Controlling Small Group Eligibility Fraud

CareFirst BlueCross BlueShield

This program combines a risk-based scoring system with an extremely efficient protocol for audit and resolution. It aims to ensure that the health care cost burden is more equitably distributed among payers, thus benefiting employers, insurers and consumers alike and keeping health insurance accessible and affordable.

Program Elements

• CareFirst BlueCross BlueShield determined a need for an audit process for their small group businesses. CareFirst's Corporate Audit and Advisory Services (CAAS) and Special Investigations (SI) developed an audit program designed to uncover employer non-compliance with contractual require­ments and to combat fraud. Though non-compliance could be a result of an oversight or error, it could also result from intentional fraud.
  
  
• This program aims to uncover both fraud and accidental non-compliance without damaging relationships with CareFirst's small business groups.  Non-compliant organizations discovered through the audit process are provided a chance to come into compliance or seek coverage elsewhere.
  
  
• Six months prior to a policy renewal date, CareFirst asks selected groups for a census of their employees (whether insured with CareFirst or not) along with supporting tax and wage documentation. Upon receiving the requested information, CareFirst determines whether the group is in com­pliance and therefore eligible for a policy renewal. 
  
  
• Employers found to be non-complaint are given ample opportunity to rem­edy the situation if they choose to do so. If an employer does not respond to the initial audit request, a series of repeat requests and warning letters are sent, though non-responsive groups cannot have their policy renewed.
  
  
• The CareFirst SI and CAAS units developed a scoring mechanism that stratifies groups by risk for non-compliance. The scoring mechanism incor­porates logical risk indicators such as dramatic changes in group member­ship or unusual trends in paid claims. To further ensure an effective audit, a random sample of small groups is selected regardless of their risk factors for compliance issues.

Program Results

• In 2005, the CareFirst SI unit targeted 739 small groups. As a result of the audit, 179 groups were terminated or self-terminated, while 100 groups were brought into compliance. Savings from reduction of fraudulent activity cannot be quantified in this audit process, though CareFirst estimates a one-year savings of $2M due to termination of non-compliant groups.

Contact

Andrea Cherenzia, Director, 410-998-6081, andrea.cherenzia@carefirst.com