by Patrick Cheng, eKare CEO
July 2024
The healthcare industry has long been shrouded in complexity and opacity, making it challenging to uncover inefficiencies and fraudulent practices. However, the advent of data analytics is starting to change this landscape, revealing hidden issues and driving transformative change. This article explores the power of data and analytics in detecting fraud, improving efficiency, and ultimately transforming patient care.
Uncovering Fraud Through Data Analysis
A recent investigation by the Wall Street Journal (WSJ) uncovered significant fraudulent practices within the Medicare Advantage program. Insurers were found to be adding fraudulent diagnoses to boost payments received from Medicare. One notable example involved the addition of diabetic cataract codes to patient records, significantly inflating reimbursements. These diagnoses were often made without the patients’ knowledge or actual medical need, leading to an estimated $50 billion in improper payments.
The rate of these fraudulent diagnoses was abnormally high in the Medicare Advantage program compared to the standard Medicare population. Additionally, insurers were slow to remove Hepatitis C diagnosis codes despite a 99% cure rate, further inflating costs. What’s particularly compelling is that these findings were uncovered not by healthcare professionals but by data analysts who identified abnormalities in the claims data. Medical experts later confirmed these practices as improper, underscoring the potential of data analytics to detect and prevent fraud even in complex and regulated industries like healthcare.
Highlighting Healthcare Fraud in Wound Care
This issue of healthcare fraud is not isolated to Medicare Advantage. Recent criminal charges by the Department of Justice (DOJ) in the wound care sector highlight similar fraudulent practices. Two individuals orchestrated a scheme to fraudulently bill Medicare $900 million for unnecessary and expensive amniotic allografts. They targeted elderly, terminally ill Medicare patients, often without proper medical oversight. By indiscriminately applying these grafts, they exploited the system and drove up costs. Data analysis played a crucial role in uncovering this scheme, demonstrating once again how powerful data can be in identifying fraud.
Breaking the Opacity of Healthcare
Healthcare’s complexity and regulation have historically benefited established players, allowing them to maintain the status quo and drive up prices. In contrast, competitive markets like consumer electronics and solar panels typically see prices decrease over time due to innovation and transparency. The introduction of data and analytics into healthcare is starting to challenge this norm, paving the way for improved efficiency and reduced costs.
Data analytics can provide insights that were previously unattainable, helping to identify inefficiencies, prevent fraud, and improve patient outcomes. By making healthcare data more transparent and accessible, we can drive competition, lower costs, and enhance the quality of care.
The Potential for Transformative Change
The examples of fraud detection in Medicare Advantage and wound care illustrate the transformative potential of data analytics. By leveraging accurate data collection and analysis, healthcare organizations can uncover hidden issues, optimize resource allocation, and improve patient care. The power of data and analytics lies not just in identifying problems but also in providing actionable insights to address them.
The integration of data-driven approaches in healthcare is not just a technological advancement but a necessity for creating a more efficient, transparent, and patient-centered healthcare system. As we continue to navigate the complexities of healthcare, it is crucial to embrace these innovations and challenge the status quo.
Looking forward
The power of data and analytics in healthcare is undeniable. From uncovering fraud to improving efficiency and patient care, data-driven approaches are paving the way for transformative change. Healthcare professionals and organizations must embrace these innovations to address the challenges posed by inaccurate data and inefficient practices. By leveraging accurate data collection and digital tools, we can enhance patient care, reduce costs, and ensure a more sustainable healthcare system.
I invite healthcare professionals and organizations to explore the benefits of digital solutions and share their experiences in adopting these technologies. Together, we can drive transformative change in the healthcare industry.
About Patrick Cheng
Patrick Cheng is co-founder and CEO of eKare, Inc. Before starting eKare, Patrick was Technology Commercialization Officer at the Sheikh Zayed Institute (SZI) for Pediatric Surgical Innovation. Prior to that, he conducted R&D in the field of minimally invasive and image‐guide surgery. Patrick received MBA from Georgetown University, MS in Biomedical Engineering with focus on medical imaging and image analysis from the University of Iowa, and BS in Biomedical Engineering from Shanghai Jiao Tong University.
