Highmark Inc.: Detecting a Web of Fraud

Computerworld - A band of chiropractors, with the help of insured "patients," recently bilked several insurance companies out of millions. Now they're facing $7 million in fines and up to seven years' imprisonment. In this major case of insurance fraud, independent Blue Cross Blue Shield provider Highmark Inc. used a new business intelligence application to fight back.

Nearly 50 people insured by Pittsburgh-based Highmark also face prosecution, having allegedly received kickbacks from the chiropractors.

The insurance company's Special Investigations Unit (SIU) spearheaded this successful, far-reaching probe through the use of detailed BI analysis data and reports. BI data helped turn up suspicious treatment and billing patterns. The carrier then tipped off other insurance providers to the falsified claims and collectively filed charges against the chiropractors, one of whom will be sentenced this fall.

Nailing the case had everything to do with Highmark executives' decision to give agents working on cases of potential fraud immediate access to a homegrown BI application. Highmark's FIRST (Financial Investigation Reporting System Tool) system eliminates the need for agents to constantly badger analysts in the health care informatics department for information they need to track patterns of treatment or billing that don't match set parameters.

Indeed, FIRST helped detect unusual patterns among the group of chiropractors. "The practitioner we prosecuted along with two other chiropractors was doing very little, but all three were living very well," says Highmark's SIU director, Tom Brennan.

FIRST hinges on software developed internally that detects irregular patterns using data served up via a BI system built by SAS Institute Inc. Cary, N.C.-based SAS has coupled Highmark's BI functionality with Java interfaces. "We also rely heavily on the use of databases implemented on Teradata servers to help us retrieve, process and store data quickly and efficiently," says Shawn McNelis, Highmark's vice president of health care informatics, research and analysis.

Such systems are necessary to fuel the amount of BI data that investigations require, notes Keith Gile, a principal analyst in Forrester Research Inc.'s information delivery research group. "What's needed is granular data, preferably at the transaction level; a detailed set of rules that establishes the boundaries between what is and what is not fraudulent; and the ability for the BI platform to process all of this data in a short period of time," observes Gile.

In Highmark's case, granular data that includes process codes and detailed patient information is served up in what-if scenarios within seconds. That information is crucial to fraud detection, says Brennan.

"Examples of improvements we've been able to accomplish using BI include identification of an 'impossible day.' This is a scenario in which a practitioner, such as a physical therapist, bills for a lot of hours -- so many that it points to the fact that these services could not possibly be rendered in such a short amount of time. There are just not that many hours in a day," Brennan says.