Fraud & Abuse Detection & Resolution

Medical Risk Management Programs

• 2002 - Aetna discloses 11% payment error rate• 2003 – BCBS Association estimates that 5 – 10% of healthcare claims are paid

incorrectly. Business Insurance March 2003• 2003 - Federal Gov’t negotiated more than $1.8B in judgments and settlements in

health care fraud matters. Health Care Fraud and Abuse Control Program Annual Report by the DOJ and HHS.

• 2004 – CMS announced 9.1% error rate• 4 Billion transactions annually – 6.3% error rate. HHS-OIG• $150B in fraud is paid by commercial payers annually National HealthCare Anti-Fraud

Assoc.• 54% of Physicians reported using deception of third-party payors to obtain benefits

• 2002 - Aetna discloses 11% payment error rate• 2003 – BCBS Association estimates that 5 – 10% of healthcare claims are paid

incorrectly. Business Insurance March 2003• 2003 - Federal Gov’t negotiated more than $1.8B in judgments and settlements in

health care fraud matters. Health Care Fraud and Abuse Control Program Annual Report by the DOJ and HHS.

• 2004 – CMS announced 9.1% error rate• 4 Billion transactions annually – 6.3% error rate. HHS-OIG• $150B in fraud is paid by commercial payers annually National HealthCare Anti-Fraud

Assoc.• 54% of Physicians reported using deception of third-party payors to obtain benefits

$250B of waste in $250B of waste in HealthcareHealthcareFraud and abuse, creative billing schemes, claim system

deficiencies,lack of good and aggregated data, and transparency are all

prime driversClaims Systems have been designed for an environment that creates efficiencies in cutting checks with strong capabilities in managing Eligibility and Benefit Plans. Applied Risk Management requires a new dynamic!

The big Carriers often do not apply the best capabilities to control costs in order to maintain discounts in their Networks – the result can be

employers end up paying more!

Who Is Helping Employers Avoid Waste?

• Over half of the country’s payors do not employ fraud detection technology.

• BCBS Association 2003 Fraud Results: 0.18% of paid claims.

• Class Action Lawsuit for arbitrary and unfair reimbursements: – CIGNA - $540 million– Aetna - $470 million

• Business Intelligence is rarely applied to health care costs.• Cost Containment programs, when applied, are typically

done retrospectively:– Retrospective recovery yields an average savings of $0.10 on

every dollar identified;– Prepayment avoidance yields an average savings of $0.54 on

every dollar identified.

Cypress Benefit Administrators Employs the Industry’s Leading Edge Loss Control Solutions

• Provider Integrity Program• Data Driven Fraud & Abuse Prevention• Intelligent Claim Surveillance• Pre-Payment Investigations• Automated Code Edits• Provider R&C Negotiations

Nobody Matches the Power and Control of the Cypress Medical Risk Management Program!

Employers Can Expect a reduction in OVERALL Employers Can Expect a reduction in OVERALL claim costs of 5% - 10% through these efforts.claim costs of 5% - 10% through these efforts.

Employers Can Expect a reduction in OVERALL Employers Can Expect a reduction in OVERALL claim costs of 5% - 10% through these efforts.claim costs of 5% - 10% through these efforts.

Provider Integrity and Fraud Prevention

• Data driven, provider centric fraud prevention with over 12,000 provider TINs on our “watch list”

• Mine and manage over 1,100 data sources.• 35,000+ HHS sanctions• 40,000+ high risk addresses• Automated FSA Deathmaster Matching• Patriot Act compliance• Identifies providers with a track record of aberrant billing practices

and/or positive investigations experience – before claims are paid

Relevant Statistics- 3.4% of all provider records in the U.S. are “phantom providers”- $0.10 of every dollar spent in health care is fraud or abuse (NHAA)- Average savings of 54% for every dollar reviewed

CYPRESS’ PROVIDER INTEGRITY AND FRAUD PREVENTION PROGRAM CYPRESS’ PROVIDER INTEGRITY AND FRAUD PREVENTION PROGRAM REDUCES OVERALL PAID CLAIMS AN AVERAGE OF 0.25% - 1%.REDUCES OVERALL PAID CLAIMS AN AVERAGE OF 0.25% - 1%.

Intelligent Claim Surveillance• Pattern Recognition: Identifies sophisticated schemes by integrating

statistical models with historical claim patterns to score the probability of fraud or abuse. Technology originally used for credit card industry.

• Uses historical data to develop profiles and constantly updates the data to “learn” and detect both known and emerging fraud schemes.

• Claim line analytics ranks claims according to fraud risk with reason codes to quickly pinpoint claims that warrant review on a prepayment basis.

Claim Line Analytics Include: - Procedure Repetition - Unusual Modifiers - Geographic Improbabilities- High Dollars/Day - Unusual Procedure Rate - Surge Analysis (hit & run)- High paid procedures - Timed Procedures - Missing Modifiers

Improbability Illustrations- Improbable Timed Billings (avg. hrs billed per day or per week or on holidays- Collusive Networks/Drop Box Scams (Patient selling/Provider identity theft)- Geographic Improbabilities (procedures hundreds/thousand of miles away)

CYPRESS’ INTELLIGENT CLAIM SURVEILLANCE PROGRAM REDUCES OVERALL CYPRESS’ INTELLIGENT CLAIM SURVEILLANCE PROGRAM REDUCES OVERALL PAID CLAIMS AN AVERAGE OF 0.5% - 1.5%.PAID CLAIMS AN AVERAGE OF 0.5% - 1.5%.

Pre-Payment Investigations• Daily Claim File analyzed for provider matches and fraud risk scores• Daily Queues Created and worked by investigative staff to focus efforts on

best opportunities for pre-payment investigations• 24 Hour claim decision turnaround (Pay, Deny or Pend for furhter info)• Investigation Includes:

- License Verification - Patient Interview - Medical Record Review- Document Analysis - Clinical Review - Coding Review

- Experienced, Multi-Disciplinary Staff including special investigators experienced in health care fraud, clinical staff and coding professionals

- 54% Average Savings in every dollar investigated- Fraud awareness training and compliance for all 50 states- Retrospective Recovery yields an avg. savings of $0.10 on every dollar

identified- Prospective Recovery yields an avg. savings of $0.54 on every dollar

identified

CYPRESS’ PRE-PAYMENT INVESTIGATIONS REDUCE CYPRESS’ PRE-PAYMENT INVESTIGATIONS REDUCE OVERALL CLAIM COSTS BY 1% - 3%OVERALL CLAIM COSTS BY 1% - 3%

Automated Code Edits

• 11 Rule Modules to detect and prevent abusive billing practices on a prepayment basis:

– Rebundler, CPT Add-on Codes, Incidental Procedures, Problematic Coding, Global Surgical, E-M Crosswalk, Modifier Misuse, Medical Necessity, Asst. Surgeon Inappropriateness, New Patient Visit Level.

• 300,000+ rules comprising over 15 million sourced and documented edits from CMS, CCI, AMA

• Provider Variance Reporting facilitates network management

• Claims are properly coded PRIOR to PPO repricing

CYPRESS’ AUTOMATED CODE EDITING CAPABILITIES REDUCE CYPRESS’ AUTOMATED CODE EDITING CAPABILITIES REDUCE CLAIM COSTS BY 1% - 4% OVER TRADITIONAL EDITING SOFTWARE.CLAIM COSTS BY 1% - 4% OVER TRADITIONAL EDITING SOFTWARE.

Provider R&C Negotiations

• Medicare cost-to-charge data establishes baseline for reasonable charge

• Negotiate from net cost up rather than billed charge down

• 85% success rate – savings produced from 18% - 34%

• Claims routing by success rate maximizes savings

• Not a prompt pay discount negotiation

CYPRESS’ PROVIDER R&C NEGOTIATION PROGRAM REDUCES OVERALL CYPRESS’ PROVIDER R&C NEGOTIATION PROGRAM REDUCES OVERALL CLAIM COSTS BY 1% - 3%CLAIM COSTS BY 1% - 3%