finding & preventing patterns in health insurance fraud – an australian perspective health...

Finding & Preventing Patterns in Health Insurance Fraud An Australian Perspective Health Insurance Counter Fraud Group Annual Conference, High Wycombe 3 November 2011 Michael Douman Head of Business & Clinical Analysis Bupa Australia 1Bupa Private and Confidential 13 October 2011

Medical Fraud Frank Abagnale 2Bupa Private and Confidential 13 October 2011

Fraud Controls We would be better served if Government policy was made not by Ph.Ds in economics but by grandmothers employing the skills they practice at the butchers Bruce Vladek, Administrator, HCFA, 1980 Any reasonably astute fraud perpetrator avoids detection by billing correctly, using orthodox treatments, and by avoiding excessive greed Prof Malcolm Sparrow License to Steal (2000) If a fraud perpetrator learns to bill correctly and thereby beats the edits and audits, then claims effectively bypass any chance of human inspection and will be paid Prof Malcolm Sparrow, Fraud in the U.S. health-care system Social Research Winter 2008 Fraud works best when claims processing works perfectly The rule for criminals is simple, if you want to steal from Medicareor any other health care insurance program, learn to bill correctly Prof Malcolm Sparrow, Testimony to the Committee on the Judiciary: Subcommittee on Crime and Drugs, U.S. Senate, 20 May, 2009. 3Bupa Private and Confidential 13 October 2011

On Jesuitical Casuistry and Fraud definitions Your fraud is: My desire to provide the patient the best possible service My desire to avoid medical malpractice legal suits My administrative error My failure to understand the system/schedule/etc My utilising the weaknesses in your product or contract design Your effectiveness depends on: What you measure How you measure How you count Bupa Private and Confidential 13 October 20114

Bupa Australia - Scale & Scope - 1 Lines of Businesses Private Health Insurance Corporate health and wellness Chronic disease coaching Home, travel, car and life insurance Optometry and optical dispensing Care services facilities Bupa Private and Confidential 13 October 20115

Bupa Australia - Scale & Scope - 2 Bupa lives covered is 3,127,692* 45.3% (10.3 million) of Australia has private health insurance of which Bupas market share is 27%* Largely an Individual Consumer Market of sales individual-pay 84% Persons covered by top 4 Funds (Bupa, Medibank, HCF and NIB) is 76% New members join through Retail centres, Web, Phone and corporate promotion Extensive customer service touch points; Retail centres, Web, Phone and Corporate workplace Claims Operations* High proportion of claims settled electronically 68% at point of service with ancillary claims being the highest at 81% 19.6 million Ancillary Claims annually 8.9 million Medical Claims annually 1.1 million Hospital episodes annually * Data as at 30 June 2011 Bupa Private and Confidential 13 October 20116

Return on Capital Employed Improved Performance Automation savings Revenue Net Cash Flow Reduced claims payments Operating Costs Personnel Reductions Customer Satisfaction SENSE OF URGENCY FLEXIBILITY Management Imperatives 7Bupa Private and Confidential 13 October 2011

ROI Measuring & Tracking Savings Do more savings represent success or failure ? If you had rules & controls in the system, then you would not have the leakage in the first place Good practice Funds actually recovered Funds not paid out as a result of new rules, changes to product, changes to contracts, provider intervention A deterrent effect on rest of industry (Hawthorn effect) is not calculated as part of the savings, as it is too difficult to separate out correlation from causation 8Bupa Private and Confidential 13 October 2011

Bupas Leakage Savings CY 99 to CY 10 9Bupa Private and Confidential 8 June 2011 Savings represent a multiple of >10 times BCAs operating costs BCA savings 2010 are equal to 1% annual savings on hospital contracts, or 0.8% of total benefits paid BCA saves >$159 million over 11 years

Australian Health System Structure Bupa Private and Confidential 13 October 201110 Australian Government Doctors Hospitals Ancillary Providers MBS Medical Benefits Schedule MBS Medical Benefits Schedule PBS Pharmaceutical Benefits Scheme PBS Pharmaceutical Benefits Scheme Prostheses List Prostheses List State Health Departments PBAC Pharmaceutical Benefits Advisory Committee PBAC Pharmaceutical Benefits Advisory Committee PLAC Prosthesis List Advisory Committee PLAC Prosthesis List Advisory Committee PBPA Pharmaceutical Benefits Pricing Authority PBPA Pharmaceutical Benefits Pricing Authority TGA Therapeutic Goods Administration TGA Therapeutic Goods Administration PublicPrivate ACCC Australian Competition & Consumer Commission ACCC Australian Competition & Consumer Commission Privacy Commission PHIO Private Health Insurance Ombudsman PHIO Private Health Insurance Ombudsman PHIAC Private Health Insurance Administration Council PHIAC Private Health Insurance Administration Council AHPRA Australian Health Practitioner Regulation Agency AHPRA Australian Health Practitioner Regulation Agency

Country Health Systems determine what Funds need to/can do Countries systems are different and we all have differing constraints under which we operate What we do, or need to do, or cannot do, is a product of those national health systems Health outlays formula is Benefits paid = utilisation*casemix*severity*price The Australian scene is shown in high level detail in Patterns Hospitals 1Patterns Hospitals 1 Unlike the public sector, in the private sector in Australia, due to Government rules, we have no control over: hospital & medical & prosthesis utilisation hospital casemix casemix severity by contrast we do have controls in the ancillary area Bupa Private and Confidential 13 October 201111

Overview of PMI (PHI) Funds operations, Australia - 1 Hospital Facility, Prostheses, Pharmacy costs No pre-authorisation unless its a Pre-existing ailment (PEA) issue Funds are legislatively obliged to pay for most treatment Government set minimum benefits are Fund payable if a contract cannot be agreed with a hospital Prostheses use determined by the surgeon. The items & the price set by the Government Pharmacy costs paid by Fund, Hospital, Government, or patient. Outpatient costs not paid unless a contracted program with a hospital Medical Government determines the items paid (MBS Schedule), the rules governing them, and the price paid Funds can pay a quantum in excess of 100% of the Government schedule fee Bupa Private and Confidential 10 October 201112

Overview of PMI (PHI) Funds operations, Australia - 2 Product design requires Federal Government approval Waiting Periods are regulated Premiums charged for policies require Federal Government approval Premiums are the same for all members on the same product whatever their risk No one can be denied the right to join a Fund no matter what the clinical risks are Privacy controls on access to medical records Risk equalisation fund compensates for Funds having to accept all risks Funds can determine: what ancillary specialty they pay for; the price they pay for a service; and limit utilisation Specialties covered: Acupuncture, Aids & Appliances, Ambulance, Antenatal, Chiropractic, Dental, Dietetics, Funeral benefit, Hearing Aids, Home Nursing, Hypnotherapy, Living Well programs, Naturopathy, Occupational Therapy, Optical, Orthoptics, Osteopathy, Pharmacy, Physiotherapy, Podiatry, Psychology, Remedial Massage, Speech Therapy, Weight Watchers Bupa Private and Confidential 10 October 201113

HOSPITAL EDI ECLIPSE ANCILLARY PROVIDER CPOS (HICAPS, Isoft) MEMBER DOCTOR INTERNET MEDICARE Electronic Health Systems BUPA AUSTRALIA

Impact of Automation on Fraud & Claims Leakage Increasing automation is changing the way work is undertaken. In the case of the increasing take up rate of Eclipse (hospitals and doctors) as well as existing Fund hospital EDI transmissions systems, the effectiveness of system controls and business rules are even more critical and encompasses: the accuracy of programming logic and parameter controls system controls reference tables System controls and rules are already significant in ancillary claims processing which account for 81% of claims processed

Ancillary System Rules - Examples Bupa Private and Confidential 13 October 201116

BCA Data Sources All our SAS datasets combined hold 4 billion rows of data Lines of SAS code we maintain/have written: ~ 200,000 to 300,000 lines Finding Needles in Haystacks 17Bupa Private and Confidential 13 October 2011

Risk Assessment & Data Issues Gatekeepers (providers) Players (Members, Fund Employees) Contracts, Products System controls Pareto principle - Size matters It is possible to eliminate risk, but you may not end up with a viable business Data Issues Data integrity Metadata Data classification Data structuring 18Bupa Private and Confidential 13 October 2011

Risk Assessment Providers as the gatekeepers are the major risk area As automated systems become more important, members and employees can only exploit the manual system claims as per below: Ancillary Member & Fund Employee 18% Medical Member 23%, Fund Employee 14% Hospital (Ex EDI and Eclipse) Member & Fund Employee 0% Other areas that require attention Product design system control weaknesses contract provisions Bupa Private and Confidential 13 October 201119

Prospective Approaches Rules & system controls based prevention Hospital clinical and/or business rules, contracts, products (Government constraints) Medical Medicare MBS rules, supplemented by Fund rules (Medicare constraints) eg type C reference tables Prostheses Fund rules eg warranties, UR eg frequencies, multiple charges Ancillary clinical and/or business rules, contracts, products System auditing DOS attacks Examples of the preceding can be seen in the following slides At the end of the day companies accept a level of commercial risk as complete prevention is impossible unless you want to close down a business Real time Behavioural profiling This is a practice yet to occur in the Australian PHI scene Bupa Private and Confidential 13 October 201120

Retrospective Analytics Statistical Analytics Data Mining Trend analysis Ratio analysis Profiling & Benchmarking (providers, members, employees, products, services) Statistical Standardisation Scoring algorithms Non Statistical analytics Targeted Clinical auditing Coding audits Etc Bupa Private and Confidential 13 October 201121

Kohonen Network (SOM) - Item model for popular dental items Work undertaken with Deloittes some years ago Bupa Private and Confidential 13 October 2011

Kohonen Network (SOM) - Clustering and labels on popular dental items model Value from this labelling can be substantial allows comparison of items based on simultaneous consideration of 55 variables summarising their usage by members and providers What items are most like other items? Input into item bundle analysis Most expensive benefits Most popular benefits Zero schedule benefits with a high variability on amount paid Zero paid benefits Bupa Private and Confidential 13 October 2011 Work undertaken with Deloittes some years ago

Patterns A significant number of the more common patterns are shown in the appendices (slides 55-65). I dont intend to discuss them here A smaller selection are in the slides that follow The industry in Australia is in the process of establishing a generic fraud pattern register to which all Funds have access Some patterns can be employed by providers, members and Fund employees alone or in collusion with each other Some patterns are employed by one of the 3 players Generically they can centre on some form of over utilisation eg SPP, SPD, BPP, pathology and diagnostic tests, services per body part, treatment not in line with past history, bank account changes, They can be found by analysing: outlier validity & frequency; benchmarking; non standard services; cluster analysis; age/service links; abnormal service times; non consistent patterns across products; different practices by same provider for same service at different locations; high usage items, providers, products, members, employees; service location/member residence location anomalies; link analysis of providers, members and employees; variable claims processing locations; Bupa Private and Confidential 13 October 201124

Questionable service Pattern 1 Bupa Private and Confidential 13 October 201125

Have dependencies on prescriptions drugs Visit many GPs and pharmacies in different geographic areas Doctor ShoppingModel for Staff Fraud Bupa Private and Confidential 13 October 2011

Fraud Pattern - Membership Bupa Private and Confidential 13 October 201127

Abuse of Tooth ID when no controls Bupa Private and Confidential 13 October 201128

Same Address, Different Memberships Bupa Private and Confidential 13 October 201129

Creating False Memberships Bupa Private and Confidential 13 October 201130 Note the activity on 13 Nov & creation of 18 new policies from 9:11am to 11:03am. Note closure on 19 Jan from 10:09 to 11:36 am. Policies stay in force for a month

Knowledge and Skill Sets 31Bupa Private and Confidential 13 October 2011 Skills Clinical: medical, nursing, pharmacy, dental Business: Finance, Economics, Health Economics Actuarial Health Informatics/Clinical coding SAS programming Statistics Clinical consultants are on standby Personal traits In built crap detector High stress threshold

Technologies & Software Virtualised quad core blade server 32 Gb RAM, 2 Tb data Designed own data model & extract daily from the mainframe SAS is fundamental to everything we do SAS base is used for sophisticated programming SAS Enterprise Guide is used for basic programming, data extraction, and reporting SAS Enterprise Miner is used for data mining Futrix is our major self service OLAP tool, and it uses SAS, Java, J Boss languages We have developed in-house web applications viz Ultrasound a scoring program (used for Claims Leakage analysis), Lasar (used for Comp & Damages recoveries) 32Bupa Private and Confidential 13 October 2011

Analytics Scoring Algorithms 1 Bupa Private and Confidential 13 October 201133

Lessons Learned/Best Practice Tips 1 Follow the Pareto principle There are distinct limits to rules based systems and claims analysis, no matter how sophisticated they are. Automated behavioural profiling is the next step Profitable products can still be abused Fraud is opportunistic and you leave it alone to do more important things at a cost Hawthorn (deterrent) effect does not work when people are desperate Data - clean data, good metadata, well structured data 34Bupa Private and Confidential 13 October 2011

Lessons Learned/Best Practice Tips 2 Staff who are/have: Good technical (business knowledge); Fascinated by data & can see patterns in it; Experienced in using programming software; Statistical understanding; Understand systems and system controls; Understand the law; Understand the need for compromise; Cope with stress and not being loved Good software and hardware tools Minimal dependence on IT departments Selling the return on investment Having a Sponsor 35Bupa Private and Confidential 13 October 2011

References Sparrow, M Testimony to the Committee on the Judiciary: Subcommittee on Crime and Drugs, U.S. Senate, May 20, 2009. Sparrow, MFraud in the U.S. health-care system Social Research Winter 2008 Sparrow, MLicense to steal (Westview Press, 2000) Corr, WTestimony to the Committee on Appropriations Subcommittee on Labor, Health and Human Services, Education, and Related Agencies United States House of Representatives Thursday, March 04, 2010 Selden, TMThe distribution of public spending for health care in the United States, 2002 Health Affairs Health Affairs 27, no. 5 (2008) DHSSHealth Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2009 Maclntyre, Hudson LLP The financial cost of Healthcare fraud (2009) NHCAAThe Problem of Health Care Fraud (2010) U.K. - NAOInternational benchmark of fraud & error in social security systems 2006 Medicare AustAnnual report 2008 2009 Professional Services Review Annual report 2008 2009 http://www.nhcaa.org/eweb/DynamicPage.aspx?webcode=anti_fraud _resource_centr&wpscode=TheProblemOfHCFraud

The End QUESTIONS 37Bupa Private and Confidential 13 October 2011 [email protected] Ph. +61 2 93239896 Mb. +61(0)417 259 582

Appendices Bupa Private and Confidential 13 October 201138

PHI coverage in Australia Bupa Private and Confidential 13 October 201139 Persons covered by top 4 Funds (Bupa, Medibank, HCF and NIB) is 76%

Health Funding Sources - Australia Bupa Private and Confidential 10 October 201140 Australias Health 2010 p.414

System Framework - Australia Federal & State Governments (legislation, funding, powers) Regulatory Bodies Private Health Insurance Administration Council (PHIAC) Medicare eg MBS Schedule, Compliance reviews Australian Health Practitioner Regulation Agency (AHPRA) all providers Professional Review Division eg physicians/surgeons registration/prosecution Therapeutic Goods Administration eg approval to use drugs, prostheses Pharmaceutical Benefits Pricing Authority (PBPA) Prostheses List Advisory Committee (PLAC) Private Health Insurance Ombudsman (PHIO) Privacy Commission Australian Competition and Consumer Commission (ACCC) Public/Private Sector interface Bupa Private and Confidential 10 October 201141

Constraints on PMI (PHI) Funds operations, Australia - 1 Hospital Facility, Prostheses, Pharmacy costs No pre-authorisation unless its a Pre-existing ailment (PEA) issue If a treatment is paid on a Fee for Service (FFS) basis, Funds are legislatively obliged to pay for treatment and associated services provided, unless it has been excluded by product design or contract Default benefits are Fund payable if a contract cannot be agreed with a hospital Prostheses use determined by the surgeon. The items & the price set by the Government Pharmacy costs paid by Fund &/or Hospital if a restricted PBS drug (whose use on a case by case basis the DoHA approves) or a non PBS drug Electronic Claim Lodgment and Information Processing Service Environment (Eclipse) electronic claiming system use mandatory Clinical and claims data submission to Federal Government mandatory Outpatient costs not paid unless contracted with a hospital Government responsibility Bupa Private and Confidential 10 October 201142

Constraints on PMI (PHI) Funds operations, Australia - 2 Medical Government determines the items paid (MBS Schedule), the rules governing them, and the price paid If an MBS service is provided by a physician/surgeon in hospital then the Fund is obliged to pay it 25% of the Government schedule price only paid by a Fund if they occur in a hospital Government pays 75% of the Government set schedule price for a hospital episode (85% if an outpatient) Funds can pay a quantum in excess of 100% of the Government schedule fee (ie the base 25% plus an additional percentage above 100%) to eliminate a member gap payment, where there is an agreement between the physician/surgeon and the Fund Eclipse & Medicare 2 Way use mandatory Outpatient costs not paid unless contracted with a hospital Government responsibility Bupa Private and Confidential 10 October 201143

Constraints on PMI (PHI) Funds operations, Australia - 3 Other constraints Product design requires Federal Government approval Waiting Periods are regulated Premiums charged for policies require Federal Government approval Premiums are the same for all members on the same product whatever their risk No one can be denied the right to join a Fund no matter what the clinical risks are Privacy controls on access to medical records Bupa Private and Confidential 10 October 201144

Freedom for PMI (PHI) Funds operations, Australia - 1 Hospital How a hospital admission, and its duration, are paid by a Fund, is determined by the Fund in negotiation with the hospital The price paid for an ARDRG is that negotiated between the Fund and the hospital The price paid for a program is that negotiated between the Fund and the hospital Readmissions & inter hospital transfers payments are determined by the Fund in negotiation with the hospital, Pharmacy costs paid by Fund and/or a hospital if a non PBS or restricted PBS drug. High cost drugs payment eg cancer, are signed off in advance by the Fund Emergency ward treatment in a private hospital is not paid unless the patient is admitted Risk equalisation fund compensates for Funds having to accept all risks Bupa Private and Confidential 10 October 201145

Freedom for PMI (PHI) Funds operations, Australia - 2 Ancillary Funds can determine what specialties they will pay for - see list below Funds can determine what specialty services they pay for Funds can determine the price they pay for a specialty service Funds can limit utilisation of a service through product rules, business and/or clinical rules, or setting an annual benefit cap or rolling year benefit cap Funds can determine the providers they deal with (commercial recognition rules), how they deal with them (EFTPOS and non EFTPOS) and the basis on which they recognise and register them Funds can determine who is included in a (preferred) provider network and the basis of reimbursement and operation within a network Specialties covered: Acupuncture, Aids & Appliances, Ambulance, Antenatal, Chiropractic, Dental, Dietetics, Funeral benefit, Hearing Aids, Home Nursing, Hypnotherapy, Living Well programs, Naturopathy, Occupational Therapy, Optical, Orthoptics, Osteopathy, Pharmacy, Physiotherapy, Podiatry, Psychology, Remedial Massage, Speech Therapy, Weight Watchers Bupa Private and Confidential 10 October 201146

Government support for PMI/PHI Private health insurance premiums subsidised by the Federal Government through rebates (35 per cent for those aged over 65, 40 per cent for over 70s, and 30 per cent for all others) Lifetime Health Cover obliges people to join before 1 July after they turn 31 if they dont want to have a loading of 2% on their premium commencing at age 30. This increases annually with joining age. Medicare Levy Surcharge at 1% of taxable income is imposed on people whose income level is above $80,000 single & $160,000 couple if they do not take out health insurance Subsidised public hospital treatment for PMI/PHI patients who: do not declare their PMI/PHI status up to 100%. do declare their PMI/PHI status through cheaper accommodation costs up to 67% of the private hospital bed day rate (public $320 vs private $965 in 2011) 12.6% of all private hospital admissions (private & public hospitals) are declared private patients in a public hospital. Previous analysis has shown that the percentage of PHI members who do not declare their PHI status accounts for 14% Bupa Private and Confidential 10 October 201147

Bupa & BCA Structure Bupa U.K. Bupa Australia Board Bupa International Internal Audit Board Audit Committee CEO CFO CIO Director HR Director HBM Director Sales Director Marketing & Product Director Customer Service Risk & Compliance Legal Business & Clinical Analysis Branches Sales Staff Branches Sales Staff Travel Claims Membership Contact Centres Claims Membership Contact Centres Claims Utilisation Review Information Analysis Information Delivery CMO Director Strategy BCA staff are based in Adelaide, Brisbane, Sydney Bupa Private and Confidential 13 October 2011

BCA Michael Douman Information Analytics Rai Gomes Clinical Utilisation Review Margaret Street Information Delivery Rob Ashmore Clinical Utilisation Review Hospital, Medical & Prostheses claims leakage savings through audits, claims review, contract compliance, etc Onsite hospital chart to bill and coding audits Ancillary claims leakage savings through audits & claims reviews, provider de-recognition & prosecution, etc Ancillary fraud prosecution Negotiations with ADA on dental schedule AHIA Fraud Committee representation Comp & Damages claims, debt management and recoveries Information Analytics Hospital, medical, prostheses and ancillary analysis Contract negotiation support Demand supply projections/modelling of hospital, medical and ancillary activity Industry benchmarking Hospital 2 nd tier pricing HCP collection, QA & submission Clinical schedule review & updates eg MBS, Prostheses Medical (SoF) indexing Information Delivery Datamart establishment & data structuring Development of self service tools eg, Futrix, LASAR, hospital contract modelling Development of scoring programs ie Ultrasound Develop complex algorithms associated with pattern analysis Daily ETL from mainframe to SAS datamart Financial KPIs for CY 11 $28 million BCA Teams Bupa Private and Confidential 13 October 2011

Fraud Structure & Bupa Interrelationships Bupa U.K. Bupa Australia Board Bupa International Internal Audit Board Audit Committee CEO CFO CIO Director HR Director HBM Director Sales Director Marketing Director Customer Service Risk & Compliance Legal Business & Clinical Analysis Branches Sales Staff Branches Sales Staff Travel Claims Membership Contact Centres Claims Membership Contact Centres AHPRA Medicare Australia Police Courts Gaol Hospital & Medical Fraud Prevention Ancillary Fraud Prevention Staff & Member Fraud Prevention Bupa Ancillary De-recognition Committee CMO Director Strategy Bupa Private and Confidential 13 October 2011

Bupa Australia - Scale & Scope Hospital & Ancillary Benefits Bupa Private and Confidential 13 October 201151

Risk Players, Products, Systems, Contracts ? Where you focus depends on where the greatest weaknesses are. Provider (& their employees) leakage & fraud is the major issue as providers are the gatekeepers to the system both in determining services and invoicing Member & Fund employee leakage & fraud is possible. The only areas where fraud is possible are those where the member and Fund employee has input into the process Given that the maximum potential is: Ancillary Member & Fund Employee 18% Medical Member 23%, Fund Employee 14% Hospital (Ex EDI and Eclipse) Member & Fund Employee 0% The reality is that fraud and leakage is significantly less than the maximum potential shown above Product waiting periods, benefit limits, step downs, etc System leakage is potentially significant depending on the effectiveness of system controls and rules eg field parameters, commercial rules, membership rules, claims assessing Contracts (Hospital, Medical, Ancillary) see next slide 52Bupa Private and Confidential 13 October 2011

Contracts & Channels Control Risk Hospital Payment Contracts (Capped ) Depending on what is bundled into the episodic (ARDRG) capped payment, determines whether there is any value in reviewing the payments There is no point in examining, for example, ICU certificate classifications, or whether MBS items link to OR bands, or excessive length of stay etc as the price is the price. 59% of hospital benefits in CY 10 were capped payments Hospital Payment Contracts (Fee for Service ) As the number of services, length of stay, OR band and ICU classification etc all add to cost, then auditing of these cost inputs are important. Unbundled ICU benefits are worth $39,000,000, and unbundled OR benefits are worth $118,000,000 Medical Payment Systems No Gap and Known Gap contracts/agreements stipulate the Fund scheduled price and Gap that is allowed when the provider bills correctly. When a No Gap or Known Gap invoice is submitted, the patient cannot be billed for any other service Ancillary Payment systems Members First/MemberCare agreements stipulate the schedule fee to be paid as well as mandate the use of HICAPS/iSoft payment systems Bupa Private and Confidential 13 October 2011

BCA Data Mining Methodology Bupa Private and Confidential 13 October 2011

Fraud analytics Data Mining 55 Supervised ModelsUnsupervised Models 1.40% Transform & Sample 2.15% Explore 3.30% Modify 4.15% Model 5.5% Assess Bupa Private and Confidential 13 October 2011

Patterns Hospitals 1 Potential methods of aberrant claiming in the absence of controls: Service padding (FFS only) Upcoding of medical items (DRGs or MBS items in the Australian context) Contract compliance - invoicing bundled and unbundled payments Invoicing certificated services for non applicable services Validity of Fee for Service (FFS) long stay outliers Prostheses billing for pack when one item only used Prostheses billing for duplicates when covered by manufacturers warranty No informed financial consent by patient (IFC) Invoicing for duplicate services Bupa Private and Confidential 13 October 201156

Potential methods of aberrant claiming in the absence of controls: Unnecessary and over long stays e.g. total stay, ICU/CCU stay Charging more than the contract price Multiple charging for pharmacy, prostheses, SUO items Multiple admissions for previous single treatment Using psychiatric hospitals for rest purposes Dual admissions (husband and wife) when only one person the patient (borders) Paying twice for a transferred patient Paying for weekend leave Claiming for a hospital benefit under a membership when not a member Billing for prosthesis opened in error or not in patient when they leave the OR Patterns Hospitals 2 Bupa Private and Confidential 13 October 2011

Patterns Doctors Potential methods of aberrant claiming in the absence of controls: Invoicing certificated services for non applicable services (ACC, C, ICU, B) Cosmetic surgery billed as clinically necessary Invoicing for No Gap service but invoice member for additional service Invoicing for duplicate services Inappropriate service categorisation (upcoding) Bupa Private and Confidential 13 October 201158

Patterns Ancillary Providers 1 Potential methods of aberrant claiming in the absence of controls: Benefit limit (UPI) surfing Multi ring fraud Inappropriate service ratios eg service padding Non clinically necessary eg fissure sealing for a 60 year old Upcoding eg scale & clean billed as perio, multi surface fillings percentages Inappropriate age services eg multi focal lenses for a 16 year old Inappropriate service linkages eg perio and fluoride Service date shifting to circumvent product rules eg orthodontics & Nov start Processing services on an unlikely day and/or time of service (ancillary) Quoting searching in EFTPOS system Bupa Private and Confidential 13 October 201159

Patterns Ancillary Providers 2 Potential methods of aberrant claiming in the absence of controls: Charge higher amount for treatment when Fund product benefits paid at a percentage rate Reverses and changes items to get a better benefit Charges for services where the necessary equipment is not owned Rate of servicing post HICAPS dramatically exceeds pre HICAPS Prolongs treatment (by not providing necessary treatment) in order to milk the Fund Bills all members of the family for the same condition up to the annual benefit limit every year Bills a patient in his rooms when she is in hospital after just having a baby Bills Patients from 3 hours away (from home or work) Billing for same services provided previously by another provider Significant number of higher cost services than normal Bupa Private and Confidential 13 October 201160

Patterns Members 1 Potential methods of false claiming in the absence of controls: False services (medical, ancillary) Service padding (ancillary) pressure on providers for no MOOP Service geographic hot spots with high utilisation or high benefit payments (ancillary) Doctor shopping eg pharmacy Multi ring fraud (ancillary) Member receiving a service for a condition they dont have but that another member of the family has e.g. hearing aid Same person (agent) making claims for multiple memberships Large no. of members joining at same time and/or at same address Bupa Private and Confidential 13 October 201161

Patterns Members 2 Potential methods of false claiming in the absence of controls: False memberships w or w/o bank account manipulation (medical, ancillary) Claims not in keeping with members age and claims profile Claims processed distant from service point (ancillary) Service provided distant from residence or workplace (ancillary) Claims lodged at different postcodes Different claims made through different channels Accident condition not shown as indemnity (hospital, medical) Age of new claimant > membership term Bupa Private and Confidential 13 October 201162

Patterns Fund Employees Potential methods of false claiming in the absence of controls: Backdating claims (23.5 months) Processing same services all family members on same or similar days Creating false memberships Processing services on an unlikely day and/or time of service (ancillary) Manually processing a disproportionate percentage of claims from a CPOS provider Linking many members claims to the same bank account Changing bank accounts, paying money to oneself and then changing bank account back False memberships Bank account manipulation Bupa Private and Confidential 13 October 201163

Patterns common to Providers, Members, Employees Potential methods of aberrant claiming in the absence of controls: Same services for many members of a family on the same or near days Services not appropriate to age group Utilising unused aged benefit limits Padding services Service on atypical day or time of day More services than are possible in a day Benefit limit (UPI) surfing (ancillary) - pressure on providers for no MOOP Bupa Private and Confidential 13 October 201164

Same services, same day on same family Bupa Private and Confidential 13 October 201165 Note same services on same day for all lives on the membership, viz 00012, 00022, 00114, 00121, 00515

Same services, same day on same family Bupa Private and Confidential 13 October 201166 $10,694.20 of dental services from 13 dentists supposedly provided on a Sunday. Examples of Dr ????? services shown above.

Doctor Shopping ? Bupa Private and Confidential 13 October 201167

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