Using the IBM Fraud and Abuse Management System to detect suspicious healthcare claims using a shared services model

FAMS Developed in 1993 with CIGNA Specifically built for healthcare fraud and abuse detection (not retrofit from another industry) Rich data mining and data visualization capabilities Over 8,500 risk indicators in the FAMS library Over two dozen pre-built medical modules (including DME, Transportation, and Home Health Care) Analysis is completed on peer groups (medical specialty and geography) FAMS ranks entities (providers, institutions, etc) based on suspicious behaviors IBM’s Fraud and Abuse Management System (FAMS) uses a scientific approach to detect suspicious claims and behaviors © 2008 IBM Corporation

We analyze the claims data by medical specialty We have a library of over 8,500 features, or risk indicators, specific to medical specialties • The medical models group the questions into areas for investigation or hypotheses • Sample hypotheses include: • Diagnosis Abuse • Services Not Rendered • Upcoding • Ordered Services © 2008 IBM Corporation

Existing medical models include • Facility • ER Hospital Facility • Inpatient Hospital • Surgical Center • Other • Ambulance • Chiropractor • DME • Home Health Care • Pathology • Patient • Physical Therapy • Radiology • Physician • Cardiology • Dentist • Dermatology • ER Physician • Gastroenterology • Neurology • OB/GYN • Pain Management • Psychology • Cross Specialty/Family Practice • Pharmacy © 2008 IBM Corporation

Most sources agree that approximately 10% of healthcare spending may be attributable to fraud, waste and abuse As much as 10% of all healthcare expenditures in the United States may be lost each year to fraud, abuse and waste. These same practices can be seen in the Medicaid program “…at least 10 percent of state Medicaid dollars were spent on fraudulent claims, while 20 or 30 percent more were siphoned off [by abuse].” © 2008 IBM Corporation

The Business Problem in New York • New York State requires all of its counties to contribute to the State’s share of Medicaid expenses • In FY2004, the State of New York spent approximately $44 Billion on Medicaid. This was more than any other state • Medicaid spend continued to accelerate resulting in higher taxes • Counties wanted to do something to address Medicaid fraud, waste and abuse © 2008 IBM Corporation

The Solution: VerifyNY • The New York State Association of Counties (NYSAC) challenged IBM to provide a solution at the county level • VerifyNY utilized IBM’s Fraud and Abuse Management System in an on demand model • The program provided the Counties with analytics to assist them in accurately verifying their Medicaid expenditures • No additional money spent on technology • No additional training of resources • No need for the Counties to hire data analysts or statisticians to do the analysis © 2008 IBM Corporation

VerifyNY- Results • Twelve counties were invited to participate in the Demonstration Project • 49 peer groups analyzed • Over 500 reports delivered Clinton Franklin Saint Lawrence Jefferson Essex Lewis Hamilton Warren Oswego Washington Orleans Herkimer Niagara Oneida Wayne Fulton Monroe Saratoga Onondaga Genesee Montgomery Ontario Madison Schenectady Cayuga Seneca Livingston Erie Wyoming Rensselaer Yates Otsego Schoharie Albany Cortland Tompkins Chenango Schuyler Greene Columbia Chautauqua Cattaraugus Allegany Steuben Delaware Tioga Chemung Broome Ulster Dutchess Sullivan Putnam Orange Westchester Rockland Suffolk Bronx Nassau New York Queens © 2008 IBM Corporation

The VerifyNY Process Flow New York MIG provided IBM with claims data for a particular medical specialty Leveraging FAMS technology, providers/recipients are scored and ranked according to their degree of aberrant behavior County suspected aberrant behavior in a particular medical specialty IBM Consultants use FAMS advanced analytics and delivered results to NY MIG County recovers overpayments from providers/recipients Auditors conduct the investigation © 2008 IBM Corporation

Mechanics of the VerifyNY Process Flow • New York Office of the Medicaid Inspector General provided IBM with an extract of claims data called a “Service Level Extract” for the chosen medical specialty • IBM performed a preliminary analysis to ensure that the data provided was for the specialty that the County expected • Further analysis confirmed that there were no obvious errors in data provided • Data was analyzed and reports were delivered to the County for further investigation © 2008 IBM Corporation

Output provides investigators a detailed view of where the potential fraud, waste and abuse may be occurring The output is targeted at two different audiences • The Executive Summary is targeted at the Medicaid Inspector General or their Cabinet, many of whom do not have time to review the in-depth reports • Detailed reports are used by Investigators as the basis for further investigation © 2008 IBM Corporation

Verify Reports Executive Summary This is a high level report targeted at the Medicaid Inspector General or their Cabinet. It provides an overview of the underlying Verify analyses For Illustrative Purposes Only © 2008 IBM Corporation

Verify Reports- cont This Profile Analysis Detail Report is targeted at an investigator and gives an in-depth look at each entity analyzed. For example, this provider is submitting claims long after performing treatment. For Illustrative Purposes Only © 2008 IBM Corporation

Memo of Understanding • Between • New York State Department of Health • And • ________County • Whereas, DOH is the single state agency for the Medicaid program in New York State wit the responsibility for the proper and efficient administration and supervision of the provision of … • Now Therefore, DOH and _______County hereby agree as follows: • Section 1 Scope and Purpose • This agreement is intended to set forth the respective roles and responsibilities of the parties with respect to audits of providers enrolled in the Medicaid Program and the protection of the integrity of the program as well as define and identify those areas requiring mutual cooperation in the … “I am also pleased to report that county expenditures made to use VerifyNY will be seventy-five percent (75%) reimbursed by the DOH as a Medicaid administrative expense if expended in 2005…” IBM in conjunction with New York State Association of Counties is pleased to announce the VerifyNY solution for Medicaid fraud detection and investigation. C. 2. The Local Services District is hereby designated the DOH agent in conduction reviews and or audits of payments to providers enrolled in Medicaid. Sample press from the VerifyNY project New York Post September 3, 2006 WHEN NERDS ATTACK IBM GEEKS AIM TO ARREST FRAUD © 2008 IBM Corporation

Why Verify? • The Verify program is an IBM on demand offering that allows Medicaid agencies to contract for analysis of one or many medical specialties • In this model IBM consultants use advanced analytics to ferret out anomalous behavior by entities • The client receives analyses which allow investigators to focus on the most egregious offenders © 2008 IBM Corporation

IBM BEHAVIOR ANALYSIS PLATFORM DETECTION DASHBOARD REPORTING ANALYTICS INTERNAL AUDIT FOOD COUPONS TAXATION HEALTHCARE INSURANCE CUSTOMS BEHAVIOR MODEL LIBRARIES The Entity Profiling Management System (EPMS) is the core of all the Risk Management Solutions © 2008 IBM Corporation

Contact Information • For further information about IBM’s Fraud and Abuse Management System, Verify or other Risk Management Solutions please contact Patreece Williams, patreece.t.williams@us.ibm.com © 2008 IBM Corporation

Using the IBM Fraud and Abuse Management System to detect suspicious healthcare claims using a shared services model