Excellus BlueCross BlueShield Tackles Health Insurance Claim Fraud, Waste and Abuse With New Service From IBM

ARMONK, NY – 06 Sep 2007: Excellus BlueCross BlueShield has contracted to use the new Risk Identification Analysis Service from IBM (NYSE: IBM) to help combat health care insurance claim fraud, waste and abuse.

According to estimates from the federal government and issues-based groups such as the National Health Care Anti-Fraud Association, as much as 10 percent of all healthcare expenditures in the United States, or $170 billion, may be lost each year to fraud, waste and abuse. This results in a high cost to private and government insurance payors.

“Make no mistake about it — someone who knowingly commits insurance fraud is no different than any other person who steals,” said Flora Allen, Corporate Director, Special Investigations Unit, Excellus BlueCross BlueShield. “Fraud affects everyone’s bottom line, so we aggressively and proactively pursue recoveries and convictions because we are protecting our members’ premiums. Adding the Risk Identification Analysis Service from IBM to our existing investigative arsenal improves the analytical capabilities we need to find and identify the most egregious offenders.”

Excellus BCBS is a non-profit company that delivers health care coverage to two million people across upstate New York. The health plan initially will use the new service to review pharmacy-related claims to uncover complex schemes. Some of these schemes may include collusion, inappropriate billing practices, prescription forging, prescription pad theft and members who are “doctor shopping.”

In addition to pharmacy claims, the service can analyze approximately two dozen other specialties such as Cardiology, Home Health Care, Gastroenterology, and Durable Medical Equipment Suppliers.

The new Risk Identification Analysis Service is based on IBM’s Fraud and Abuse Management System (FAMS) technology which was developed by IBM Research and consultants in collaboration with leading healthcare organizations.

This technology uses a unique combination of data mining capabilities, visualization techniques and reporting tools to identify questionable behavior before a claim is paid. Retrospectively, it can analyze providers’ past behaviors to flag suspicious patterns. It replaces traditional manual processes by sorting though tens of thousands of providers and tens of millions of claims in minutes — ranking providers as to their degree of potentially fraudulent, wasteful, abusive or questionable behavior.

By offering this technology as a service, IBM clients are able to leverage advanced data mining technology, and have their healthcare claims analyzed by IBM consultants. The results are then categorized into a series of “next step” business actions and provided to investigators to pursue.

“By providing these powerful data mining and advanced analytical capabilities as an on-demand service, we are able to offer this investigative capability to smaller healthcare payor organizations, or government healthcare insurance entities which may prefer to use this advanced analytic capability as a service, because of the lower demands on their staff and IT capabilities,” said Mark Ramsey, Global Data Analytics Leader, IBM Center for Business Optimization. “It can also easily be used by larger, private payors looking to use this capability as a service instead of implementing the FAMS solution internally.”

The Risk Identification Analysis Service is available today through the IBM Center for Business Optimization. By adapting technology from IBM’s Research Labs into services that can help clients improve their business performance, the IBM Center for Business Optimization is helping to pioneer the future of services at IBM.

For more information, visit www.ibm.com/services/cbo.