Fighting Fraud with Population Health Analytics

Healthcare fraud costs the United States an estimated $100 billion annually, according to the National Health Care Anti-Fraud Association, with Medicare bearing a disproportionate burden of fraudulent claims. For Accountable Care Organizations (ACOs) operating under value-based care contracts, fraudulent billing presents a particularly insidious threat that can undermine years of careful population health management and jeopardize participation in programs like the Medicare Shared Savings Program (MSSP).

Traditional fraud detection methods often fall short in the complex world of value-based care. By the time suspicious patterns emerge through conventional reporting, the financial damage may already be substantial. ACOs need sophisticated analytics capabilities that can identify anomalies in real-time, distinguish between legitimate cost variations and fraudulent activity, and provide the detailed evidence necessary to take decisive action.

This case study demonstrates how one ACO leveraged advanced population health analytics to uncover a sophisticated DME fraud scheme, protect their financial performance, and ultimately help safeguard the entire Medicare system from ongoing fraudulent activity.

Unexpected Cost Surge Threatens Shared Savings

In 2023, an ACO client noticed an alarming trend in their financial data. Durable Medical Equipment (DME) costs had inexplicably spiked, threatening their performance in the MSSP and putting their full-risk contract at serious financial risk.

The numbers were staggering: costs for specific DME procedure codes had surged from $130,000 to $4.5 million—a jaw-dropping 3,360% increase. Yet utilization data showed no corresponding rise in patient need or service volume. Something was fundamentally wrong.

Data-Driven Detective Work

Using Koan Health's population health analytics platform, this ACO embarked on a systematic investigation that would ultimately expose a nationwide fraud scheme. The process was methodical and revealing:

Step 1: Trend Analysis

‍Initial population health analytics flagged the cost anomaly, showing the dramatic spike in DME expenditures without corresponding utilization increases.

Step 2: Claims Deep Dive

‍The ACO exported comprehensive claims data spanning 2022-2023, creating a complete picture of DME billing patterns across their patient population.

Step 3: Multi-Layer Analysis

‍Data was segmented by procedure codes, billing providers, and rendering providers, revealing suspicious patterns invisible in aggregate reporting.

Step 4: Pattern Recognition

Two specific procedure codes emerged as outliers, with costs that defied logical explanation when compared to historical norms and patient utilization.

The Smoking Gun: Adding the billing provider dimension revealed 17 suspicious sources responsible for the fraudulent claims—a clear pattern of coordinated healthcare fraud.

System-Wide Impact and Recovery

Armed with concrete data and irrefutable evidence, our client opened a formal case with the Centers for Medicare & Medicaid Services (CMS) and shared their findings with the National Association of ACOs (NAACOS) community.

The investigation's impact extended far beyond a single organization. CMS confirmed that the identified providers were perpetrating DME fraud across multiple ACOs nationwide. The agency took swift action, removing all expenditures for the fraudulent procedure codes across ALL ACOs participating in the MSSP for performance year 2023.

Sustained Vigilance and Financial Protection

The success didn't end with fraud detection. The ACO implemented quarterly reviews using Koan Health's analytics, establishing a proactive monitoring system that continues to protect their financial health. This ongoing vigilance ensures early detection of future anomalies before they can impact shared savings calculations.

Key Results:

• Fraudulent expenditures completely removed from ACO calculations
• Shared savings protected across the entire Medicare program
• Continuous monitoring system established for ongoing protection
• Fraud detection methodology shared across NAACOS community

Protect Your ACO’s Financial Health

This success story demonstrates the power of advanced population health analytics in protecting ACO financial stability.

Healthcare fraud is an unfortunate reality, but with the right analytical tools and expertise, ACOs can detect and combat fraudulent activity before it threatens their bottom line.

Identify, analyze, and protect your ACO’s financial performance. Get results with Koan Health.

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