Data Science Would Have Revealed Fraud Perpetrated by the Major Health Insurance Carriers

Another nail in the coffin for BUCA: how to put these criminals out of business for good

Introduction

Today we are going to discuss how Medicare didn’t know they were being defrauded by the big health payers, Blue Cross Blue Shield, United Healthcare, Cigna and Aetna (BUCA).  The article we will be referencing is from The Wall Street Journal where they concluded a year long investigation and published “How Health Insurers Racked Up Billions in Extra Payments From Medicare Advantage” on January 2, 2025 With the details of the allegations.  If you don’t have a subscription to WSJ, MSN has a free copy of the article here.

The Problem

The Wall Street Journal (WSJ) uncovered fraud perpetrated by the big payers against Medicare advantage in five categories

1. Insurers packed on diagnoses that made them more money.
   66,000 Medicare Advantage patients were diagnosed with diabetic cataracts and HIV, though no treatments were ever administered and some had already had cataract surgery, making this diagnosis impossible
2. Insurers sent nurses to find diagnoses that doctors hadn’t.
   When the payers weren’t billing enough they sent nurses to ‘find’ new diagnoses triggering an average of $1,818 in extra annual payments during each visit from 2019 to 2021—$15 billion in total.
3. Insurers got paid to cover patients who were already getting their healthcare elsewhere
   Payers targeted veterans with cash-like rebate payments that encourage them to sign up, the Journal found. Nearly 90% of plans focused on veterans offered the rebates. These veterans got their medical treatments from the VA for no cost.
4. Doctors who work for UnitedHealth generated billions of dollars in extra payments for their employer by adding more diagnoses
   When patients moved from traditional Medicare to payer based MEdicare Advantage they appeared to acquire previously undiagnosed maladies.  Those patients got 55% sicker, on paper, in their first year in UnitedHealth plans, an increase equivalent to every patient getting newly diagnosed with HIV and breast cancer, the analysis showed.
5. Sicker patients who needed expensive treatments like nursing-home care left Medicare Advantage at high rates—suggesting that insurers may have been denying them costly coverage
   This is a sign, experts said, that patients may not be getting the care they need through the private insurers. When patients leave Medicare Advantage, taxpayers pick up the full bill for their treatments.

These are five egregious fraudulent tactics That should have been caught and gotten BUCA completely shut down.

Data Science

Data science is a concept to unify statistics, data analysis, informatics, and their related methods to understand and analyze actual phenomena with data.  Data scientists combine statistics, mathematics, artificial intelligence(AI), advanced analytics, and programming to unravel hidden and actionable insights from data.  They are trained in and use

• Linear algebra
• Probability theory
• Statistics
• Calculus
• Optimization

They also use several mathematical laws like

• Benford’s Law
  That states that the leading digit is likely to be small in many naturally occurring collections of numbers
• The Law of Large Numbers
  That states as the number of trials of a random process increases, the results' average gets closer to the expected values or theoretical values. Note: NOT Gambler's Fallacy
• Zipf’s Law
  That states any word's frequency is inversely proportional to its frequency table rank.

Examining Data Science in detail is beyond the scope of this article.  We mention it so that the reader is aware of its existence and capabilities.

The fraud that was perpetrated by BUCA against Medicare Advantage could have been detected and stopped with any application of Data Science.  It could have even been detected with a simple Standard Deviation that we all learned in middle school, that would have stated something like “your HIV and Breast cancer diagnoses are four standard deviations above the norm, we are going to need explanation before payment is issued.”

This is exactly the kind of technology we use at Sentia Health.  Below we are going to detail exactly what we do, but for now we’ll just say that we’ve automated the process of paying for health care.  Therefore, if your doctor says you need it, you get it.  We have to be careful, for the sake of the overall costs to patients using our system that doctors don’t attempt to pad their bills by just tacking on fraudulent procedures and expecting them to get paid for.  We have a Director of Data Science, Matthew Tichenor on our staff for this express purpose.

This is exactly why we can't trust government to come up with a Single Payer System  and particularly why we can’t have “Medicare for all”

The Solution

The solution is to put health insurance companies out of business.  You don’t want bankers running anything; they crash the economy every ten years on average, and it doesn’t have to be that way.  Yes, bankers are running insurance companies.  The Commonwealth Fund identified several problems in their paper “U.S. Health Care from a Global Perspective, 2022: Accelerating Spending, Worsening Outcomes” That basically boiled down two problems:

• Health insurance is too expensive
• Patient education is largely ignored

If we can address these two problems, we can fix the US healthcare system.

The Concept

Health insurance companies have two inputs: a patient and a procedure, and one output: a check to the practice for the procedure performed.  That is it.  If we automate the process between the input and the output, then we have eliminated everything the insurance company does.  The only other thing we need to add would be some way to educate and incentivize the patient on how to live a healthy lifestyle.  That would result in fewer claims, causing reduced rates for everyone.

The Execution

We at Sentia have designed and developed a solution that completely automates health insurance.  We provide the Electronic Medical Records (EMR) system to the practice, and when they code a patient encounter, we pull out the procedures performed and pay for them in real time.  There is no adjudication, no denials, no medical coding, no big buildings, no people and most importantly, little to no cost once the system is built.  For this service we charge $10 per month plus the actual cost of the risk.  Remember that your health insurance company only returns 53% of your premiums as benefits.  We can return the 47% they waste, on average to the patient, in lieu of the previously stated $10 per month, plus the actual cost of the risk. There are other efficiencies we will explain, and a way to manage chronic, behavior-based disease.

Patient Education

Also remember that treatment for chronic, behavior based disease consumes 84%, or $3.7 trillion, of the $4.4 trillion spent on healthcare each year in the US.  The average of avoidable deaths per 100,000 in OECD countries is 225.  In the US it is 335, or about 33% higher.  If we could bring the US average down to the OECD average, we would save about $1.2 trillion.  That is a further reduction in costs of about a quarter of the total.  

How do we do this?  We offer financial incentives for people who live a healthier lifestyle as measured by our built-in health and wellness system.  This system takes into account measurements taken at the primary care physician’s practice, like height, weight and  blood pressure, plus things screened for in blood work.  Additionally, there is a mental health screening right in the wellness package.  This system looks at all these factors and then prescribes patient education based on the results. At Sentia, this is part of the system. We can tell when the patient opened the patient education and how long they spent reading it, and offer a small discount for simply doing so.  A larger discount is offered for reading and following the education, as evidenced by better results in the patient screening.

The Finances

Let’s look at big round numbers.  Let’s say we can save the patient about 40% on their health insurance up front.  Let’s say that we save the people of the US another 25% by being educated about healthy living and getting to the average OECD deaths per 100,000.  We know that eliminating medical coding, providing a free EMR to the practice and putting compliance and efficacy reporting into that system will save each and every practitioner an additional $77,000 per year that they currently spend.  That however is only about 2% of the total, so we’ll just ignore it.  If we total all that up, we see more than 60% savings.  That means that we would have not only the best healthcare on the planet but also the cheapest.

Conclusion

We have shown a way to save about 60% from the cost of health insurance and have addressed both of The Commonwealth Fund’s two conclusions about health insurance in the US: cost and education.  We have all of this written and deployed in a prototype application.  The only thing we really need to get this all started is to clean up that application and turn it into an enterprise application with logging, administration and redundancies in hardware.  We will need funding, probably about $100 million over the first two years, like other startup health insurance companies.  For comparison, United Healthcare had revenue of $371.6 billion and net earnings of $22.3 billion.  With about 60% savings we should service and retain 90% or more of the 300 million insured people in the US.  That gives us a revenue of $36 billion, however, everything in our system is automated so that is a $32.4 billion profit at a 90% profit margin.

This figure shows that this is a viable business proposition.

We have shown a way to make patients healthier by educating them on the consequences of their behavior, and a way to capitalize on that to the sum of $1.2 trillion or about 25%. If we add that to the process automation savings of our solution, we are in the ballpark of more than 60% savings in total. We already have the best doctors and the best equipment; we just need to implement the above detailed framework to give them all the tools necessary for success.

We have this system in prototype now, fully functioning.

Contact us here or on our site and we will be happy to provide a demonstration of the fully functional prototype.

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We have built a comprehensive health information system to keep the patient healthy and on the right track with the ability to incentivize healthy living. Implementing this system should be fairly simple and will completely revolutionize the way healthcare is paid for, saving countless lives. We have shown a way to use this system to make the best healthcare system in the world also the most efficacious and the most affordable, and a way to move toward value-based care.