New York - Insurers of all sizes hoping to take a proactive approach to cracking health claims fraud seem to understand the stakes: According to estimates from the federal government and issues-based groups such as the National Health Care Anti-Fraud Association, as much as 10% of all healthcare expenditures in the United States, or $170 billion, may be lost each year to fraud, waste and abuse.  Carriers still struggling to keep up with claims fraud may also do well to recognize that there is yet another piece of ammunition available. From its research laboratories in New York, IBM has pooled data mining and analytics technologies to create a software-as-a-service product designed to identify potentially fraudulent and abusive behavior before a claim is paid, or retrospectively analyze providers' past behaviors to flag suspicious patterns. Non-profit provider Excellus Blue Cross Blue Shield in Rochester, N.Y., which counts two million members, is the latest carrier to contract with Big Blue to thwart fraud. The company will use IBM's on-demand Risk Identification Analysis Service to review pharmacy-related claims to uncover complex schemes. Some of these schemes may include collusion, inappropriate billing practices, prescription forging, prescription pad theft and members who are "doctor shopping."  "Make no mistake about it-someone who knowingly commits insurance fraud is no different than any other person who steals," says Flora Allen, corporate director, special investigations unit, Excellus BlueCross BlueShield. "Fraud affects everyone's bottom line, so we aggressively and proactively pursue recoveries and convictions because we are protecting our members' premiums." Although the stakes are high for Allen and her organization, which processed somewhere between 51 and 52 million claims in 2006, there is no real way to calculate the hard and soft costs, she says.  "We are only as good as what we can find," she told Insurance Networking News. "Adding the Risk Identification Analysis Service from IBM to our existing investigative arsenal improves the analytical capabilities we need to find and identify the most egregious offenders." That arsenal includes a fraud hotline, which is available to all members, and a link on the company's Web site where anyone can provide anonymous tips. The insurer also participates with law enforcement task forces, and shares that information the U.S. attorney's office. Based on IBM's Fraud and Abuse Management System (FAMS) technology, which was developed by IBM Research and consultants in collaboration with leading healthcare organizations, the Risk Identification Analysis Service uses a combination of data mining capabilities, visualization techniques and reporting tools to identify questionable behavior before a claim is paid. It replaces traditional manual processes by sorting though tens of thousands of providers and tens of millions of claims in minutes-ranking providers as to their degree of potentially fraudulent, wasteful, abusive or questionable behavior.  Allen says their company does not consider whether, as a whole, fraudulent claims are on the rise or may be decreasing. "When it comes to fraud, it's an issue that always appears larger than life and we are getting better at discovering it." IBM hopes that by designing the offering as an on-demand service, it will appeal to insurers of all sizes. "By providing these powerful data mining and advanced analytical capabilities as an on-demand service, we are able to offer this investigative capability to smaller healthcare payor organizations, or government healthcare insurance entities, which may prefer to use this advanced analytic capability as a service, because of the lower demands on their staff and IT capabilities," says Mark Ramsey, global data analytics leader, IBM Center for Business Optimization. "It can also easily be used by larger, private payors looking to use this capability as a service instead of implementing the FAMS solution internally." In addition to pharmacy claims, the service can analyze approximately two dozen other specialties such as cardiology, home health care, gastroenterology and durable medical equipment suppliers. Sources: Excellus Blue Cross Blue Shield, IBM

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