As much as 10 percent of America's annual $2 trillion healthcare bill is tied to fraud, waste or abuse. A new partnership by two leading healthcare IT vendors aims to tackle that problem.
Emdeon, Inc., a Nashville-based provider of healthcare revenue and payment cycle management services, has announced plans to add business analytics software into its platform to help the approximately 1,200 payers using Emdeon products to detect and prevent fraud. The company will incorporate Insurance Fraud Manager, developed by Minneapolis-based FICO.
Officials of the two companies say a pilot study conducted in two states identified millions of dollars in cost savings through the use of Emdeon-FICO software.
"Creating an efficient healthcare system helps all stakeholders: payers, providers and consumers, and that is why it is one of Emdeon's top priorities," said George Lazenby, Emdeon's CEO. "By putting FICO's advanced, predictive fraud analytics into the hands of payers who pay the nation's healthcare claims, we are helping our customers address one of the largest, most debilitating sources of friction in the healthcare system and ultimately creating change that will lead to efficiency."
"As Congress and the American people grapple with the magnitude of the landmark healthcare bill, our work with Emdeon is focused on a very practical matter: Reducing the costs borne by healthcare payers and taxpayers," added Mark Greene, FICO's CEO. "FICO fraud management technology has made an enormous impact on the credit card industry since its introduction in 1992, cutting losses by an estimated $10 billion over that period of time. Together with Emdeon, we intend to make a similar contribution in healthcare."
Company officials say FICO's technology has helped the credit card industry reduce its fraud expenses to about 7 cents per $100. They're now targeting a healthcare industry that spends roughly $200 billion to $600 billion a year on fraud, waste or abuse, or as much as $10 per every $100 spent.
Analysts say health insurers have been largely unsuccessful in detecting fraud, and will have to embrace pre-pay, pre-adjudication tools and new risk management technology. Maureen O'Neil, a principal research analyst for Gartner, sees the move as a "profound cultural change" for insurers.
"Healthcare represents one-seventh of the U.S. economy, and it's rife with examples of fraud," said Louis Saccoccio, executive director of the National Health Care Anti-Fraud Association. "By increasing awareness and improving the detection and prevention of healthcare fraud, we can begin to impact the continuing yet burgeoning market need of controlling soaring healthcare costs."