Blue Cross and Blue Shield Plans

Blues Plans Utilize a Variety of Strategies to Guard Against Fraud and Abuse Schemes

Reprinted from the November 2006 issue of The AIS Report on Blue Cross and Blue Shield Plans, a hard-hitting independent monthly newsletter on business strategies, products and markets, mergers and alliances, and financing of BC/BS plans.

Most Blues plans contacted by AIS say sophisticated data-mining software, increased awareness among subscribers, and support from local and federal law enforcement agencies is helping them keep pace with increasingly sophisticated health care fraud and abuse schemes. Here's a look at a few Blues plans and their tactics for tackling health care fraud and abuse:

-- Blue Cross and Blue Shield of Louisiana: Like many insurers, the Louisiana Blues plan uses data-mining software to identify possible fraud. "We have used IBM's FAMS product since 1995 and have seen great returns from this strategy," says the plan's compliance and privacy officer, Darrell Langlois. Recent cases include cardiac stent procedures performed on healthy patients, $500,000 of claims in illegally prescribed narcotics (e.g., OxyContin) and millions of dollars in experimental equipment ordered and billed unnecessarily, he says.

-- WellPoint, Inc.: The insurer hired a physician/former medical director and a former federal prosecutor when it restructured its fraud and abuse department in 2004, says Lee S. Arian, vice president of WellPoint's fraud and abuse unit. The unit uses several computer-based applications to help detect and prevent potential fraud, Arian says. "The primary application is an online query application that maintains multiple combinations of professional, institutional, dental and pharmacy claims," he says. "This application allows investigators to work with paid claims data at their desktops, running various queries to uncover aberrant billing or treatment patterns." WellPoint's clinical investigations unit (CIU) conducts various data-mining studies to identify suspicious trends. When the CIU identifies particular providers whose conduct warrants attention, it refers the matter to its special investigations unit (SIU), Arian explains.

-- BlueCross BlueShield of Tennessee: The insurer's SIU recently launched an "analytics group" to identify and analyze suspicious behavior patterns, says Jack Price, senior manager of special investigations and compliance. Increased funding from federal agencies such as HHS and the Department of Justice, he adds, "has resulted in additional resources.and has yielded increased prosecutions and civil recoveries from providers and others who have committed fraud against health care payers," he says.

-- HealthNow New York, Inc.: In December, HealthNow, which includes BlueCross BlueShield of Western New York, will hold its annual employee awareness day for health fraud. Through printed material and the company's intranet site, employees are provided with tips to identify fraud. "We tell them what to look for, such as providers that might continually ask if a patient has met [his or her] maximum for benefits," says Investigations Coordinator Susan Nason. Other signs of fraud could include receipts that appear to have been altered and overutilization of particular procedure codes, she adds.

-- Blue Cross and Blue Shield of Minnesota: The Minnesota Blues plan says its fraud detection unit saved "just over $6.4 million" in 2005 and saved almost $3.1 million in the first two quarters of 2006. The plan reports launching its program more than 10 years ago, "long before anti-fraud programs were mandated by the Minnesota state legislature in 1994." The insurer's SIU is made up of five staff members dedicated to investigating potential fraudulent and abusive activities. Since the program's inception, the insurer says it "has stopped millions of dollars in fraudulent activity." When explanation-of-benefit (EOB) forms are mailed out to patients, the Blues plan includes information about its fraud hotline.

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