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
Bupa
Private and Confidential
13 October 2011
1
Medical Fraud – Frank Abagnale
Bupa
Private and Confidential
13 October 2011
2
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 butcher’s”
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 Medicare…or 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.
Bupa
Private and Confidential
13 October 2011
3
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 2011
4
Bupa Australia - Scale & Scope - 1
Lines of Businesses
Bupa
•
Private Health Insurance
•
Corporate health and wellness
•
Chronic disease coaching
•
Home, travel, car and life insurance
•
Optometry and optical dispensing
•
Care services facilities
Private and Confidential
13 October 2011
5
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 Bupa’s
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 2011
6
Management Imperatives
Improved Performance
Return on Capital Employed
Automation savings
Revenue
FLEXIBILITY
Reduced claims payments
Net Cash Flow
SENSE OF
URGENCY
Operating Costs
Personnel Reductions
Customer Satisfaction
Bupa
Bupa
Private and Confidential
13 October 2011
Private and Confidential
13 October 2011
7
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
Bupa
Private and Confidential
13 October 2011
8
Bupa’s Leakage Savings CY 99 to CY 10
Historical BCA Total Savings by Calendar Year
$30,000,000
$27,000,000
$24,000,000
$21,000,000
Savings
$18,000,000
$15,000,000
$12,000,000
$9,000,000
$6,000,000
$3,000,000
$0
1999
Series2 $2,193,987
•
•
•
Bupa
2000
2001
2002
2003
$5,302,127
$6,807,438
$9,669,151
$9,534,873
2004
2005
2006
2007
2008
2009
2010
$11,201,232 $14,018,485 $13,188,703 $14,638,145 $17,977,826 $25,398,385 $28,456,324
Savings represent a multiple of >10 times BCA’s 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
Private and Confidential
8 June 2011
9
Australian Health System Structure
Australian Government
PLAC
TGA
Prosthesis
List Advisory
Committee
Therapeutic
Goods
Administration
PBPA
MBS
Pharmaceutical
Benefits Pricing
Authority
Medical Benefits
Schedule
ACCC
Australian
Competition &
Consumer
Commission
Privacy
Commission
PBAC
Prostheses
List
Pharmaceutical
Benefits
Advisory
Committee
Public
PHIAC
AHPRA
Private Health
Insurance
Administration
Council
Australian
Health
Practitioner
Regulation
Agency
PBS
Pharmaceutical
Benefits
Scheme
Doctors
Hospitals
PHIO
Private Health
Insurance
Ombudsman
Ancillary
Providers
Private
State Health
Departments
Bupa
Private and Confidential
13 October 2011
10
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 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 2011
11
Overview of PMI (PHI) Funds operations, Australia - 1
•
Hospital – Facility, Prostheses, Pharmacy costs
• No pre-authorisation unless it’s 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 2011
12
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 2011
13
Electronic Health Systems
DOCTOR
HOSPITAL
ECLIPSE
EDI
MEDICARE
BUPA
AUSTRALIA
CPOS
(HICAPS, Isoft)
ANCILLARY PROVIDER
INTERNET
MEMBER
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
Ancillary System Rules - Examples
Bupa
Private and Confidential
13 October 2011
16
Finding Needles in Haystacks
BCA Data Sources
SAS Datasets: 2,100
Boss Mirror: 680 tables
Boss DW: 650 tables
Hugo: 160 tables
Diamond /MFM tables
Other: ABS; AHIA; ARDRG; MBS; Prostheses;
Providers; Own itemisation; Corporate Groups;
MC/MF network etc
BCA Server
SAS
FUTRIX
Enterprise
Guide
-------------Data and
reference
tables
updated
DAILY
Formats: 320
Futrix OLAP Tables: 2,800
Meta ReferenceTables: 90
SAS Catalogs
• 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
Bupa
Private and Confidential
13 October 2011
17
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
Bupa
Private and Confidential
13 October 2011
18
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 2011
19
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 2011
20
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 2011
21
Kohonen Network (SOM) - Item model for popular dental items
•
Bupa
Work undertaken with Deloitte’s some years ago
Private and Confidential
13 October 2011
Kohonen Network (SOM) - Clustering and labels on popular
dental items model
Most expensive benefits
• Value from this labelling can be
substantial
Most popular benefits
◦ 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
Zero
schedule
benefits with
a high
variability on
amount paid
Work undertaken with Deloitte’s some years ago
Bupa
Private and Confidential
13 October 2011
Zero paid benefits
Patterns
•
A significant number of the more common patterns are shown in the
appendices (slides 55-65). I don’t 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 2011
24
Questionable service Pattern 1
Bupa
Private and Confidential
13 October 2011
25
Doctor Shopping–Model for Staff Fraud
• Have dependencies on prescriptions drugs
• Visit many GPs and pharmacies in different geographic areas
High Risk High Risk
Drug
Drug
Features
User 1
User 2
Age
34.4
40
Mulitple Days
173.4
252.5
No of providers***
199
413
Total Services
645.2
767.5
Analgesics***
71.2
213
Benzodiazepenes***
202
32
Codenes
124.2
169
No.of approvals***
24.4
140
No of postcodes***
59.6
169
Total items
33.8
32
Benefits $
14,768
16,134
Bupa
Private and Confidential
13 October 2011
Medium
Risk
Low Risk
Drug
Drug
User
User
37
28
4.4
1.9
22
18.2
63.6
36.4
0
0.13
5.4
3.8
4.9
7.31
5
4.4
9
7.31
20
12.9
1,536
830.6
Fraud Pattern - Membership
Bupa
Private and Confidential
13 October 2011
27
Abuse of Tooth ID when no controls
Bupa
Private and Confidential
13 October 2011
28
Same Address, Different Memberships
Bupa
Private and Confidential
13 October 2011
29
Creating False Memberships
• 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
Bupa
Private and Confidential
13 October 2011
30
Knowledge and Skill Sets
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
Bupa
Private and Confidential
13 October 2011
31
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)
Bupa
Private and Confidential
13 October 2011
32
Analytics Scoring Algorithms 1
Bupa
Private and Confidential
13 October 2011
33
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
Bupa
Private and Confidential
13 October 2011
34
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
Bupa
Private and Confidential
13 October 2011
35
References
Sparrow, M
Testimony to the Committee on the Judiciary:
Subcommittee on Crime and Drugs, U.S. Senate, May 20, 2009.
Sparrow, M
“Fraud in the U.S. health-care system” Social Research Winter 2008
Sparrow, M
License to steal (Westview Press, 2000)
Corr, W
Testimony 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, TM
“The distribution of public spending for health care in the United States, 2002”
Health Affairs 27, no. 5 (2008)
DHSS
Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2009
Maclntyre , Hudson LLP The financial cost of Healthcare fraud (2009)
NHCAA
The Problem of Health Care Fraud (2010)
http://www.nhcaa.org/eweb/DynamicPage.aspx?webcode=anti_fraud
_resource_centr&wpscode=TheProblemOfHCFraud
U.K. - NAO
International benchmark of fraud & error in social security systems 2006
Medicare Aust
Annual report 2008 – 2009
Professional Services Review
Annual report 2008 – 2009
The End
QUESTIONS
michael.douman@bupa.com.au
Ph. +61 2 93239896
Mb. +61(0)417 259 582
Bupa
Private and Confidential
13 October 2011
37
Appendices
Bupa
Private and Confidential
13 October 2011
38
PHI coverage in Australia
• Persons covered by top 4 Funds (Bupa, Medibank, HCF and NIB) is 76%
Bupa
Private and Confidential
13 October 2011
39
Health Funding Sources - Australia
Australia’s Health 2010 p.414
Bupa
Private and Confidential
10 October 2011
40
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 2011
41
Constraints on PMI (PHI) Funds operations, Australia - 1
•
Hospital – Facility, Prostheses, Pharmacy costs
• No pre-authorisation unless it’s 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 2011
42
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 2011
43
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 2011
44
“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 2011
45
“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 2011
46
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 don’t 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 2011
47
Bupa & BCA Structure
Bupa U.K.
Bupa
International
Bupa Australia
Board
Board Audit
Committee
Internal Audit
CFO
CIO
Director
HR
CMO
Director HBM
Business &
Clinical Analysis
Risk &
Compliance
Legal
Claims
Utilisation
Review
Information
Analysis
CEO
Director
Marketing
& Product
Director
Sales
Travel
Branches
Sales
Staff
Information
Delivery
BCA staff are based in Adelaide, Brisbane, Sydney
Bupa
Private and Confidential
13 October 2011
Director
Customer
Service
Claims
Membership
Contact Centres
Director
Strategy
BCA Teams
BCA
Michael Douman
Information
Analytics
Rai Gomes
Clinical Utilisation
Review
Margaret Street
Information
Delivery
Rob Ashmore
Financial KPIs for CY 11 – $28 million
Information Analytics
Clinical Utilisation Review
Information Delivery
• Hospital, medical, prostheses
and ancillary analysis
• Hospital, Medical & Prostheses
claims leakage savings through
audits, claims review, contract
compliance, etc
• Datamart establishment & data
structuring
• Contract negotiation support
• Demand supply
projections/modelling of
hospital, medical and ancillary
activity
• Industry benchmarking
• Hospital 2nd tier pricing
• HCP collection, QA &
submission
• Onsite hospital chart to bill and
coding audits
• Ancillary claims leakage savings
through audits & claims reviews,
provider de-recognition &
prosecution, etc
• Ancillary fraud prosecution
• Clinical schedule review &
updates eg MBS, Prostheses
• Medical (SoF) indexing
• Negotiations with ADA on dental
schedule
• AHIA Fraud Committee
representation
• Comp & Damages claims, debt
management and recoveries
Bupa
Private and Confidential
13 October 2011
• 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
Fraud Structure & Bupa Interrelationships
Bupa U.K.
Bupa
International
Bupa Australia
Board
Board Audit
Committee
Internal Audit
CFO
CIO
Risk &
Compliance
Legal
Director
HR
CMO
Director HBM
Business &
Clinical Analysis
Medicare
Australia
CEO
Director
Marketing
Director
Sales
Travel
Branches
Sales
Staff
AHPRA
Police
Hospital &
Medical Fraud
Prevention
Ancillary
Fraud
Prevention
Courts
Bupa Ancillary
De-recognition
Committee
Gaol
Bupa
Private and Confidential
13 October 2011
Staff & Member
Fraud
Prevention
Director
Customer
Service
Claims
Membership
Contact
Centres
Director
Strategy
Bupa Australia - Scale & Scope – Hospital & Ancillary Benefits
Discharge Fin Year
Specialty Nam e
FY10-11
Episode
Count (In
Total Medical
Benefit
Prosth
Benefit
Total Hosp Ben
Less Prosth
Total Hosp
Benefit
Private Hospitals
Service Fin Year
FY10-11
Item Subcategory 1 Services Benefit Paid
$355,953,446
$548,836,990
Dental
8,361,898 $425,098,170
$95,164,288
$162,942,922
$258,107,210
Optical
2,389,799 $136,174,409
$25,074,515
$203,551,552
$228,626,067
$60,355,577
$268,038
$123,031,313
$123,299,351
Physio
2,497,784 $74,504,425
2,815,549 $74,122,314
Orthopaedics
86,301
Cardiology
41,208
$69,250,852
General Surgery
68,899
$109,576,570
Obstetrics
33,231
$163,847,822 $192,883,544
6,776
$47,210,499
$13,383,188
$83,158,694
$96,541,882
Chiro & Osteo
40,823
$49,544,239
$6,087,169
$88,303,653
$94,390,822
118,120
$106,846,735
$1,231,991
$91,923,602
$93,155,594
Podiatry
777,867 $27,555,802
Rehabilitation Medic
16,458
$13,834,677
$21,171
$91,514,776
$91,535,947
Remedial Massage
739,287 $16,850,880
General Medicine
60,957
$48,095,031
$1,754,121
$86,304,220
$88,058,341
Ophthalmology
Ambulance
49,200
$58,765,691
$18,393,322
$63,622,571
$82,015,894
46,325 $14,427,395
Psychiatry
11,073
$12,884,525
$624,209
$69,298,202
$69,922,411
Pharmacy
520,768 $13,588,799
Gynaecology
40,656
$37,917,996
$3,779,784
$64,903,180
$68,682,964
Acupuncture
438,445 $10,040,189
Respiratory Medicine
26,910
$27,081,213
$341,306
$62,089,718
$62,431,024
ENT
28,228
$27,401,203
$5,082,890
$41,456,103
$46,538,994
Neurology
14,674
$14,264,997
$902,309
$43,007,527
Haematology
24,780
$21,698,033
$627,251
Plastics
16,142
$22,240,215
Medical Oncology
60,837
1,729
Cardiothoracic
Urology
Gastroenterology
Other
76,263
$5,986,282
$43,909,836
Hearing Aid
10,190
$5,396,061
$36,357,344
$36,984,594
$797,095
$31,339,585
$32,136,680
Aids & Appliances
42,504
$5,395,438
$11,490,141
$671,653
$28,733,996
$29,405,649
Psychology
80,647
$4,435,623
$11,069,198
$7,658,366
$18,344,884
$26,003,250
Naturopathy
61,509
$3,977,480
$34,605
$23,046,926
$23,081,531
168,608
$3,714,420
Vascular
3,986
$10,347,251
$4,081,138
$18,396,094
$22,477,233
Speech Therapy
87,193
$2,989,036
Neonatology
4,503
$4,869,019
$11,758
$20,481,242
$20,493,000
Complementary Other
117,393
$2,447,641
Endocrinology
6,548
$7,228,139
$2,270,823
$15,253,463
$17,524,286
20,246
$4,919,538
$47,486
$15,256,563
$15,304,049
Occupational Therapy
50,198
$1,775,829
Dermatology
2,194
$1,359,256
$8,510
$2,261,855
$2,270,365
Dietetics
45,726
$1,399,790
Rheumatology
1,740
$697,545
$6,571
$1,917,460
$1,924,031
8
$33,599
$119
$36,303
$36,422
Orthoptics
1,829
$56,403
3,349
$17,055,892
$4,693,658
$30,756,312
$35,449,970
43,064
$32,262
Total Private
Hospitals
Public
Hospitals
851,085
963,862,934
385,900,881
1,873,243,506
2,259,144,387
114
$9,531
80,038
$69,509,085
$28,391,846
$164,233,779
$192,625,625
Sum m ary
931,123
$1,033,372,018 $414,292,727
$2,037,477,285
$2,451,770,012
Neurosurgery
Renal Medicine & Dia
Dental&Oral Surgery
Immunology
Other/Ungrouped
Bupa
Private and Confidential
13 October 2011
Misc
Hypnotherapy
Summary
19,311,451 $826,000,699
51
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
Bupa
Private and Confidential
13 October 2011
52
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
BCA Data Mining Methodology
Bupa
Private and Confidential
13 October 2011
Fraud analytics – Data Mining
Supervised Models
1. 40% Transform & Sample
2. 15% Explore
3. 30% Modify
Bupa
Private and Confidential
Unsupervised Models
4. 15% Model
5. 5% Assess
13 October 2011
55
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 manufacturer’s warranty
•
No informed financial consent by patient (IFC)
•
Invoicing for duplicate services
Bupa
Private and Confidential
13 October 2011
56
Patterns – Hospitals 2
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
Bupa
Private and Confidential
13 October 2011
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 2011
58
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 2011
59
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 2011
60
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 don’t 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 2011
61
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 member’s 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 2011
62
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 2011
63
Patterns common to Providers, Members, Employees
Potential methods of aberrant claiming in the absence of controls:
Bupa
•
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
Private and Confidential
13 October 2011
64
Same services, same day on same family
Note same services on same day for all lives on the membership, viz 00012, 00022, 00114, 00121, 00515
Bupa
Private and Confidential
13 October 2011
65
Same services, same day on same family
• $10,694.20 of dental services from 13 dentists supposedly provided on a Sunday.
• Examples of Dr ????? services shown above.
Bupa
Private and Confidential
13 October 2011
66
Doctor Shopping ?
Bupa
Private and Confidential
13 October 2011
67