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Payment Fraud Detection

Successful Pilot Program Results in New Commercial Healthcare Client.

SAN RAFAEL, Calif.--Fair, Isaac and Company, a provider of analytics and decision technology, announced that the Government Employee Hospital Association (GEHA) has selected the company's Payment Optimizer fraud and abuse detection solution to make prepayment detection possible.

Payment Optimizer is designed to detect fraud in the commercial health plans, as well as state Medicaid and Medicare programs. The solution will help GEHA find suspicious healthcare claims before they are paid, while enabling the health plan to pay legitimate claims more quickly and accurately. GEHA is the third largest national health plan serving federal employees, retirees and their dependents, with more than 230,000, health plan subscribers and 450,000 insured lives.

"We're very pleased with the results from our participation in the Payment Optimizer pilot program," said Bob Greene, Manager of Data Analysis at GEHA. "Detecting fraud prior to claims payment was a high priority. We needed a solution that was also effective as we increased our ability to process more claims electronically and increased the rate of auto-adjudication. No other product offered the prospective fraud detection capabilities that would enable us to accurately identify fraud within a highly automated and electronic claims adjudication process."

"Healthcare is only just beginning to apply the power of pre-payment fraud and abuse detection to its claims processing, a capability that we've long offered to the financial services industry to detect payment card fraud," said Steve Biafore, vice president of the Healthcare Market Unit at Fair, Isaac. "GEHA participated in our pilot program, beginning last November. Having them now roll out Payment Optimizer validates the power of our technology and the value of pre-payment fraud detection capabilities."

After completion of the pilot, GEHA attributed improved staff and claims processing efficiency and accuracy to Payment Optimizer. GEHA found that in its case, the majority of the claims flagged for review were payment or billing errors, rather than outright fraud or abuse. As a result, Payment Optimizer was effective in revealing all types of aberrant behavior, including payment or billing errors, suspected fraud and abuse, and indications of clinical inappropriateness.

Another efficiency improvement was the reduction in "false-positives," cases that are flagged as fraudulent but in reality are legitimate claims. After implementing Payment Optimizer, GEHA greatly improved its false-positive rate.

"Our claims staff repeatedly acknowledged that Payment Optimizer helped to identify aberrant claims that would have otherwise gone undetected," said Greene. "Our SIU department was tasked with analyzing an estimated 6 million claims annually - a huge task to perform effectively. Payment Optimizer's well-targeted detection will help our investigators focus on the cases with the highest potential for fraud. As a result, the success of the program is not just due to the money coming back to our organization, but also from savings in time and resources."

Here is how it works: Payment Optimizer uses Fair, Isaac's neural network technology, which has been successfully deployed in finding fraud in real-time for credit cards and other financial transactions. The software identifies patterns of unusual behavior and provides a score based on the claim's degree of risk. The score allow claims professionals to determine which claims need to be taken out of the payment stream for further investigation, and allows the rest oft he claims to be fast-tracked for payment. The system also provides reason codes to help investigators determine the most appropriate action on each high-risk claim. The system is sophisticated enough to discern between actual fraud and legitimate claims that may look like fraud. This accuracy translates into fewer unneeded investigations, less wasted resources, and ultimately, happier providers who do not receive unwarranted audits.

Fraud and abuse continues to be a major concern to the healthcare industry, costing the nation as much as $100 billion a year according to the U.S. General Accounting Office. As the occurrence of electronic transactions and connectivity increase in healthcare, so does the industry's vulnerability to fraud.