HomeMy WebLinkAbout(0017) M&C 19-0372City of Fort Worth, Texas
Mayor and Council Communication
DATE: 12/10/19 M&C FILE NUMBER: M&C 19-0372
LOG NAME: 14FRAUD AND ABUSE ANALYTICS
SUBJECT
Authorize an Amendment to City Secretary Contract No. 52069 to Engage SmartLight Analytics LLC to Review City of Fort Worth Health Care
Claims for Fraud and Abuse for an Amount Up To $405,000 Per Year for an Initial One Year Term with Five One -Year Renewal Options (ALL
COUNCIL DISTRICTS)
RECOMMENDATION:
It is recommended that the City Council authorize an amendment to City Secretary Contract No. 52069 to engage SmartLight Analytics LLC to
review City of Fort Worth health care claims for fraud and abuse on an ongoing basis for an amount up to $405,000 per year for an initial one year
term with five one-year renewal options (ALL COUNCIL DISTRICTS)
DISCUSSION:
The purpose of this Mayor and Council Communication (M&C) is to seek authorization from the City Council to amend City Secretary Contract No.
52069 with SmartLight Analytics, LLC to include ongoing claims monitoring for fraud, waste, and abuse within the healthcare system at a cost of
approximately $405,000 per year. This amendment will give the City additional tools to continue to proactively fight against wasteful healthcare
spending and increasing healthcare costs.
There have been a number of stories in the news about fraud, waste, and abuse in healthcare. Currently an estimated one in three dollars in the US
Healthcare system are spent on waste, fraud or abuse. Locally there have been examples of this, Forest Park Hospitals in Dallas was writing off
the higher out -of -network coinsurance for the members who received high -cost out -of -network surgeries there. The referring providers were
receiving kickbacks for their referrals. The City did fall victim to this fraudulent activity and worked with the FBI to help bolster their case against
Forest Park Hospitals. Unfortunately, it is unlikely the City will ever be able to recover the money lost.
In order to help alleviate the rising cost of health claims and fight future incidents of fraud, waste and abuse, the Human Resources Department
engaged SmartLight in a pilot program to review a subset of past paid claims. On a go forward basis, through their data analytics and clinical
expertise, SmartLight will be able to identify fraudulent billing such as:
■ pass -through billing schemes where unscrupulous physicians route billing to out -of -network labs who in turn send the claims to in -network
rural hospitals for claims submission in order to receive reimbursement at 20-30X average payments or,
■ medically unnecessary abusive urine drug screening and genetic testing claims, or
■ identifying claims submitted that violate the anti -kickback laws, like in the Forest Park example.
SmartLight's monitoring of wasteful claims also includes, monthly interventions to reduce:
■ overuse of emergency rooms services,
■ billing of medically unnecessary services such as long-term, high frequency testosterone replacement therapy, and
■ payments for misrepresented services (such as investigational treatment of sublingual hormone drops billed as allergy treatment)
■ payments for non -rendered services (based on patterns that are medically unlikely), coding errors, or duplicate payments that bypass the
plan administrator's adjudication process.
Once a wasteful claim is identified, SmartLight will pass that information on to our current medical and prescription providers and work within the
administrator's existing processes to deny and/or credit payments back to the City. Additionally, our medical or prescription providers may report
these findings to authorities to help curb the abuse throughout the healthcare system. SmartLight provides a quarterly report on progress of
refunded payments to the City.
SmartLight Analytics anticipates that the City will save approximately $2-$3 million per year in reduced wasteful claim costs and guarantees to
save the City a minimum amount of 2Xs our annual fees paid. If SmartLight Analytics saves the Clty a minimum of $810,000 in a year, the City will
owe the entire annual amount. If SmartLight Analytics saves the City less than $810,000 in a year, it will refund the City a proprotionate amount of
the annual payment based on the total amount saved.
The proposed Amendment is for a one-year period with five one-year renewal options.
FISCAL INFORMATION / CERTIFICATION:
The Director of Finance certifies that upon approval of the recommendations, funds are available in the current operating budget, as appropriated,
of the Group Health Insurance Fund and that, prior to an expenditure being made, the participating department has the responsibility to validate the
availability of funds.
Submitted for City Manager's Office by. Jay Chapa 5804
Originating Business Unit Head: Brian Dickerson 7783
Additional Information Contact: Brian Dickerson 7783