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 Thats 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 39 Minimum 24.36 23.13 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 Median 210.99 131.87 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 Maximum 827.36 660.03 869.00 177,505.00 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 Weight 0 0 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

869.99 55,769.00 172.00 11.00 735.00 9,055.00 8.00 87.00 4.27 15.64 1.38 2.82 19.86 3.64

Through [the Fraud and Abuse Management System] Hospital Model, Aetnas 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. Whats 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. 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 IBMs industry and process expertise, hardware and business performance software, and the companys 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.

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-

For more information

To learn more about IBM Global Business Services, contact your IBM representative or visit: 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.
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Copyright IBM Corporation 2005 IBM Global Business Services Route 100 Somers, NY 10589 U.S.A. Produced in the United States of America 11-05 All Rights Reserved IBM and the IBM logo are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries or both. Other company, product and service names may be trademarks or service marks of others. 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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