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In certain areas of the country, patients are getting a surprise – boxes and boxes of gauze, dressings, and advanced skin substitutes designed for severe injuries. These patients usually have either minor wounds or no wounds at all. Instead, they’re the byproduct of a new variation on DME fraud that bad actors are using to defraud insurers. We asked Shift expert Mark Starinsky to fill us in on the details.

What’s the scheme?
It goes like this:

  • A patient visits a corrupt provider for a routine checkup
  • The provider asks the patient if they would like free wound care supplies
  • The patient, who is either older or an immigrant, sees nothing fishy about this
  • The patient receives an unnecessary prescription
  • The provider bills their insurer for a wasteful amount of medical supplies

On the surface, this scheme doesn’t look much different from many other DME schemes that were already prevalent. Some new variations have made this fraud tactic somewhat more difficult to detect.

What’s new about this form of fraud?
Around 2020, a few medical equipment suppliers began releasing new forms of wound care material. This took the form of advanced skin substitutes and collagen dressings that are designed to decrease healing time, improve outcomes for complex injuries, and minimize scarring.

Accordingly, the Centers for Medicare and Medicaid Services (CMS) issued new Healthcare Common Procedure Coding System (HCPCS) codes which would stand for those products.

Every time the CMS issues new HCPCS codes, bad actors evaluate them to determine whether they’re viable for committing fraud. Since insurers aren’t necessarily familiar with these new codes, there can sometimes be little guidance regarding how they’re applied. 

Why did insurers miss the initial spike in wound care prescriptions?
A few factors combined to make this form of DME fraud more successful. Unfamiliarity played a role. An ordinary wound might require yards of gauze, so it didn’t appear unusual for providers to prescribe a large number of wound dressings.  

Unlike normal bandages, these new wound care treatments are designed to be used in smaller amounts. They’re also much more expensive. Unfortunately, these facts might not have been apparent to a less experienced investigator or claims adjuster. The fraudulent prescriptions initially disappeared into the data. 

Lastly, this form of fraud first came about during 2020, when orders for nearly every kind of medical equipment were on the rise. This contributed to making the rise in wound care orders unremarkable – but it also helped investigators eventually unravel this fraud scheme.

How can insurers detect wound care fraud?
There are a combination of methods and details that can be used to prevent and mitigate wound care fraud.

First, there’s the initial spike in utilization. It’s normal for providers to use new treatment codes once they’re released – many are eager to try new things after all – but the initial increase in wound care codes didn’t taper off. Was this because the treatment was especially effective, or was it because of fraud?

Next, there’s the timing of the spike. Again, this was during the initial COVID wave, which meant an increase in prescriptions for many kinds of DME. Context is crucial, however – there was no reason for wound care orders to increase during a period of increased respiratory infections.

Lastly, there’s the location of the spike. Many of these new prescriptions originated from providers and suppliers in Florida, centered around Miami. This is a well-known hub of health insurance fraud – there are a large number of elderly people, as well as immigrants who speak English as a second language. These patients aren’t as apt to question their providers when they receive unusual prescriptions that they may not need.

Based on the duration, timing, and location of the wound care prescriptions, investigators have been able to begin mitigating this form of fraud while reclaiming some of their lost revenue.

Could Shift Technology have helped in this case?
Shift uses an AI solution designed to flag new forms of healthcare fraud, waste, and abuse as soon as they occur. Shift Healthcare Improper Payments Detection will proactively flag potentially fraudulent claims, even when they represent new forms of fraud.

Here, it took investigators a significant amount of time to determine that fraud was occurring – there’s always a lot of fraud going around, and this form of fraud was relatively subtle. Shift, however, is designed to replicate the experience and knowledge of veteran insurance investigators and apply it to every claim in real time, something no human could ever do.

This ability lets Shift augment health insurance investigative units. Instead of waiting months for a spike in fraud to become apparent, Shift would be able to dramatically shorten the timeline. This would let insurers prevent lost revenue and mitigate a significant amount of waste – while also saving a lot of time for their investigators.

For more information on Shift Technology and how we help health insurers solve fraud, waste, and abuse, request a demo today.