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IBM Global Business Services
Center for Business Optimization
Combating healthcare provider fraud and abuse IBM Fraud and Abuse Management System
According to estimates from the federal government, and from issues-based groups such as the National Health Care Anti-Fraud Association (NHCAA), as much as 10 percent of all healthcare expenditures in the United States may be lost each year to fraud, abuse and waste.1 That’s more than US$100 billion — coming largely from healthcare providers attempting to defraud the system. Methods of cheating, such as billing for more expensive services than those actually performed, or even conducting medically unnecessary procedures for the purpose of billing insurance, have become more sophisticated and more costly to payers. For example, the NHCAA reported that one Texas chiropractor was caught submitting US$5.7 million in fraudulent claims over a five-year period.2 Detecting fraudulent activity is not easy. Given the huge volume of data involved, resource and process limitations have forced many healthcare payers to rely on “payand-chase” strategies, in which claims are paid and then later — sometimes years later — investigated for fraud. However, such after-the-fact collections are almost never paid in full.
Recognizing the ultimate impact healthcare fraud and abuse have on private health insurers, government-funded health plans and consumers, IBM has worked closely with healthcare investigators to develop the IBM Fraud and Abuse Management System. A sophisticated, comprehensive solution with both proactive and retrospective detection capabilities, the Fraud and Abuse Management System helps healthcare payers identify and pursue fraud cases faster and more cost-effectively.
A full-spectrum solution The Fraud and Abuse Management System supports the various aspects of fraud investigation and management, including prevention, investigation, detection and settlement. Using a unique combination of data mining capabilities and graphical reporting tools, the system can identify potentially fraudulent and abusive behavior before a claim is paid or retrospectively analyze providers’ past behaviors to flag suspicious patterns. In either case, the Fraud and Abuse Management System is designed to operate more swiftly and effectively than traditional, manual processes — sorting through tens of thousands of providers and tens of millions of claims in minutes, and then ranking providers as to their degree of potentially abusive behavior.
The easy-to-use reports and database wizard allows drill-down capability to profile, claims and other relational data. Metropolitan Healthcare Plans Provider Report Card PE010 Ordered by Provider ID Peer Group: Value Set: Model: Profile: Provider: Element G1EXPOSURE EA0001 EB0001 FBG003 FBG007 FBG019 FBG020 FBG160 FBG333 FBG334 G2RATIOS FBG006 FBG008 FBG009 FBG014 FBG040 FBG061
CHIRLA ~ Los Angeles Area Chiropractors AB ~ LA Area Chiropractors - 2004 ~ 01/01/2004 - 12/31/2004 CHIRO2 ~ Chiropractic Model 2 ~ This model analyzes the practice, radiology, patient age as well as billing and volume ratios 001 ~ LA Area Chiropractors - 2004 Groups: 7, Features: 44, Providers: 122, Owner: FAMSADMN 669317756 ~ J Peck Description Provider Composite Score Financial Exposure Group Overcharge Exposure Code Historical High Billing Score Total $ Charged Total # of Visits Total # of Patients Total # of Procedures Total $ Eligible Total # of Families Total # of Claims Practice Ratios Group Avg # of Pxs/Visit Avg # of Visits/Patient Avg # of Patients/Family Avg # of Diagnoses/Patient Avg # Procedures/Month/Patient Avg # Office Visit Svcs/Patient
Rank 1 5 1 16 79 113 27 119 113 80 2 8 4 24 12 1 9
Score 827 392 H 1,000 211 59 6 168 14 5 28 822 863 992 219 695 1,000 893
Value
Minimum
Median
39
24.36 23.13
210.99 131.87
827.36 660.03
0 0
869.99 55,769.00 172.00 11.00 735.00 9,055.00 8.00 87.00
0.00 20,032.00 32.00 7.00 200.00 5,717.00 4.00 6.00 0.00 1.21 2.29 1.00 1.44 1.93 0.00
75.00 31,709.50 209.50 32.50 473.50 18,286.00 27.00 120.00 146.76 2.25 5.94 1.23 2.20 4.43 0.64
869.00 177,505.00 1,124.00 233.00 2,725.00 120,512.00 181.00 818.00 846.26 10.66 20.86 2.25 4.00 19.86 15.55
5 5 5 5 5 5 5 5 5 5 5 5 5 5 5
4.27 15.64 1.38 2.82 19.86 3.64
Maximum
Weight
“Through [the Fraud and Abuse Management System] Hospital Model, Aetna’s special investigations unit (SIU) identified more than 200 facilities with questionable outlier behaviors. To date, the SIU has pinpointed more than US$20 million in potential recoveries.” — Benjamin S. Wright, business systems manager, Special Investigations Unit, Aetna With the ability to drill down into detailed information on each provider or claim, antifraud investigators and auditors can zero in on questionable behavior, avoiding dead ends and focusing on the most egregious offenders. What’s more, IBM has built in a “point and click” graphical interface, a reports and database wizard and extensive help documentation that make the system relatively easy to learn and simple to use.
A rapid return on investment Not only can the Fraud and Abuse Management System help speed and extend the ability to recover mistakenly paid claims, but the system also promotes compliance by providers and claimants, who quickly realize that fraud detection and enforcement have become more systematic and effective — an outcome known as the “sentinel effect.” Additionally, by automating processes previously conducted manually and by more accurately targeting likely offenders, the system helps enable investigators and auditors to become more productive, handling broader caseloads and conducting a higher proportion of success-
ful investigations. In fact, many healthcare payers realize a significant return on investment within the first year of implementation.
Turning analytics into action The IBM Fraud and Abuse Management System is part of the IBM Center for Business Optimization solutions portfolio. The IBM Center for Business Optimization brings together IBM’s industry and process expertise, hardware and business performance software, and the company’s deep computing and advanced analytics capabilities to tackle our clients’ most difficult business challenges. In addition to the area of risk management optimization, the center offers solutions in the areas of marketing investment mix, dynamic pricing and complex supply chain optimization. The Fraud and Abuse Management System is driven by the requirements of companies like yours — for example, through collaborations with insurance organizations and through our deep involvement with user groups — and is constantly evolving as your business needs change.
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ibm.com/bcs To learn more about the IBM Fraud and Abuse Management System and the IBM Center for Business Optimization visit: ibm.com/services/cbo References 1 National Health Care Anti-fraud Association. “Health Care Fraud, A Serious and Costly Reality for All Americans.” www.nhcaa.org. September 2002, p. 2. 2
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References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates.
National Health Care Anti-fraud Association. “Health Care Fraud, A Serious and Costly Reality for All Americans.” www.nhcaa.org. September 2002, p. 4.
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