Smart Claims and Dynamic FWA Detection with AI

In 2025, health insurers face a daunting landscape. According to Willis Towers Watson’s report, medical costs are set to surge, with global projections averaging a 10.4% increase. For some regions, like the Middle East, the potential jumps are as high as 12%. This makes insurance companies search for efficient ways to optimize their operations and costs. Given that a significant share of that inflation is the result of different sorts of inefficiencies, a key area for optimization is to tackle Fraud, Waste, and Abuse (FWA).

Understanding the FWA Trio

The FWA challenge isn’t new. It has been a persistent drain on resources in the insurance industry for decades. While fraud often steals the spotlight, waste and abuse are, in fact, equally problematic. Waste is usually associated with inefficiency and overuse, such as unnecessary tests or prolonged hospital stays. It’s not malicious, but it’s far from being cost-effective. Abuse, on the other hand, is a bit difficult to define, as it often comes down to exploiting loopholes, upcoding procedures, or billing for a service that wasn’t actually provided. Both waste and abuse silently erode the system, driving costs up and compromising patient care.

Historically, combating those has been a Herculean task, requiring skilled assessors to review each complex case manually. It involves evaluating both the financial aspects (e.g., verifying expenses and billing accuracy) and the medical necessity of provided services.

While checking the accuracy of expenses is quite straightforward, determining whether a service was medically necessary is a far more challenging task. This process requires complex, manual medical expertise that, considering the overwhelming claim load, makes it impossible to keep up.

In countries where health insurance services are still developing, providers face a distinct FWA challenge: their clients often lack transparency about whether a medical treatment will be approved. The lack of certainty can even lead to the cancellation of policies, as clients seek to avoid risk and confusion.

In response to the situation, many companies introduced a pre-authorization process before planned procedures. This stage involves a manual review of the proposed treatment to ensure it aligns with policy terms and medical necessity.

Yet, while helping build consumer trust, it also puts a significant drain on human resources.

On top of that, regulators started to tighten their grip, increasing the frequency of audits and imposing hefty fines for the lack of FWA preventive measures. This added another layer of complexity for insurers, making them look for solutions that are not only effective but also transparent and auditable.

The AI Revolution in FWA Detection: from traditional models to Agentic AI

AI became a turning point in FWA detection by not only streamlining the overall process but also making it more efficient, scalable, and accurate. Although early-stage models had shortcomings due to their ‘black box’ nature and required significant resources for implementation and maintenance, they have gradually evolved into what we now know as Agentic AI. This technology went beyond fixed-task automation, becoming an autonomous system that can work with a dynamic environment, adapt to new fraud patterns in real-time, and even engage in human-like interactions.

In collaboration with the innovative insurtech company Ucare.AI and powered by Google Agentic AI, Sigma Software offers a comprehensive strategy for FWA management. This approach provides insurers with more efficient instruments than just flagging the suspicious claims.

We help our clients adopt the platform that actively investigates claims, communicates with providers, and learns from each interaction to continuously improve the detection capabilities.

The solution provides the following functionality:

• Services expense evaluation based on configurable limits and historical data
• Medical necessity assessment of procedures and services
• Pre-authorization check of prescribed procedures before the treatment starts
• Detailed reasoning on every claim decision pinpointed with all required information
• Claim summary for the assessor to make the final judgment on a case

At its core, the approach we offer is based on human-AI collaboration. This means all the AI features act like an intelligent co-pilot for assessors to make smart data-driven decisions. Insurers get full transparency on every resolution behind the assessed claim to prevent any misunderstanding and reduce false-positive cases. Based on our clients’ feedback, the practical implementation of the solution into FWA workflows has already delivered notable results:

• 24% reduction in overservicing-related costs
• 100x improvement in FWA claim processing speed
• <12 months payback period, with ROI compounding over time

We understand that while positive outcomes are the ultimate goal, they might mask the significant effort required to achieve them. Yet, one of the biggest challenges companies often face right at the start is how to seamlessly integrate an AI-based solution into the existing workflows. In the next chapter, we’ll describe the ways we help navigate these complexities and overcome the implementation hurdles.

Ensuring Seamless AI Solution Integration

In light of AI becoming increasingly popular for optimizing health insurance workflows, many companies are struggling with the shortage of AI-savvy personnel. This became a critical bottleneck when it comes to adopting AI solutions, leading to delays and an inability to fully capitalize on their potential.

That’s why, at Sigma Software, we navigate our clients through the entire AI integration process and continuously support them with a versatile technology expertise. It helps our team ensure that every phase of AI deployment goes smoothly, from initial assessment all the way to optimization and ongoing support.

By combining our partner product capabilities with a custom implementation strategy, we make the adoption process significantly easier for our clients compared to traditional models. We also closely collaborate with our clients’ IT departments along the way to:

• Tailor the solution to insurers’ specific medical systems, languages, and unique operational needs
• Optimize data quality and ensure compliance with strict standards for processing sensitive information
• Develop necessary customizations to cover the specific company requirements
• Ensure seamless integration with the existing IT infrastructure and applications
• Provide training and 24/7 support to ensure effective solution utilization

As a result, we not only provide our clients with a solution that works and brings measurable value, but we also ensure it maintains high performance over time. This, in turn, allows insurers to efficiently drive their internal optimizations and overcome any technical challenges or evolving needs regarding FWA detection right away.

Conclusion

As we navigate the complex world of health insurance, the battle against Fraud, Waste, and Abuse stands as a critical frontier. The AI-driven approach we offer for FWA management is not just a technological advancement but a paradigm shift in how insurers can handle this persistent challenge. It makes FWA detection smarter, providing insurers with a tool to protect their bottom line, enhance patient care, and create more robust healthcare ecosystems.

As we look ahead, the integration of AI in the FWA detection process isn’t just an option – it’s becoming a necessity for businesses who aim to stay competitive in a constantly changing landscape. The question now is not whether to embrace this technology or not. It’s how fast you can transform your operations and secure your position in the evolving insurance market.

Hence, we help our clients leverage Agentic AI to address regulatory pressures, all while reducing the integration hurdles. This way, we create a more efficient, compliant, and trustworthy insurance ecosystem for years to come. As the industry evolves, those who embrace these innovative technologies will be best positioned to thrive in the challenging landscape of tomorrow. If you need a reliable partner along the way, don’t hesitate to contact us. We’ll be happy to support you.

• #AI/ML
• #Healthcare