Finding & Preventing Patterns in Health Insurance Fraud – An Australian Perspective Health...
If you can't read please download the document
Finding & Preventing Patterns in Health Insurance Fraud – An Australian Perspective Health Insurance Counter Fraud Group Annual Conference, High Wycombe
Finding & Preventing Patterns in Health Insurance Fraud An
Australian Perspective Health Insurance Counter Fraud Group Annual
Conference, High Wycombe 3 November 2011 Michael Douman Head of
Business & Clinical Analysis Bupa Australia 1Bupa Private and
Confidential 13 October 2011
Slide 3
Medical Fraud Frank Abagnale 2Bupa Private and Confidential 13
October 2011
Slide 4
Fraud Controls We would be better served if Government policy
was made not by Ph.Ds in economics but by grandmothers employing
the skills they practice at the butchers Bruce Vladek,
Administrator, HCFA, 1980 Any reasonably astute fraud perpetrator
avoids detection by billing correctly, using orthodox treatments,
and by avoiding excessive greed Prof Malcolm Sparrow License to
Steal (2000) If a fraud perpetrator learns to bill correctly and
thereby beats the edits and audits, then claims effectively bypass
any chance of human inspection and will be paid Prof Malcolm
Sparrow, Fraud in the U.S. health-care system Social Research
Winter 2008 Fraud works best when claims processing works perfectly
The rule for criminals is simple, if you want to steal from
Medicareor any other health care insurance program, learn to bill
correctly Prof Malcolm Sparrow, Testimony to the Committee on the
Judiciary: Subcommittee on Crime and Drugs, U.S. Senate, 20 May,
2009. 3Bupa Private and Confidential 13 October 2011
Slide 5
On Jesuitical Casuistry and Fraud definitions Your fraud is: My
desire to provide the patient the best possible service My desire
to avoid medical malpractice legal suits My administrative error My
failure to understand the system/schedule/etc My utilising the
weaknesses in your product or contract design Your effectiveness
depends on: What you measure How you measure How you count Bupa
Private and Confidential 13 October 20114
Slide 6
Bupa Australia - Scale & Scope - 1 Lines of Businesses
Private Health Insurance Corporate health and wellness Chronic
disease coaching Home, travel, car and life insurance Optometry and
optical dispensing Care services facilities Bupa Private and
Confidential 13 October 20115
Slide 7
Bupa Australia - Scale & Scope - 2 Bupa lives covered is
3,127,692* 45.3% (10.3 million) of Australia has private health
insurance of which Bupas market share is 27%* Largely an Individual
Consumer Market of sales individual-pay 84% Persons covered by top
4 Funds (Bupa, Medibank, HCF and NIB) is 76% New members join
through Retail centres, Web, Phone and corporate promotion
Extensive customer service touch points; Retail centres, Web, Phone
and Corporate workplace Claims Operations* High proportion of
claims settled electronically 68% at point of service with
ancillary claims being the highest at 81% 19.6 million Ancillary
Claims annually 8.9 million Medical Claims annually 1.1 million
Hospital episodes annually * Data as at 30 June 2011 Bupa Private
and Confidential 13 October 20116
Slide 8
Return on Capital Employed Improved Performance Automation
savings Revenue Net Cash Flow Reduced claims payments Operating
Costs Personnel Reductions Customer Satisfaction SENSE OF URGENCY
FLEXIBILITY Management Imperatives 7Bupa Private and Confidential
13 October 2011
Slide 9
ROI Measuring & Tracking Savings Do more savings represent
success or failure ? If you had rules & controls in the system,
then you would not have the leakage in the first place Good
practice Funds actually recovered Funds not paid out as a result of
new rules, changes to product, changes to contracts, provider
intervention A deterrent effect on rest of industry (Hawthorn
effect) is not calculated as part of the savings, as it is too
difficult to separate out correlation from causation 8Bupa Private
and Confidential 13 October 2011
Slide 10
Bupas Leakage Savings CY 99 to CY 10 9Bupa Private and
Confidential 8 June 2011 Savings represent a multiple of >10
times BCAs operating costs BCA savings 2010 are equal to 1% annual
savings on hospital contracts, or 0.8% of total benefits paid BCA
saves >$159 million over 11 years
Slide 11
Australian Health System Structure Bupa Private and
Confidential 13 October 201110 Australian Government Doctors
Hospitals Ancillary Providers MBS Medical Benefits Schedule MBS
Medical Benefits Schedule PBS Pharmaceutical Benefits Scheme PBS
Pharmaceutical Benefits Scheme Prostheses List Prostheses List
State Health Departments PBAC Pharmaceutical Benefits Advisory
Committee PBAC Pharmaceutical Benefits Advisory Committee PLAC
Prosthesis List Advisory Committee PLAC Prosthesis List Advisory
Committee PBPA Pharmaceutical Benefits Pricing Authority PBPA
Pharmaceutical Benefits Pricing Authority TGA Therapeutic Goods
Administration TGA Therapeutic Goods Administration PublicPrivate
ACCC Australian Competition & Consumer Commission ACCC
Australian Competition & Consumer Commission Privacy Commission
PHIO Private Health Insurance Ombudsman PHIO Private Health
Insurance Ombudsman PHIAC Private Health Insurance Administration
Council PHIAC Private Health Insurance Administration Council AHPRA
Australian Health Practitioner Regulation Agency AHPRA Australian
Health Practitioner Regulation Agency
Slide 12
Country Health Systems determine what Funds need to/can do
Countries systems are different and we all have differing
constraints under which we operate What we do, or need to do, or
cannot do, is a product of those national health systems Health
outlays formula is Benefits paid =
utilisation*casemix*severity*price The Australian scene is shown in
high level detail in Patterns Hospitals 1Patterns Hospitals 1
Unlike the public sector, in the private sector in Australia, due
to Government rules, we have no control over: hospital &
medical & prosthesis utilisation hospital casemix casemix
severity by contrast we do have controls in the ancillary area Bupa
Private and Confidential 13 October 201111
Slide 13
Overview of PMI (PHI) Funds operations, Australia - 1 Hospital
Facility, Prostheses, Pharmacy costs No pre-authorisation unless
its a Pre-existing ailment (PEA) issue Funds are legislatively
obliged to pay for most treatment Government set minimum benefits
are Fund payable if a contract cannot be agreed with a hospital
Prostheses use determined by the surgeon. The items & the price
set by the Government Pharmacy costs paid by Fund, Hospital,
Government, or patient. Outpatient costs not paid unless a
contracted program with a hospital Medical Government determines
the items paid (MBS Schedule), the rules governing them, and the
price paid Funds can pay a quantum in excess of 100% of the
Government schedule fee Bupa Private and Confidential 10 October
201112
Slide 14
Overview of PMI (PHI) Funds operations, Australia - 2 Product
design requires Federal Government approval Waiting Periods are
regulated Premiums charged for policies require Federal Government
approval Premiums are the same for all members on the same product
whatever their risk No one can be denied the right to join a Fund
no matter what the clinical risks are Privacy controls on access to
medical records Risk equalisation fund compensates for Funds having
to accept all risks Funds can determine: what ancillary specialty
they pay for; the price they pay for a service; and limit
utilisation Specialties covered: Acupuncture, Aids &
Appliances, Ambulance, Antenatal, Chiropractic, Dental, Dietetics,
Funeral benefit, Hearing Aids, Home Nursing, Hypnotherapy, Living
Well programs, Naturopathy, Occupational Therapy, Optical,
Orthoptics, Osteopathy, Pharmacy, Physiotherapy, Podiatry,
Psychology, Remedial Massage, Speech Therapy, Weight Watchers Bupa
Private and Confidential 10 October 201113
Slide 15
HOSPITAL EDI ECLIPSE ANCILLARY PROVIDER CPOS (HICAPS, Isoft)
MEMBER DOCTOR INTERNET MEDICARE Electronic Health Systems BUPA
AUSTRALIA
Slide 16
Impact of Automation on Fraud & Claims Leakage Increasing
automation is changing the way work is undertaken. In the case of
the increasing take up rate of Eclipse (hospitals and doctors) as
well as existing Fund hospital EDI transmissions systems, the
effectiveness of system controls and business rules are even more
critical and encompasses: the accuracy of programming logic and
parameter controls system controls reference tables System controls
and rules are already significant in ancillary claims processing
which account for 81% of claims processed
Slide 17
Ancillary System Rules - Examples Bupa Private and Confidential
13 October 201116
Slide 18
BCA Data Sources All our SAS datasets combined hold 4 billion
rows of data Lines of SAS code we maintain/have written: ~ 200,000
to 300,000 lines Finding Needles in Haystacks 17Bupa Private and
Confidential 13 October 2011
Slide 19
Risk Assessment & Data Issues Gatekeepers (providers)
Players (Members, Fund Employees) Contracts, Products System
controls Pareto principle - Size matters It is possible to
eliminate risk, but you may not end up with a viable business Data
Issues Data integrity Metadata Data classification Data structuring
18Bupa Private and Confidential 13 October 2011
Slide 20
Risk Assessment Providers as the gatekeepers are the major risk
area As automated systems become more important, members and
employees can only exploit the manual system claims as per below:
Ancillary Member & Fund Employee 18% Medical Member 23%, Fund
Employee 14% Hospital (Ex EDI and Eclipse) Member & Fund
Employee 0% Other areas that require attention Product design
system control weaknesses contract provisions Bupa Private and
Confidential 13 October 201119
Slide 21
Prospective Approaches Rules & system controls based
prevention Hospital clinical and/or business rules, contracts,
products (Government constraints) Medical Medicare MBS rules,
supplemented by Fund rules (Medicare constraints) eg type C
reference tables Prostheses Fund rules eg warranties, UR eg
frequencies, multiple charges Ancillary clinical and/or business
rules, contracts, products System auditing DOS attacks Examples of
the preceding can be seen in the following slides At the end of the
day companies accept a level of commercial risk as complete
prevention is impossible unless you want to close down a business
Real time Behavioural profiling This is a practice yet to occur in
the Australian PHI scene Bupa Private and Confidential 13 October
201120
Slide 22
Retrospective Analytics Statistical Analytics Data Mining Trend
analysis Ratio analysis Profiling & Benchmarking (providers,
members, employees, products, services) Statistical Standardisation
Scoring algorithms Non Statistical analytics Targeted Clinical
auditing Coding audits Etc Bupa Private and Confidential 13 October
201121
Slide 23
Kohonen Network (SOM) - Item model for popular dental items
Work undertaken with Deloittes some years ago Bupa Private and
Confidential 13 October 2011
Slide 24
Kohonen Network (SOM) - Clustering and labels on popular dental
items model Value from this labelling can be substantial allows
comparison of items based on simultaneous consideration of 55
variables summarising their usage by members and providers What
items are most like other items? Input into item bundle analysis
Most expensive benefits Most popular benefits Zero schedule
benefits with a high variability on amount paid Zero paid benefits
Bupa Private and Confidential 13 October 2011 Work undertaken with
Deloittes some years ago
Slide 25
Patterns A significant number of the more common patterns are
shown in the appendices (slides 55-65). I dont intend to discuss
them here A smaller selection are in the slides that follow The
industry in Australia is in the process of establishing a generic
fraud pattern register to which all Funds have access Some patterns
can be employed by providers, members and Fund employees alone or
in collusion with each other Some patterns are employed by one of
the 3 players Generically they can centre on some form of over
utilisation eg SPP, SPD, BPP, pathology and diagnostic tests,
services per body part, treatment not in line with past history,
bank account changes, They can be found by analysing: outlier
validity & frequency; benchmarking; non standard services;
cluster analysis; age/service links; abnormal service times; non
consistent patterns across products; different practices by same
provider for same service at different locations; high usage items,
providers, products, members, employees; service location/member
residence location anomalies; link analysis of providers, members
and employees; variable claims processing locations; Bupa Private
and Confidential 13 October 201124
Slide 26
Questionable service Pattern 1 Bupa Private and Confidential 13
October 201125
Slide 27
Have dependencies on prescriptions drugs Visit many GPs and
pharmacies in different geographic areas Doctor ShoppingModel for
Staff Fraud Bupa Private and Confidential 13 October 2011
Slide 28
Fraud Pattern - Membership Bupa Private and Confidential 13
October 201127
Slide 29
Abuse of Tooth ID when no controls Bupa Private and
Confidential 13 October 201128
Slide 30
Same Address, Different Memberships Bupa Private and
Confidential 13 October 201129
Slide 31
Creating False Memberships Bupa Private and Confidential 13
October 201130 Note the activity on 13 Nov & creation of 18 new
policies from 9:11am to 11:03am. Note closure on 19 Jan from 10:09
to 11:36 am. Policies stay in force for a month
Slide 32
Knowledge and Skill Sets 31Bupa Private and Confidential 13
October 2011 Skills Clinical: medical, nursing, pharmacy, dental
Business: Finance, Economics, Health Economics Actuarial Health
Informatics/Clinical coding SAS programming Statistics Clinical
consultants are on standby Personal traits In built crap detector
High stress threshold
Slide 33
Technologies & Software Virtualised quad core blade server
32 Gb RAM, 2 Tb data Designed own data model & extract daily
from the mainframe SAS is fundamental to everything we do SAS base
is used for sophisticated programming SAS Enterprise Guide is used
for basic programming, data extraction, and reporting SAS
Enterprise Miner is used for data mining Futrix is our major self
service OLAP tool, and it uses SAS, Java, J Boss languages We have
developed in-house web applications viz Ultrasound a scoring
program (used for Claims Leakage analysis), Lasar (used for Comp
& Damages recoveries) 32Bupa Private and Confidential 13
October 2011
Slide 34
Analytics Scoring Algorithms 1 Bupa Private and Confidential 13
October 201133
Slide 35
Lessons Learned/Best Practice Tips 1 Follow the Pareto
principle There are distinct limits to rules based systems and
claims analysis, no matter how sophisticated they are. Automated
behavioural profiling is the next step Profitable products can
still be abused Fraud is opportunistic and you leave it alone to do
more important things at a cost Hawthorn (deterrent) effect does
not work when people are desperate Data - clean data, good
metadata, well structured data 34Bupa Private and Confidential 13
October 2011
Slide 36
Lessons Learned/Best Practice Tips 2 Staff who are/have: Good
technical (business knowledge); Fascinated by data & can see
patterns in it; Experienced in using programming software;
Statistical understanding; Understand systems and system controls;
Understand the law; Understand the need for compromise; Cope with
stress and not being loved Good software and hardware tools Minimal
dependence on IT departments Selling the return on investment
Having a Sponsor 35Bupa Private and Confidential 13 October
2011
Slide 37
References Sparrow, M Testimony to the Committee on the
Judiciary: Subcommittee on Crime and Drugs, U.S. Senate, May 20,
2009. Sparrow, MFraud in the U.S. health-care system Social
Research Winter 2008 Sparrow, MLicense to steal (Westview Press,
2000) Corr, WTestimony to the Committee on Appropriations
Subcommittee on Labor, Health and Human Services, Education, and
Related Agencies United States House of Representatives Thursday,
March 04, 2010 Selden, TMThe distribution of public spending for
health care in the United States, 2002 Health Affairs Health
Affairs 27, no. 5 (2008) DHSSHealth Care Fraud and Abuse Control
Program Annual Report for Fiscal Year 2009 Maclntyre, Hudson LLP
The financial cost of Healthcare fraud (2009) NHCAAThe Problem of
Health Care Fraud (2010) U.K. - NAOInternational benchmark of fraud
& error in social security systems 2006 Medicare AustAnnual
report 2008 2009 Professional Services Review Annual report 2008
2009 http://www.nhcaa.org/eweb/DynamicPage.aspx?webcode=anti_fraud
_resource_centr&wpscode=TheProblemOfHCFraud
Slide 38
The End QUESTIONS 37Bupa Private and Confidential 13 October
2011 [email protected] Ph. +61 2 93239896 Mb. +61(0)417
259 582
Slide 39
Appendices Bupa Private and Confidential 13 October 201138
Slide 40
PHI coverage in Australia Bupa Private and Confidential 13
October 201139 Persons covered by top 4 Funds (Bupa, Medibank, HCF
and NIB) is 76%
Slide 41
Health Funding Sources - Australia Bupa Private and
Confidential 10 October 201140 Australias Health 2010 p.414
Slide 42
System Framework - Australia Federal & State Governments
(legislation, funding, powers) Regulatory Bodies Private Health
Insurance Administration Council (PHIAC) Medicare eg MBS Schedule,
Compliance reviews Australian Health Practitioner Regulation Agency
(AHPRA) all providers Professional Review Division eg
physicians/surgeons registration/prosecution Therapeutic Goods
Administration eg approval to use drugs, prostheses Pharmaceutical
Benefits Pricing Authority (PBPA) Prostheses List Advisory
Committee (PLAC) Private Health Insurance Ombudsman (PHIO) Privacy
Commission Australian Competition and Consumer Commission (ACCC)
Public/Private Sector interface Bupa Private and Confidential 10
October 201141
Slide 43
Constraints on PMI (PHI) Funds operations, Australia - 1
Hospital Facility, Prostheses, Pharmacy costs No pre-authorisation
unless its a Pre-existing ailment (PEA) issue If a treatment is
paid on a Fee for Service (FFS) basis, Funds are legislatively
obliged to pay for treatment and associated services provided,
unless it has been excluded by product design or contract Default
benefits are Fund payable if a contract cannot be agreed with a
hospital Prostheses use determined by the surgeon. The items &
the price set by the Government Pharmacy costs paid by Fund
&/or Hospital if a restricted PBS drug (whose use on a case by
case basis the DoHA approves) or a non PBS drug Electronic Claim
Lodgment and Information Processing Service Environment (Eclipse)
electronic claiming system use mandatory Clinical and claims data
submission to Federal Government mandatory Outpatient costs not
paid unless contracted with a hospital Government responsibility
Bupa Private and Confidential 10 October 201142
Slide 44
Constraints on PMI (PHI) Funds operations, Australia - 2
Medical Government determines the items paid (MBS Schedule), the
rules governing them, and the price paid If an MBS service is
provided by a physician/surgeon in hospital then the Fund is
obliged to pay it 25% of the Government schedule price only paid by
a Fund if they occur in a hospital Government pays 75% of the
Government set schedule price for a hospital episode (85% if an
outpatient) Funds can pay a quantum in excess of 100% of the
Government schedule fee (ie the base 25% plus an additional
percentage above 100%) to eliminate a member gap payment, where
there is an agreement between the physician/surgeon and the Fund
Eclipse & Medicare 2 Way use mandatory Outpatient costs not
paid unless contracted with a hospital Government responsibility
Bupa Private and Confidential 10 October 201143
Slide 45
Constraints on PMI (PHI) Funds operations, Australia - 3 Other
constraints Product design requires Federal Government approval
Waiting Periods are regulated Premiums charged for policies require
Federal Government approval Premiums are the same for all members
on the same product whatever their risk No one can be denied the
right to join a Fund no matter what the clinical risks are Privacy
controls on access to medical records Bupa Private and Confidential
10 October 201144
Slide 46
Freedom for PMI (PHI) Funds operations, Australia - 1 Hospital
How a hospital admission, and its duration, are paid by a Fund, is
determined by the Fund in negotiation with the hospital The price
paid for an ARDRG is that negotiated between the Fund and the
hospital The price paid for a program is that negotiated between
the Fund and the hospital Readmissions & inter hospital
transfers payments are determined by the Fund in negotiation with
the hospital, Pharmacy costs paid by Fund and/or a hospital if a
non PBS or restricted PBS drug. High cost drugs payment eg cancer,
are signed off in advance by the Fund Emergency ward treatment in a
private hospital is not paid unless the patient is admitted Risk
equalisation fund compensates for Funds having to accept all risks
Bupa Private and Confidential 10 October 201145
Slide 47
Freedom for PMI (PHI) Funds operations, Australia - 2 Ancillary
Funds can determine what specialties they will pay for - see list
below Funds can determine what specialty services they pay for
Funds can determine the price they pay for a specialty service
Funds can limit utilisation of a service through product rules,
business and/or clinical rules, or setting an annual benefit cap or
rolling year benefit cap Funds can determine the providers they
deal with (commercial recognition rules), how they deal with them
(EFTPOS and non EFTPOS) and the basis on which they recognise and
register them Funds can determine who is included in a (preferred)
provider network and the basis of reimbursement and operation
within a network Specialties covered: Acupuncture, Aids &
Appliances, Ambulance, Antenatal, Chiropractic, Dental, Dietetics,
Funeral benefit, Hearing Aids, Home Nursing, Hypnotherapy, Living
Well programs, Naturopathy, Occupational Therapy, Optical,
Orthoptics, Osteopathy, Pharmacy, Physiotherapy, Podiatry,
Psychology, Remedial Massage, Speech Therapy, Weight Watchers Bupa
Private and Confidential 10 October 201146
Slide 48
Government support for PMI/PHI Private health insurance
premiums subsidised by the Federal Government through rebates (35
per cent for those aged over 65, 40 per cent for over 70s, and 30
per cent for all others) Lifetime Health Cover obliges people to
join before 1 July after they turn 31 if they dont want to have a
loading of 2% on their premium commencing at age 30. This increases
annually with joining age. Medicare Levy Surcharge at 1% of taxable
income is imposed on people whose income level is above $80,000
single & $160,000 couple if they do not take out health
insurance Subsidised public hospital treatment for PMI/PHI patients
who: do not declare their PMI/PHI status up to 100%. do declare
their PMI/PHI status through cheaper accommodation costs up to 67%
of the private hospital bed day rate (public $320 vs private $965
in 2011) 12.6% of all private hospital admissions (private &
public hospitals) are declared private patients in a public
hospital. Previous analysis has shown that the percentage of PHI
members who do not declare their PHI status accounts for 14% Bupa
Private and Confidential 10 October 201147
Slide 49
Bupa & BCA Structure Bupa U.K. Bupa Australia Board Bupa
International Internal Audit Board Audit Committee CEO CFO CIO
Director HR Director HBM Director Sales Director Marketing &
Product Director Customer Service Risk & Compliance Legal
Business & Clinical Analysis Branches Sales Staff Branches
Sales Staff Travel Claims Membership Contact Centres Claims
Membership Contact Centres Claims Utilisation Review Information
Analysis Information Delivery CMO Director Strategy BCA staff are
based in Adelaide, Brisbane, Sydney Bupa Private and Confidential
13 October 2011
Slide 50
BCA Michael Douman Information Analytics Rai Gomes Clinical
Utilisation Review Margaret Street Information Delivery Rob Ashmore
Clinical Utilisation Review Hospital, Medical & Prostheses
claims leakage savings through audits, claims review, contract
compliance, etc Onsite hospital chart to bill and coding audits
Ancillary claims leakage savings through audits & claims
reviews, provider de-recognition & prosecution, etc Ancillary
fraud prosecution Negotiations with ADA on dental schedule AHIA
Fraud Committee representation Comp & Damages claims, debt
management and recoveries Information Analytics Hospital, medical,
prostheses and ancillary analysis Contract negotiation support
Demand supply projections/modelling of hospital, medical and
ancillary activity Industry benchmarking Hospital 2 nd tier pricing
HCP collection, QA & submission Clinical schedule review &
updates eg MBS, Prostheses Medical (SoF) indexing Information
Delivery Datamart establishment & data structuring Development
of self service tools eg, Futrix, LASAR, hospital contract
modelling Development of scoring programs ie Ultrasound Develop
complex algorithms associated with pattern analysis Daily ETL from
mainframe to SAS datamart Financial KPIs for CY 11 $28 million BCA
Teams Bupa Private and Confidential 13 October 2011
Slide 51
Fraud Structure & Bupa Interrelationships Bupa U.K. Bupa
Australia Board Bupa International Internal Audit Board Audit
Committee CEO CFO CIO Director HR Director HBM Director Sales
Director Marketing Director Customer Service Risk & Compliance
Legal Business & Clinical Analysis Branches Sales Staff
Branches Sales Staff Travel Claims Membership Contact Centres
Claims Membership Contact Centres AHPRA Medicare Australia Police
Courts Gaol Hospital & Medical Fraud Prevention Ancillary Fraud
Prevention Staff & Member Fraud Prevention Bupa Ancillary
De-recognition Committee CMO Director Strategy Bupa Private and
Confidential 13 October 2011
Slide 52
Bupa Australia - Scale & Scope Hospital & Ancillary
Benefits Bupa Private and Confidential 13 October 201151
Slide 53
Risk Players, Products, Systems, Contracts ? Where you focus
depends on where the greatest weaknesses are. Provider (& their
employees) leakage & fraud is the major issue as providers are
the gatekeepers to the system both in determining services and
invoicing Member & Fund employee leakage & fraud is
possible. The only areas where fraud is possible are those where
the member and Fund employee has input into the process Given that
the maximum potential is: Ancillary Member & Fund Employee 18%
Medical Member 23%, Fund Employee 14% Hospital (Ex EDI and Eclipse)
Member & Fund Employee 0% The reality is that fraud and leakage
is significantly less than the maximum potential shown above
Product waiting periods, benefit limits, step downs, etc System
leakage is potentially significant depending on the effectiveness
of system controls and rules eg field parameters, commercial rules,
membership rules, claims assessing Contracts (Hospital, Medical,
Ancillary) see next slide 52Bupa Private and Confidential 13
October 2011
Slide 54
Contracts & Channels Control Risk Hospital Payment
Contracts (Capped ) Depending on what is bundled into the episodic
(ARDRG) capped payment, determines whether there is any value in
reviewing the payments There is no point in examining, for example,
ICU certificate classifications, or whether MBS items link to OR
bands, or excessive length of stay etc as the price is the price.
59% of hospital benefits in CY 10 were capped payments Hospital
Payment Contracts (Fee for Service ) As the number of services,
length of stay, OR band and ICU classification etc all add to cost,
then auditing of these cost inputs are important. Unbundled ICU
benefits are worth $39,000,000, and unbundled OR benefits are worth
$118,000,000 Medical Payment Systems No Gap and Known Gap
contracts/agreements stipulate the Fund scheduled price and Gap
that is allowed when the provider bills correctly. When a No Gap or
Known Gap invoice is submitted, the patient cannot be billed for
any other service Ancillary Payment systems Members
First/MemberCare agreements stipulate the schedule fee to be paid
as well as mandate the use of HICAPS/iSoft payment systems Bupa
Private and Confidential 13 October 2011
Slide 55
BCA Data Mining Methodology Bupa Private and Confidential 13
October 2011
Slide 56
Fraud analytics Data Mining 55 Supervised ModelsUnsupervised
Models 1.40% Transform & Sample 2.15% Explore 3.30% Modify
4.15% Model 5.5% Assess Bupa Private and Confidential 13 October
2011
Slide 57
Patterns Hospitals 1 Potential methods of aberrant claiming in
the absence of controls: Service padding (FFS only) Upcoding of
medical items (DRGs or MBS items in the Australian context)
Contract compliance - invoicing bundled and unbundled payments
Invoicing certificated services for non applicable services
Validity of Fee for Service (FFS) long stay outliers Prostheses
billing for pack when one item only used Prostheses billing for
duplicates when covered by manufacturers warranty No informed
financial consent by patient (IFC) Invoicing for duplicate services
Bupa Private and Confidential 13 October 201156
Slide 58
Potential methods of aberrant claiming in the absence of
controls: Unnecessary and over long stays e.g. total stay, ICU/CCU
stay Charging more than the contract price Multiple charging for
pharmacy, prostheses, SUO items Multiple admissions for previous
single treatment Using psychiatric hospitals for rest purposes Dual
admissions (husband and wife) when only one person the patient
(borders) Paying twice for a transferred patient Paying for weekend
leave Claiming for a hospital benefit under a membership when not a
member Billing for prosthesis opened in error or not in patient
when they leave the OR Patterns Hospitals 2 Bupa Private and
Confidential 13 October 2011
Slide 59
Patterns Doctors Potential methods of aberrant claiming in the
absence of controls: Invoicing certificated services for non
applicable services (ACC, C, ICU, B) Cosmetic surgery billed as
clinically necessary Invoicing for No Gap service but invoice
member for additional service Invoicing for duplicate services
Inappropriate service categorisation (upcoding) Bupa Private and
Confidential 13 October 201158
Slide 60
Patterns Ancillary Providers 1 Potential methods of aberrant
claiming in the absence of controls: Benefit limit (UPI) surfing
Multi ring fraud Inappropriate service ratios eg service padding
Non clinically necessary eg fissure sealing for a 60 year old
Upcoding eg scale & clean billed as perio, multi surface
fillings percentages Inappropriate age services eg multi focal
lenses for a 16 year old Inappropriate service linkages eg perio
and fluoride Service date shifting to circumvent product rules eg
orthodontics & Nov start Processing services on an unlikely day
and/or time of service (ancillary) Quoting searching in EFTPOS
system Bupa Private and Confidential 13 October 201159
Slide 61
Patterns Ancillary Providers 2 Potential methods of aberrant
claiming in the absence of controls: Charge higher amount for
treatment when Fund product benefits paid at a percentage rate
Reverses and changes items to get a better benefit Charges for
services where the necessary equipment is not owned Rate of
servicing post HICAPS dramatically exceeds pre HICAPS Prolongs
treatment (by not providing necessary treatment) in order to milk
the Fund Bills all members of the family for the same condition up
to the annual benefit limit every year Bills a patient in his rooms
when she is in hospital after just having a baby Bills Patients
from 3 hours away (from home or work) Billing for same services
provided previously by another provider Significant number of
higher cost services than normal Bupa Private and Confidential 13
October 201160
Slide 62
Patterns Members 1 Potential methods of false claiming in the
absence of controls: False services (medical, ancillary) Service
padding (ancillary) pressure on providers for no MOOP Service
geographic hot spots with high utilisation or high benefit payments
(ancillary) Doctor shopping eg pharmacy Multi ring fraud
(ancillary) Member receiving a service for a condition they dont
have but that another member of the family has e.g. hearing aid
Same person (agent) making claims for multiple memberships Large
no. of members joining at same time and/or at same address Bupa
Private and Confidential 13 October 201161
Slide 63
Patterns Members 2 Potential methods of false claiming in the
absence of controls: False memberships w or w/o bank account
manipulation (medical, ancillary) Claims not in keeping with
members age and claims profile Claims processed distant from
service point (ancillary) Service provided distant from residence
or workplace (ancillary) Claims lodged at different postcodes
Different claims made through different channels Accident condition
not shown as indemnity (hospital, medical) Age of new claimant >
membership term Bupa Private and Confidential 13 October
201162
Slide 64
Patterns Fund Employees Potential methods of false claiming in
the absence of controls: Backdating claims (23.5 months) Processing
same services all family members on same or similar days Creating
false memberships Processing services on an unlikely day and/or
time of service (ancillary) Manually processing a disproportionate
percentage of claims from a CPOS provider Linking many members
claims to the same bank account Changing bank accounts, paying
money to oneself and then changing bank account back False
memberships Bank account manipulation Bupa Private and Confidential
13 October 201163
Slide 65
Patterns common to Providers, Members, Employees Potential
methods of aberrant claiming in the absence of controls: Same
services for many members of a family on the same or near days
Services not appropriate to age group Utilising unused aged benefit
limits Padding services Service on atypical day or time of day More
services than are possible in a day Benefit limit (UPI) surfing
(ancillary) - pressure on providers for no MOOP Bupa Private and
Confidential 13 October 201164
Slide 66
Same services, same day on same family Bupa Private and
Confidential 13 October 201165 Note same services on same day for
all lives on the membership, viz 00012, 00022, 00114, 00121,
00515
Slide 67
Same services, same day on same family Bupa Private and
Confidential 13 October 201166 $10,694.20 of dental services from
13 dentists supposedly provided on a Sunday. Examples of Dr ?????
services shown above.
Slide 68
Doctor Shopping ? Bupa Private and Confidential 13 October
201167