Fraud is a different issue than waste and abuse, but most technology fails to address any of these issues. If you think you know how to manage fraud, waste and abuse (FWA) at your healthcare organization, you should probably be aware that CMS doesn’t agree with you. With the influx of promises of change and reform from CMS and GAO, it appears as though our government doesn’t agree think healthcare organizations are managing FWA well at all.

FWA Data

The data behind this supports the lack of management. Estimates of FWA are in the billions, with vendors furthering hindering management strategies when they market it as a complete solution. You see, without system visibility, managed care organizations and health plans can only keep their fingers crossed that they’re controlling their FWA, but not eliminating it.

We are not, in any way, suggesting that you should not work with tech vendors and third-party business partners. What we are saying is that health plans must do more than plug in a piece technology or some adjunct service hoping it will fix their FWA. A much more proactive, overarching method is needed to eradicate the FWA in your organization.

The Confusion on Overpayments

At least 7% of healthcare spending will be comprised of overpayments by 2026. That is a total of $400 billion. However, “overpayments” is an extremely broad term, encompassing everything from simple errors to intentional fraud. Although fraud makes headlines, a much greater percentage of cases are merely incidents of waste and abuse, which needs to be handled differently.

Harkening back to our previous point, health plans need to be completely aware that programs to manage FWA are merely a piece of the solution here. The absolute key to building traction with your health plan is visibility. CMS and GAO promote interoperability for a reason, and that is so this can seen with a broader scope that is done in real-time. This way, you’re much less likely to get caught up in waste areas such as administrative complexity.

What’s the Difference in FWA?

The primary difference between these incorrect payments is the intent behind them. While fraud and abuse are considered illicit, only fraud is deemed willful. Combined, fraud and abuse make up 7% of healthcare spending. However, waste is an exorbitant  cost due to administrative complexities, slow processes, elevated costs associated with suppliers, as well as other wasteful spending. Clinical waste makes up over 14% of healthcare spending.

Overall, there’s a great deal that health plans don’t know about FWA, and it’s costing them millions of dollars a year.

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