How big of a bite can AI take out of health insurance fraud?
A health tech startup born at Georgia Tech may end “pay and chase” for health insurers’ special investigations units.
Healthcare fraud in the United States is estimated to cost the system $270 billion every year. Scams are constantly evolving. Current detection techniques and whistleblowers only uncover a small fraction of this.
Founded in March 2017, FraudScope is the brainchild of Georgia Tech alum Musheer Ahmed, Ph.D. The company’s AI-based SaaS platform origins can be found in Dr. Ahmed’s dissertation on applying cybersecurity concepts in healthcare. Fraudscope is commercializing the patented AI-based technology to detect fraud, waste and abuse (FWA) in health insurance claims data from his dissertation.
“Every health plan has a special investigations unit (SIU) to identify FWA in health insurance claims,” says Dr. Ahmed,FraudScope CEO, CTO and Founder. “When plans receive a claim for payment, they have a limited number of days to make that payment. If initial, simple checks for validity discover nothing suspicious, they pay the claims and then further examine for anything potentially fraudulent, wasteful or abusive. If this further examination uncovers patterns of FWA within paid claims, insurers have to chase the money for recovery which is difficult and costly to attain.”
How then do you optimize the use of limited special investigation unit resources to maximize savings?
FraudScope brings sophisticated AI-based technology currently absent in the FWA detection realm for insurers to identify those claims before payments are made. And because the machine learning capabilities aren’t rules-based like most existing solutions it can adapt to new scams at very high speed with low false-positive rates. The days of playing ‘pay and chase’ for insurers, their audit teams and special investigations units may be nearing an end.
Dr. Ahmed says that every health insurance plan that has seen a demo of FraudScope has signed on to pilot the technology. FraudScope’s pilots have identified a significant amount of claims containing FWA that were paid at those plans. The company’s target market is currently commercial payers, though they will target public payers such as CMS and the VA in the future as well.
FraudScope announced a $1.5 million seed fund round shortly after its founding in April 2017. Among the investors and now principal advisor to FraudScope are former UnitedHealthcare COO of Shared Services Patrick Stamm. The company plans another funding round later this year to expand its sales and engineering teams. The goal: acquire more customers and rollout additional products such as pharmacy/drug claims and workers compensation FWA detection.
When asked what FraudScope needs from the southeast medtech community, Dr. Ahmed said, “More interactions with health insurance plans to make them aware of what we can do, especially SIU directors, audit teams and payment integrity officials at health plans.”
When asked what advice he would share with other innovators or engineers who believe they may have a technology ripe for commercial development, Dr. Ahmed said, “Because there is so much potential for improvement in healthcare, connect with foundations and apply for commercialization grants. Healthcare innovation, including the insurance space, moves more slowly than almost any other industry. Be prepared for a longer sales timeline than you might anticipate.
“There is a great deal of lot of support in the Atlanta local and regional startup ecosystem. The ecosystem has matured significantly in the past few years. Young companies should be confident that there is sufficient local and regional support for their journey without needing to court Silicon Valley.”
Connect with the entirety of the Southeast Medtech Ecosystem at the 2018 SEMDA Medtech Conference May 2-4, 2018 in Greenville, SC!