Medical Mutual of Ohio catches $6.2 million in fraudulent claims
Posted by Sarah Jane Tribble/Plain Dealer Reporter January 07, 2009 18:20PM
Categories: Business Impact, Impact, Insurance, Real Time News, Sarah Jane Tribble
Updated at 6:20 p.m.

Medical Mutual of Ohio, the state's largest health insurer, said it caught a record $6.2 million in fraudulent health-care claims last year, up from nearly $5 million the year before.

The company credits its computer software and a diligent investigative unit, which includes ex-police officers, for the increase.

The privately owned Cleveland-based company, which has 2,700 employees and serves about 1.6 million customers, is one of a growing number of insurers fighting fraud in the hopes of controlling health-care costs in a weak economy.

Health-care fraud typically occurs when doctors and other providers inaccurately bill the insurer or write unneeded prescriptions and perform unneeded procedures, said Lou Saccoccio, executive director of the National Health Care Anti-Fraud Association.

"It drives up cost -- absolutely it does," Saccoccio said. "Three to 5 percent of what insurers pay out in health benefits is fraudulent and that's going to be reflected in the premiums."

Medical Mutual's news of recovered dollars comes during a difficult time for health insurers. Two of the nation's largest health insurers plan job cuts in the wake of investment losses and a weak economy in which employers and consumers are reducing health care coverage. Cigna said earlier this week that it would cut 1,100 jobs, or 4 percent of its work force, by mid-2009; Aetna said last month that it would cut 1,000 jobs, or 3 percent of its work force.

Medical Mutual, the oldest health insurer in Ohio and one of Cleveland's largest employers, has no plans for layoffs -- though it is always "cautious on hiring," said Jared Chaney, Medical Mutual's chief communications officer.

Unlike some publicly traded competitors, the company does not answer to Wall Street, Chaney said.

"We don't have the pressure to meet quarterly targets set by analysts and year-over-year growth goals," Chaney said. "We want to turn a small profit because that profit goes into a surplus."

Medical Mutual has an operating surplus of nearly $1 billion, he said.

It's not all about money for John Shoemaker, manager of the 11-person financial investigations unit at Medical Mutual. "Not only do they steal," Shoemaker said. "In a lot of cases the services that they [doctors] render become questionable and I wonder if they're not hurting patients."


Tags: health care fraud, health costs, Medical Mutual of Ohio, National Health Care Anti-Fraud Association
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Andy Brimmer, 205-410-2777

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Mary Ann Arico, 205-969-6175
maryann.arico@healthsouth.com