Enterprise Investigations Emerging Health Care Fraud Trends & Schemes

1. Detectors of Fraud, Waste & Abuse Part of the Program Integrity & Investigations Department Enterprise InvestigationsEmerging Health Care Fraud Trends & Schemes

2. Emerging Trends in Health Care Fraud and Economics for the Investigator Alanna Lavelle, MS, AHFI, CPCDirector, Enterprise InvestigationsSpecial Investigations Unit

3. Special Investigations Unit *New York: service area covers 28 eastern and southeastern counties *Missouri: service area excludes the 30 counties in the Kansas City area *Virginia: the service area is all of Virginia except for the City of Fairfax, the Town of Vienna, and the area east of State Route 123. SIU West California Colorado Nevada SIU East Connecticut Maine New Hampshire New York* Virginia* SIU Centraland South Georgia Indiana Kentucky Missouri* Ohio Wisconsin

4. Coordination of Duties: Regional SIUs Each regional director is focused on FW&A in their region • the regional SIUs perform targeted investigations of professional providers, vendors, and facilities to avoid dollars being paid inappropriately • make overpayment demands and law enforcement referrals • negotiate resolutions, liaison on criminal cases

5. General Activities to Accomplish Mission • Targeted investigations • Broad studies/initiatives • Data mining/predictive modeling • Internal and external outreach • Compliance • Fraud and abuse training • Flagged provider/Pre-pay review • Investigators attend fraud conferences and other training yearly through NHCAA, ACFE, BCBS Association, etc.

6. Who We Are: Background & Approach • Maintain a 24-hour Fraud and abuse hotline, which is answered by live associates and led by an investigative analyst who trends the referrals • Associates experienced and training include: • physicians • attorneys • medical doctors and chiropractors • retired FBI and secret service • retired Office of the Inspector General, U.S. Department of Human Services • Dedicated SIU function since 2004 between • Involves all lines of business • Cases approached, in this order: • Criminal • Civil • Administrative • Utilize, IBM-FAMs and McKesson-FICO InvestiClaim predictive modeling analytics • Identify high risk areas for fraud by predictive modeling, analytics, rule based analytics and data mining

7. Who We Are: Fraud and Abuse Team Special Investigators • Former law enforcement officers (from the FBI and local law enforcement), attorneys, and health care industry professionals • Perform targeted investigations of providers—doctors (i.e., professionals), vendors, and facilities—to avoid incorrect payments; make overpayment demands and law enforcement referrals; liaison on criminal cases, as appropriate Clinical Investigators • Provide clinical support to the SIU, Enterprise-wide, and proactively identifies clinically-related fraud and abuse through data mining analysis and audits • Comprised of a physician, a chiropractor, a consultant podiatrist, and 6 registered nurses with strong medical management background, primarily in medical claim review Data Analysts • Complete complex data mining related to cases and large-scale initiatives

8. Sources of Fraud, Waste & Abuse(FW&A) Cases • Internal referrals • Fraud hotline • Web reporting • External sources • Other plans • Law enforcement • Anti-fraud association/anti-fraud association alerts • Fraud detection software – VIPS, Stars, IBM-FAMS, McKesson’s InvestiClaim • Regional blue plans information sharing meetings • Task force meetings

10. Fraud, Waste & Abuse Continuum Creating consistency in the processes… Identify • Identify suspicious provider behavior via automated and non-automated data analysis • Collaborate with other business units to identify areas FW&A should focus efforts to reduce overall Cost-of-Care • Audit providers using consistent methodology and consistent assets • Medical records requests • Consistent clinical/coding assets Audit Investigate • Investigate using a consistent workflow and consistent process • Collaborate and interact with providers consistently across markets Intervene • Intervene with providers across markets in a consistent manner • criminal/civil referrals to government agencies • change-in-behavior • settlement agreements/recoveries • pre-payment review • savings calculations

11. Emerging Trends and Schemesin Health Care Fraud • Medical identity theft • Experimental/investigational coding misrepresentations • Kickback arrangements • Upcoding • Medical necessity (factor cases, etc.) • Foreign claims • Facility fraud • Dialysis fraud • Chiropractic and podiatric fraud • Durable Medical Equipment (DME) fraud

12. Trend: Medical Identity Theft Scope of Problem • Accounts for approximately 3% of all identity crimes and is 10 times more expensive • Average payout for regular identity theft is $2,000 • Average payout for medical identity theft is $20,000 • Experts estimate 3% of all health care costs ($60 billion) is the result of fraud; of that 1% ($600 million) is attributed to medical identity theft • According to World Privacy Forum, stolen medical information has 50 times more street value than a stolen social security number • Street cost for stolen social security number is $1.00 • Street cost for stolen medical identity information is $50.00 • Anyone with medical insurance is a potential victim Examples • An individual’s purse or wallet is lost or stolen and the thief or person who finds it uses the individual’s information to obtain medical goods or services • An individual “loans” an uninsured friend or family member their medical ID information so that they may receive medical goods or services that would otherwise be unavailable to them

13. Diagnostic Testing • Hidden provider ownership of labs and radiology • Increase in expensive genetic testing • Kickbacks to Doctors for ordering unnecessary labs • Social targeting through health fairs, mail, internet, shopping malls and “health screening” and useless diagnostics tests • MRI/CT Scans in hospitals and clinics: Hospital often needs a high volume of procedures to pay for the expensive equipment • Allergy testing: • Unnecessary IgG/IgE food allergy testing • Aggressive screening from doctors office resulting in excessive billing for immunotherapy serum

14. Billing for Services outside the U.S. • Fraudulent claims from West African nations, mainly Nigeria • Experimental/Investigational Cancer Therapy for end stage cancer patients treated in Mexico, Italy, Portugal and Switzerland • Submission of billings as though work was performed in the US • Air Ambulance claims from foreign country back to United States often in excess of $1 Million US • Cosmetic Surgery procedures from Colombia, South Africa and Mexico – billed as significant conventional surgeries – Hernia Repair for “Tummy Tuck”; Septoplasty for “Nose Job”, etc.

15. Prescription Drug Diversion • New shift from Class II Controlled narcotics to expensive non-controlled drugs • Anti-Psychotics • HIV/AIDS anti-virals • Compounds (testosterone) • Sleep Aids • Cocktails of pain killers • Pill Mills and Pain Clinics • Repurchase unused or unwanted drugs

16. Durable Medical Equipment Fraud • Wheelchairs • Oxygen • Nutrition Supplies • Diabetic Supplies • Prosthetics • Orthotics (Custom) • Increase use of “runners who provide kickbacks to patients such as cash, drugs, food, etc. for use of insurance card • Telemarketing: Encouraging resale of excessive volume of diabetic test strips on E-Bay.

17. Scheme: Multidisciplinary Clinics Integration of several doctors in one practice so that claims can be miscoded, double billed, up-coded, etc. Example: DC or PT render services under an MD’s supervision and circumvents limits on insurance benefits for chiropractic or physical therapy care; or PT care is rendered by a DC or PT, but billed to insurance as if the servicing provider was the MD; again, done in an effort to circumvent insurance benefit limits and maximize reimbursement. Provider groups with doctors from various specialties, such as: • MD/DDS • MD/DC • MD/PT • DO/DC • DC/PT • MD/DC/PT

18. Scheme: Bogus Clinic Multi-million dollar scheme against Centers for Medicare & Medicaid (CMS) and private carriers Fraudsters (organized crime, South Florida): • steal UPIN/NPI number from provider and thereafter purchase medical ID card numbers • sets up bogus clinic with UPS or a P.O. box address and begin billing WellPoint (Medicare Advantage) • Due to “any willing provider” clause, claims are paid without question • If codes are pended, code shifting takes place • If scheme discovered by payer, the bogus clinic moves and changes names and Payers

19. Schemes: Alternative Medicine & Emerging Devices • Chelation • Sea urchin/insecticide IV therapy • Gastric emptying/colonics • Alternative cancer treatments drug • Meridian stress assessment • Oxygen chamber • Live cell transfer as post surgical wound therapy, billed as a tissue graft • Prolotherapy • Neural scans • Nerve conduction studies • Pressure specific sensory devices • Weight loss clinics miscoding

20. Case Highlight The GA office of WellPoint’s SIU received its largest single restitution from a provider that was convicted of fraud: $2,450,364.00 United States Attorney David E. Nahmias, Northern District of Georgia prosecuted Dr. Howard Berkowitz, of Atlanta, GA who pled guilty to one count of an indictment in a $3 million scheme to commit health care insurance fraud.

21. Additional Schemes Controlled Substance Utilization Management Program • off-label • off-market Durable Medical Equipment (DME) • prosthetics • wound therapy/pumps/bone growth stimulators • surgical supply trays Podiatric • platelet rich plasma • tissue grafts • removal of buried wire Transport • dialysis • critical care transports • mileage

22. Measuring success: Metrics • Recoveries • Corrective Action Savings • Denied Claims

23. Questions and Discussion Alanna M. Lavelle Director, Enterprise Investigations Special Investigations Unit 404-842-8128 Alanna.Lavelle@bcbsga.com

24. THANK YOU