The Problem
Fraud in the health insurance market is a significant concern, leading to billions of dollars in yearly losses. This affects insurance companies, resulting in higher consumer premiums and can lead to losing trust in the medical profession. Detection and prevention are continuous challenges, but advances in data analytics, stricter regulations, and increased public awareness can help mitigate these fraudulent activities.
Like many other industries, the health insurance market is susceptible to various forms of fraud. These fraudulent activities increase insurance companies’ costs, resulting in higher premiums for policyholders and undermining the overall system’s integrity. Some common types of fraud in the health insurance market include:
- False Claims:
- Upcoding occurs when healthcare providers bill for more expensive services than what was provided.
- Unbundling: Charging for each procedure step as if they were separate procedures.
- Billing for services not rendered: Charging for medical services that were never provided.
- Identity Theft: Fraudsters might use someone else’s identity to receive medical services or file false claims.
- Duplicate Claims: Submit multiple claims for the same service, hoping the insurance company won’t notice.
- Phantom Billing: Medical providers bill for unnecessary tests, treatments, or procedures the patient doesn’t require.
- Prescription Fraud:
- Doctor Shopping: When patients visit multiple doctors to obtain prescriptions for controlled drugs.
- Prescription Padding: When doctors prescribe medications that aren’t necessary and may be selling them on the side.
- Misrepresenting Non-covered Treatments: Billing for cosmetic or other non-covered treatments as if they were medically necessary procedures covered by insurance.
- Waiving Deductibles and Co-payments: Some providers might advertise that they won’t require co-payments or deductibles from patients, and then they make up the difference by over-billing the insurance company.
- Kickbacks: This involves doctors or medical providers receiving compensation for referring patients to particular facilities, specialists, or for specific services or tests.
- False Policy Applications: Individuals might provide incorrect information when applying for health insurance, like omitting pre-existing conditions, to receive a lower premium.
- Misrepresentation of Locations: Some providers might claim that treatments were performed in higher-cost locations or facilities when they were not, to command higher reimbursement rates.
- Shell Companies: Creating fictitious companies to bill insurance providers for fake or non-existent services.
How can a strong Identification via SSI can help prevent fraud in Health Insurance?
Self-Sovereign Identity (SSI) is a decentralized model of digital identity where individuals control their own identity data without relying on a central authority. Here are some use cases where SSI can help prevent fraud in health insurance:
- Identity Verification for Claims: When patients file claims, SSI can ensure the person filing the claim is the legitimate policyholder. This can prevent identity theft or false claims using someone else’s identity.
- Provider Verification: With SSI, insurance companies can confirm the legitimacy of healthcare providers, ensuring that claims are only paid to legitimate and licensed providers, thus preventing fraud from fake medical practitioners or facilities.
- Treatment Verification: Using SSI with tamper-proof digital records can ensure that the treatments claimed were indeed the treatments given. This can prevent claims for treatments or procedures that were never performed.
- Prescription Drug Verification: SSI can be used to confirm that prescriptions were issued by legitimate doctors and were filled at legitimate pharmacies, reducing the chances of fraudulent claims related to prescription drugs.
- Transparent Audit Trails: With SSI, every interaction or transaction (like a claim) can have a tamper-proof digital trail. This makes audits more transparent and ensures that discrepancies can be spotted more easily.
- Policy Issuance: SSI can be used during the initial policy issuance process to confirm the identity of the individual applying for insurance. This can prevent people from taking out policies in someone else’s name or using fake identities.
- Data Integrity: Since SSI is often built on blockchain or other decentralized technologies, the integrity of data (like medical records or policy details) can be maintained. Any attempts to modify data fraudulently can be detected.
In all these scenarios, the combination of SSI’s decentralized nature, cryptographic security, and the user’s control over their identity data plays a crucial role in reducing the potential avenues for fraud in health insurance.
Our Solution
QID(QriarLabs ID) is a platform for streamlining SSI challenges, focusing initially on how we can integrate the concept of Verifiable Credentials(VCs) with a wide range of different scenarios, aggregating data, protecting and validating them through Mobile and IoT experiences. Our first release is expected for December 2023; keep watching our updates and news, and feel free to contact us to discuss this and many other ways we can help your organization apply SSI today.
