Insurance Fraud Trends: Dr. Andrea Allmon, FICO

Organized crime has targeted healthcare organizations for insurance fraud scams. What are the risks? What are the solutions?

Dr. Andrea Allmon, senior director with FICO, discusses:

Insurance fraud trends;
How organizations are most vulnerable;
What to do now to reduce fraud today.

Allmon is responsible for FICO's fraud solutions in the insurance and healthcare industries, where she focuses on bringing new and innovative analytic based solutions to market. In her more than 10 years at FICO and over 20 years of industry experience, she has been focused on utilizing data and analytics to solve complex mission critical business and clinical challenges. During her career she has served in key managerial positions and her clients have included property & casualty insurers, worker's compensation insurers and both commercial and government healthcare payors.

Prior to joining FICO, Dr. Allmon was the Assistant Director of Analytics at Axios Data Analysis Corporation and was responsible for the development of risk management software applications, analytical models, and consulting support of these applications to the marketplace. These applications saved millions of dollars for clients.

TOM FIELD: What are the latest trends in insurance fraud?

Hi, this is Tom Field, Editorial Director with Information Security Media Group. We are talking about insurance fraud today, and we are talking with Dr. Andrea Allmon, Senior Director with FICO. Andrea, thanks so much for joining me today.

ANDREA ALLMON: My pleasure.

FIELD: Just to start out here, maybe you can tell us a little bit about yourself and your role with FICO, please?

ALLMON: Right, well I am a Product Director for FICO's Insurance Fraud Manager product. It is a product that detects fraud in healthcare insurance claims and provides a way for insurance carriers to not only detect the fraud, but to investigate and manage the fraud that they are finding. I have been the Product Director with FICO for 10 years now, and been in this space for probably closer to 20 years.

FIELD: Well, great. You have got good perspective here, and I would like to start out by asking you: What are the biggest fraud trends that you are seeing today?

ALLMON: Well, we are seeing a lot more organized crime moving into the healthcare insurance fraud space. It is a lot safer than running drugs and dealing with other kinds of gangs, so whether it is fraudulent claims for be it 12 injections with HIV diagnosis attached to them ... or even the latest heist of pharmaceuticals form Eli Lilly, I think we are starting to see a bigger push from organized crime into this space.

It is actually a bit of a shift from historical insurance fraud. Maybe 10 years ago, what would happen is a doctor would add a urinalysis test to every claim that they sent in or make you do a urinalysis test on top of everything, so they would bill for services not rendered, mostly. That was the common way of doing things.

And then maybe five years ago, we started to see trends where patients were being involved in the collusion. So patients were being paid to undergo unnecessary procedures. And now, in the last year or two, we are starting to see a bigger move with the organized criminal elements moving into this space. It is something like 'Why do you rob banks?' -- it is where the money is, right? And insurance is where the money is in the United States for sure.

FIELD: So, Andrea, where do you find that organizations are most vulnerable to organized crime and these fraud scams that they are bringing in?

ALLMON: I think organizations are most vulnerable when they don't have robust fraud programs, when they don't take fraud seriously. So, they don't have training programs for their staff. They don't have rigorous ways of handling fraud when it comes into them, and they don't have the tools to detect and manage the fraud.

Automation -- a lot of our health plans have really been pushing over the last decade to automate everything, right? So let's auto-adjudicate claims. That reduces the human visibility into the claim, and so as long as you have high automation, but you don't have any detection solutions, or you have limited detection solutions, you are really at risk, right? So, you are paying those claims as fast and as quickly as possible, without human intervention, but if you don't have the tools in place to look for the fraud, I think you are really at risk.

FIELD: Well, that is a good segue to this question, which is what do you find to be the biggest challenges for organizations in preventing this type of fraud you have been discussing?

ALLMON: Well, I think the overall complexity of your healthcare system is the biggest challenge. Fraud is a constantly shifting target. There are more than 10,000 procedure codes, and as soon as we get ICD9 in there are going to be over 155,000 diagnosis codes, and the coding systems aren't even precise; even with that kind of complexity, the coding systems aren't that precise.

Patients have very complex healthcare problems. There are infinite varieties of treatment protocols, and so if you are trying to figure out what the fraud is and code up like a detection rule, if you are using rules based solutions ... I mean, that is like shoveling sand against the tide. It is almost impossible to keep up. You will write a rule to handle one of these situations, and tomorrow there will be a different permutation on it, so you really need more powerful approaches to protection.

FIELD: Well, Andrea, maybe you can offer an example of how your customers best leverage your solutions in fighting insurance fraud.

ALLMON: FICO's insurance fraud manager solutions use predictive analytics as the underpinning of the application itself, and on top of that you need to be able to profile patients and providers in very rich ways to look for outliers. And that outlier detection is what really gives you the power over a rules-based system in this kind of complex world.

One step that takes it even to the most current cutting edge way of managing fraud is to be able to deploy this in a true prepayment implementation, so that you are able to look at the claims as they are coming in, as you are processing them and before you pay them. Because once the money is out the door, you are not going to get it back. You are lucky to get 10 cents on the dime back when you are chasing it, and when you have got organized crime, that is even going to lower your hit rate at getting your money back even further.

So, you need to pick up the fraud early and detect it as soon as you can possibly detect it and prevent the claims from going out the door, so that you don't bleed from that fraud. Our customers are really moving towards or have already been in those prepayment environments, and that is really where you get the bang for your buck.

FIELD: So, if you could boil it all down, if you could offer one piece of advice to an organization looking to reduce insurance fraud, what would that advice be?

ALLMON: Take fraud prevention seriously with support from the top down in your organization. If you don't think it is there, you will be surprised, and you are going to get hit, and you are going to get hit hard, so you need to take that fraud prevention seriously. And you need to put solutions in place; you need to put processes in place. Because if you don't, you are going to get left behind, and you are going to get hit hard.

FIELD: Very good, Andrea. I appreciate your time and your insight today. Thank you so much.

ALLMON: You are welcome.

FIELD: We have been talking about insurance fraud. We have been talking with Dr. Andrea Allmon with FICO. For Information Security Media Group, I'm Tom Field. Thank you very much.

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