1. © 2014 Fair Isaac Corporation. Confidential. This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation's express consent. FICO Client Case Study Facility Model FICO® Insurance Fraud Manager User Group: San Diego, CA | May 7--8, 2014 Dr. Andrea Allmon Senior Director Global Fraud Solutions Robin Analytic Scientist Analytic Scores and Development Eileen Guiney Senior Consultant Global Fraud Solutions Snehal Katre Analytic Scientist Analytic Scores and Development

2. © 2014 Fair Isaac Corporation. Confidential. Agenda 2 ► Introduction to the Facility Project ► Data Used ► Modeling Technology ► Reason Codes Explained ► Reviewing the Model Results ► Conclusion / Discussion

3. 3 © 2014 Fair Isaac Corporation. Confidential. The IFM Facility Model is currently an outlier claim and member-centric model. Additional ad hoc elements are still in R&D and can be purchased as services offerings. A scoring engine that will score facility claims either prior to payment or post-payment along with the ability to queue and decision them in the IFM User Interface will be available in our 4.0 release this fall. For those that are interested in getting an early jump on their Facility Model, results can be delivered in spreadsheet form or in a simple to use, light- weight user interface with limited functionality. Facility Claim Scoring

4. 4 © 2014 Fair Isaac Corporation. Confidential. FICO Behavior Profiling Technology ► Generate rich profiles ► Profile variables are driven by key fraud areas ► Multi-entity profiling ► Profile includes activities of related entities, such as providers ► Predictive Analytics ► Unsupervised models are typically the best with health care ► Can use either supervised or unsupervised approach, depending on data quality ► Reason codes generated ► Results displayed in a user interface ► Detailed reports on each suspect claim Profiles Enabling risk assessment across a variety of relevant dimensions Input Data Feature Detectors Profiles give the analytic models the power to compare recent patterns with historical behavior, or undesirable behavior with normal, desirable behavior

5. 5 © 2014 Fair Isaac Corporation. Confidential. Profiling Techniques ► Data-driven procedure profiling enables better accuracy Incorporating Accurate Information in Profile Variables ► Dynamic profiling incorporates the dimension of time Static Versus Dynamic Profiling ► Single-entity: Directly profile the target entity ► Multi-entity: Profile multiple interacting entities; merge and statistically aggregate the various entity profiles up to the target entity ► Single-entity: Directly profile the target entity ► Multi-entity: Profile multiple interacting entities; merge and statistically aggregate the various entity profiles up to the target entity Single Versus Multi-entity Profiling 5 © 2014 Fair Isaac Corporation. Confidential.

6. 6 Find and Score Outliers: Closer to Norm… FEATURE “B” FEATURE “A” LOW RISK HIGH RISK LOW RISK HIGH RISK Low scoring (96-98% of claims) Outliers (2-4% of claims) Note: Each Point on the Graph Represents a Claim

7. 7 © 2014 Fair Isaac Corporation. Confidential. Find and Score Outliers: Closer to Norm… FEATURE “B” FEATURE “A” LOW RISK HIGH RISK LOW RISK HIGH RISK Low scoring (96-98% of claims) 500–600 700–800 900

8. © 2014 Fair Isaac Corporation. Confidential. 8 Results

9. 9 © 2014 Fair Isaac Corporation. Confidential. Data and Models Rich data feeding: ► Data Set ► Finalized dates from 10/1/2012 to 09/30/2013 ► Outpatient ► Claim Lines - 39M ► Paid - $5.9B ► Inpatient ► Claim Lines – 9.7M ► Paid - $6.6B ► Included Bill Types ► 011X, 012X, 013X, 83X ► Segmentation was done on FFS vs. APC’s Predictive Analytics Prioritized Claims Inpatient Outpatient ASC Member Provider

10. 10 © 2014 Fair Isaac Corporation. Confidential. Facility Project Results ► Egregious Payment Schedules and Contractual Issues are the biggest pain points. Opportunity is in excess of $500M range ► Duplicate Blues Card Claims and Blues Card edits. Facilities are billing the plan through multiple channels and getting paid twice. ► High Dollar Day/High Paid has $180M in Allowed Amounts – 4-5% is a possible recovery figure based on the amount that could be reviewed. Potentially a $7M opportunity. ► Procedure Repetition has $28M – 50% of that would be a $14M opportunity.

11. 11 © 2014 Fair Isaac Corporation. Confidential. Reason Codes ► IFM Reason Codes – 4.0 Release ► Inpatient ► High Paid DRG ► High Paid Non-DRG ► Early Discharge with Readmission ► MDC Rate ► Outpatient ► Procedure Repetition ► Procedure Rate ► High Paid Procedure ► High Dollar Day ► Unusual Modifier ► Ad-Hoc Analytics – Services Offering ► Systemic Patterns ► Roll-ups ► High Units ► Facility/Professional Inconsistency ► CCI ► Blue Card Duplicates

12. 12 © 2014 Fair Isaac Corporation. Confidential. Inpatient – High Paid DRG Claims have much greater allowed amount than the norm, based on DRG, especially where length of stay (LOS) is less than the average LOS and may not be a good candidate for outlier payment.

13. 13 © 2014 Fair Isaac Corporation. Confidential. Inpatient – High Paid DRG 13 Claims submitted to payer for review. Total Allowed was $3M. Average allowed based on PAYER norms would have been $400K. Results Most of these would require clinical chart review and audit of the pricing. There are also quality of care issues to be considered with the early discharges. Extremely high rich contracts with back to back DRG’s. Develop a project to close the gap on re-admission rules. There is potential to look at the outlier status. Bill audit. Summary

14. 14 © 2014 Fair Isaac Corporation. Confidential. Claims that are NOT paid on a DRG basis are analyzed and by comparing the claim with other DRG claims using fields like primary diagnosis, other diagnoses, ICD procedure codes, admission and discharge status, etc. to arrive at a set of possible DRG’s. Aberrance is determined by using the dollars and LOS of the non-DRG claim compared against the norms of the set of associated DRGs, using the most conservative outlier condition. High Paid Non-DRG

15. 15 © 2014 Fair Isaac Corporation. Confidential. Inpatient – High Paid Non-DRG $178k (5 days) for lumbar fusion 2-3 regions $191k (3 days) for lumbar fusion 2-3 regions $297k (2 days) for Laparoscopic cholecystectomy Results Recommend a chart and charge audit of these selected claims Projects

16. 16 © 2014 Fair Isaac Corporation. Confidential. Inpatient - Early Discharge with Readmission Cases where a member has been readmitted to a facility for similar condition. Looking for poor quality of care where the member may have been prematurely discharged in the first admission and yet full payment made.

17. 17 © 2014 Fair Isaac Corporation. Confidential. Inpatient – Early Discharge with Readmission 7 Claims presented for review. Results 3 of the 7 are suspected to be Emergency Room visits followed by Inpatient Admission and not two Admissions 2 of the 7 are suspected Quality of Care issues 2 of the 7 are suspected claim/payment errors Contracts may not allow recoupment on similar DRG’s only identical DRG’s Summary

18. 18 © 2014 Fair Isaac Corporation. Confidential. Inpatient - MDC Rate 18 © 2014 Fair Isaac Corporation. Confidential. Cases for members where rate of admissions for the same condition is more than what is seen in the norm.

19. 19 © 2014 Fair Isaac Corporation. Confidential. Inpatient – MDC Rate Some DRG miscoding Duplicate childbirths with mother having a name change (12/18 & 12/26) Results Clinical chart reviews would be required for most of these results. Summary

20. 20 © 2014 Fair Isaac Corporation. Confidential. This analysis finds procedures that are repeated too quickly on a member. This analysis looks only at a pair of claim lines. The time between the occurrence of the claim line’s procedure and the last (or next) occurrence of the procedure on the same member is compared with population norms. The more unusual the interval between the procedures, the higher the claim line's score. For example, repeating a blood draw on the same day as a previous blood draw is probably not unusual, and will not score high. However, repeating the delivery of a baby two weeks after a previous delivery would be unusual, and this claim would score high. Typical patterns: ■ Duplicate Claims ■ Procedures performed by two different providers on the same day ■ Claims repeated too quickly Investigation suggestions: ■ Determine if procedure should be repeated that quickly ■ Determine if complete claim is duplicated Outpatient – Procedure Repetition

21. 21 © 2014 Fair Isaac Corporation. Confidential. Outpatient – Procedure Repetition Overall Impressions – good results with a 34% of the top 200 appearing to be exact duplicates. Easy savings. $11,000 in the sample of $50,000. Currently have a duplicative E&M project. Outsourced to vendors for recovery. Vendors gets % of savings. Completely duplicate claims Similar duplicate claims Results Assistant Surgeon in Teaching Facilities (Modifier 80, 81, 82) COB – There is $713,820 claim lines that appear to be exact duplicates paid ONCE in full and then AGAIN with COB. Savings is easily 50% or about $357k. If you assume that the ENTIRE Claim may have been paid in error, the savings could rise as high as $1.5M. US/CT/MRI’s billed a few days apart. Projects

22. 22 © 2014 Fair Isaac Corporation. Confidential. Outpatient – Procedure Rate This analysis looks for an unusually high rate of lines being billed, given the procedure. The rate here is the number of lines billed (units are ignored) divided by the number of days over which they are billed. High rates on a single day are ignored in this analysis, because those should be caught by a separate analysis. The rate can be during any period of time. The algorithm finds the highest rate during the longest period of time for a procedure. The rate is compared to the average rate for the procedure, and any claim that contributes to an unusually high rate for the procedure is flagged as suspect. Typical patterns: ■ Drug seeking behavior ■ Medically unnecessary services ■ Procedures repeated too quickly Investigation suggestions: ■ Consider all of the claim lines for the member with that procedure

23. 23 © 2014 Fair Isaac Corporation. Confidential. Outpatient – Procedure Rate Overall Impressions – good results, but does require some clinical expertise. Some clear duplicate claims. Two members had in excess of 70 2x daily Therapeutic Prophylactic Diagnostic IV, initial, first hour infusions! Just these two people incurred over $10,000 in this code alone. Not to mention any other procedures that were billed alongside the IV code (96365). The use of the 59 modifier allowed the second IV to pay. Interesting both were in Florida hospitals. Many of these are Blue Card so recovery is difficult. Need to edit it at the front end. Once the payment is gone, it’s gone and hard to recover. Blue Card lacks strong edits. Results Policy on 80053 (Comprehensive Metabolic Panel) Policy on 97002 (Physical Therapy Re-evaluation) - no more frequently than every 30 days? For some lower dollar, but unusually frequent procedures, examine the Member’s total activity. Policy on 36415 – Routine Venipuncture. Even though this is a low amount per procedure, it is likely that the patients have lines put in, not one draw for every test (could be revenue maximization software). One patient got three draws per day over multiple days. Projects

24. 24 © 2014 Fair Isaac Corporation. Confidential. 24 © 2014 Fair Isaac Corporation. Confidential. Outpatient - High Paid Procedure This analysis finds claims with unusually high-paid amounts given the procedure and the number of units billed on the claim. The dollars-per-unit is found for each claim and norms are established based on the procedure code. Claims with an unusually high dollars-per-unit amount given the procedure are flagged as suspect. Typical patterns: ■ Claims processing errors ■ Fee schedule weakness Investigation suggestions: ■ Determine why paid amounts exceed fee schedule This analysis finds claims with unusually high-paid amounts given the procedure and the number of units billed on the claim. The dollars-per-unit is found for each claim and norms are established based on the procedure code. Claims with an unusually high dollars-per-unit amount given the procedure are flagged as suspect. Typical patterns: ■ Claims processing errors ■ Fee schedule weakness Investigation suggestions: ■ Determine why paid amounts exceed fee schedule

25. 25 © 2014 Fair Isaac Corporation. Confidential. Outpatient – High Paid Procedure $55k to remove wisdom teeth – normally $1k $46k for kidney stone lithotripsy – normally $3,400 $21k for cataract surgery – normally $1,200 $16k for Knee Arthroscopy for Meniscus tear – normally $1,600 $11k for DIAGNOSTIC colonoscopy – normally $1,400 Results Consider reviewing contracts and policy on Reasonable and Customary limitations. Consider a project looking at the distance travelled for these high paying procedures. This pattern is similar to the pattern seen in the Rent-a-Patient scam. Projects

26. 26 © 2014 Fair Isaac Corporation. Confidential. Outpatient – High Dollar Day This analysis looks for high amounts being paid across an entire day for an individual member, given the procedures performed on the member for that day. The total dollars for the day are found and are compared with the average total dollars on a day when they received that procedure. The lowest score resulting from this comparison is the score for the day. It is much like saying, given the most expensive procedure you had performed on this day, how unusual was the total amount paid for all procedures. Typical patterns: ■ A single, unusually high-dollar claim ■ Unbundling ■ Medically unnecessary services Investigation suggestions: ■ Focus on claim lines with the highest dollar amounts ■ Focus on claim lines where dollar amount is much higher than the average dollar amount

27. 27 © 2014 Fair Isaac Corporation. Confidential. Outpatient – High Dollar Day There appear to be some possible issues with Chemotherapy providers. They don’t miss a single code. Facilities use revenue generating software to stop the bill before it goes out to look for the additional codes. They don’t miss a single code. Aggregate to Provider-level detail: Is it a price issue? Is it a quantity issue? Is it a procedure mix issue? Results Consider implementing a rules solution or the FICO High Units analytic that would cap the number of units on any given procedure (particularly J Codes) and flag those over the threshold for review. Projects

28. 28 © 2014 Fair Isaac Corporation. Confidential. High Dollar Day – Roll-up SCORE MEMBER COUNT TOTAL ALLOWED AMOUNT CLAIM LINE COUNT PROCEDURE COUNT HIGH PATIENT COUNT HIGH ALLOWED AMOUNT HIGH CLAIM LINE COUNT HIGH PROCEDURE COUNT PROVIDER CITY PROVIDER STATE 90710$388,490343710$182,2351694HAMILTONNJ 9622$259,82617252$159,111913HUNTINGTON BEACHCA 903212$358,6103031449$114,63910810BETTENDORFIA 930381$867,80372835121$458,2581599DANVILLEPA 96633$445,464242917$249,2269649FORT WAYNEIN 939179$586,58729210947$177,5029141DAVENPORTIA 989124$587,2981905783$389,43911133HUNTINGDON VALLEYPA 94889$612,48973522513$446,87724074OAKLANDCA 957105$508,3051936841$237,0706024MARIETTAOH 917296$24,689,60430,429795150$10,659,4527,587444CHICAGOIL 9757$554,85434354$342,5981643COSTA MESACA 9442$158,8139322$138,375812CALDWELLID 93541$305,94950140$304,521471GALAXVA 98012$216,92596159$195,9007711WARNER ROBINSGA 92653$258,742805425$153,2154328RALEIGHNC

29. 29 © 2014 Fair Isaac Corporation. Confidential. Outpatient – Unusual Modifier This analysis looks at procedure-modifier pairs that are rarely seen in the data. The metric for scoring is based on the most unusual modifier. If there are two modifiers, one that is fine and one that looks unusual, the claim is flagged as unusual. Examining the entire claim can be illuminating. What happens quite often is that a provider bills for a procedure that requires a modifier, and then attaches that same modifier to all lines on the claim, and some other procedure on the bill winds up looking unusual. Typical patterns: ■ Modifiers billed with procedures that do not usually receive a modifier ■ Non-standard modifiers ■ Inappropriate modifiers Investigation suggestions: ■ Determine if the unusual modifier impacts payment

30. 30 © 2014 Fair Isaac Corporation. Confidential. Outpatient – Unusual Modifier Some modifiers are almost randomly added to lines. This may prevent repricing and bundling logic from working correctly as well as duplicate logic Results Consider examining high scoring claims with 59 modifiers that may be preventing rebundling of lab tests. Examine your rebundling logic for modifier exclusions. Consider examining modifier 91 – used for repeat lab when additional information is needed, not for pure repetition Projects

31. 31 © 2014 Fair Isaac Corporation. Confidential. Outpatient – Systemic Patterns Systemic Patterns is an analysis that takes all of the at risk claims and aggregates them to a Procedure/Analysis/Score band. The value in this approach is the identification of specific procedures where there may be a weakness in the payment systems that could be identified and addressed. Additionally focused projects or audits can be launched on specific procedures for specific reasons.

32. 32 © 2014 Fair Isaac Corporation. Confidential. Outpatient – Systemic Patterns Administration of flu vaccine - Procedure code G0008 – almost always are seeing 2 for each member Mammograms – Procedure codes 77052, 77057, G0202, G0203 and G0204, providers are billing for right and left breast and billing some of the codes in conjunction with one another. Colonoscopies, colonoscopies with lesion removal and colonoscopy with biopsy. Procedure codes 45386, 45385, 45380, 45378, G0105 and G0120, billing a colonoscopy, and then either a colonoscopy with biopsy or lesion removal when it is likely the member only received a single service. Procedure code 99282, emergency room visit, 1 provider billed $61,586 for 2 emergency room visits rendered to 2 members. Across the board, there is an enormous amount of money for ED visits. Line 12256 – Procedure code Q2043 - $190,521 paid for Sipuleucel T, we checked the literature and with a FICO pharmacist. This drug, at the dose reported pays $93,000, this was paid twice the usual amount. Also Medicare has stopped paying for this drug due to the cost and the efficacy, apparently there is some question as to how well it works. It is used to treat advance prostate CA. Results Procedure G0008 Mammograms Colonoscopies Emergency Room Visits Sipuleucel T Billing bilateral codes twice Projects

33. 33 © 2014 Fair Isaac Corporation. Confidential. Ad-Hoc Analytics – High Units Every procedure code is analyzed for the typical number of units. Procedures with excessive units are flagged

34. 34 © 2014 Fair Isaac Corporation. Confidential. Ad-Hoc Analytics – High Units Overall Impressions – good value. Just under 400 high scoring lines should yield over $600,000 A focus on units is one way of getting past some contractual pricing issues Results Emergency Room (501 units, $78k) Initial Observation Care (171 units on one day, $13k) Hepatitis Panel (34 units on one day, $3k) Projects

35. 35 © 2014 Fair Isaac Corporation. Confidential. Ad-Hoc Analytics – Blue Card Duplicates ► Double payments through both the Host and the Home Blues Plan ► Different claim numbers are assigned. ► Identifiers for providers and members are not consistent. ► Systems don’t talk to each other. ► Prevention is key ► FICO Entity Resolution Engine and IFM Pre-payment combined

36. 36 © 2014 Fair Isaac Corporation. Confidential. Blue Card Duplicate Payments NPIProvider Name/AddressInpatient Duplicate Claims Inpatient Duplicate Paid Outpatient Duplicate Claims Outpatient Duplicate Paid Potential Hard Dollar Recoveries 505$7,303,793 $3,651,896 232$4,477,905 $2,238,952 SIX providers had over $11M in overpayments These were not the only providers, nor were they the largest. 132$4,214,941 $2,107,470 3,053$1,910,500$955,250 7,880$3,066,777$1,533,388 3,741$1,395,628$697,814 Grand Total$11,184,771

37. 37 © 2014 Fair Isaac Corporation. Confidential. Ad Hoc Analytics – Professional/Facility Inconsistency ► Blending Professional and Facility Claims together to examine and detect inconsistent billing ► Provider bills one procedure ► Facility bills a different procedure

38. 38 © 2014 Fair Isaac Corporation. Confidential. Ad-Hoc Analytics – CCI The Facility CCI edits can be deployed in Blaze and easily maintained in Blaze. They can be run at the front end prior to IFM.

39. © 2014 Fair Isaac Corporation. Confidential. 39 Reviewing Model Results Prior to IFM 4.0

40. © 2014 Fair Isaac Corporation. Confidential. 40

41. © 2014 Fair Isaac Corporation. Confidential. 41