13 Jan Calculating the Fraud Detection Technology ROI
We recently discussed that fraud has no boundaries and fraud strategies need to span several areas. There has been much conversation regarding better usage of technology, but how do we better equip SIU investigators with better information to ?out-smart? the fraud rings? But what becomes even more challenging is how to make the business case/cost benefit analysis for investing in the right technology?
Many times when fraud is detected, insurers do not pursue due to the high cost of the restitution and legal fees and also actually getting someone to testify! So carriers lower their benefits on the investment case. Possibly, we should look at the benefits that result from the fact that the investigation makes our SIU investigators more intelligent on the activities of the fraud rings and include this as an intangible benefit in the business case —- hopefully, the intelligence is leveraged in future detection rules, investigative measures and deployed in the technology so that future anti-fraud activities are detected so that insurers are not investigating the same set of fraud rings or similar fraud cases over and over.
If we continue to not count these types of benefits in the investment cases, investments in anti-fraud technology will continue to lag and the cost of fraud in the insurance industry will continue to rise. Hopefully, with the additional investment by the federal government in their efforts to decrease Medicare and Medicaid fraud, we will see the investment in technology increase and also lower the cost of deploying anti-fraud solutions.