned an accused arsonist in South Carolina used the system to try to clear his name. Deli owner Nathan Harvey was accused of torching his business, and even though criminal charges had been dropped, his insurer refused to pay his claim. Harvey thought maybe the MRI scan results just might convince the insurer of his innocence. No word yet on whether his claim will be paid any time soon.

Nonetheless, the idea of this technology is intriguing, and if it works, could have widespread application from fraud to interrogating suspected terrorists. It also may pose opportunity since the technology is located in MRI centers. Perhaps insurers could ask their medical billers to undergo the tests to determine whether they are inflating their claims?