Medical Fraud by Identity Proliferation

a Case Study

by Karen Wolfe

Using data to define quality performance based networks
People in Workers’ Compensation are beginning to power up their data to gain insight and objective decision support to structure their provider networks. To do that, physician and other provider performance is evaluated based on actual performance evidenced in the data. That seems simple enough on the surface, but it is fraught with challenges. A few are described here, along with a case description of fraud by data proliferation.

Primary provider
Evaluating the data to determine provider performance quality is tricky. For instance, who among those treating a claimant should be held most responsible for claim outcome? Which provider is the so-called primary provider? Is it the first provider to see the claimant, the provider who has charged the most money, or the one who saw the claimant most frequently? There is no specific indicator in the data denoting primary provider, nor do providers generally self-identify in that way unless they are involved in a formal gatekeeper arrangement. Consequently, for analytic purposes a decision must be made regarding provider influence in the claim, aka, primary provider.

Distinguishing individual providers
Another common problem is that individual providers are often not differentiated in the data. Many payers accept bills “as is”, meaning they do not require the billing entities to specify individuals. Typically, individual physicians and other providers are camouflaged under the organization’s Tax ID. In the past, that was adequate because the purpose of the bill was to pay and record the transaction. But that is no longer good enough because of the demand for analytics.

Bills are now a significant piece of the data required for provider performance analytics. Therefore, for individual treating providers, the NPI number (National Provider Identification) or state license number is needed to recognize single medical doctors or other professionals treating claimants. Unfortunately these identifiers are usually not included in the data. Withholding payment is the most powerful method of generating compliance and payers have that power.

Moreover, among data issues, deliberate identity proliferation is even more damaging to accurate provider performance analytics.

Identity proliferation
As discussed previously in this series, medical fraud surfaces in many forms. Duplicate billing, up-charging, and optimizing charge codes and diagnostic codes (up-coding) are among the most common, but now newly creative methods are being employed by a few. Perpetrators are obfuscating the data to conceal their poor performance by proliferating their identities in the data.

By altering names or addresses slightly, thereby adding to their number, providers are able to cause the system to recognize each variation as a separate entity. That way, multiple provider records are created in the data, even though they are really all the same individual. Proliferating provider records in a data set effectively skews the results of performance analytics.

A case of data proliferation
Provider identify proliferation was discovered recently when a monthly billing report for an organization was analyzed. Fifty (50!) different name and address iterations for the same medical provider Tax ID were discovered. This had been attempted previously, but this time, the effort was extreme. Some examples of bills submitted for the same Tax ID at the same and closely similar addresses were:
Smith Orthopedic Medical Group
Smith Outpatient Surgery Group
Comprehensive OP SX LP
Comprehensive Outpatient Surgery CT
Smith Orthopedic Medical GRP, Inc.

Is this provider representing themselves carelessly? Probably not. The provider knows computer systems consider data literally, so each submission would generate a new record, the hoped-for result. Without investigation, the provider’s billing will not be questioned, yet when the provider’s performance is analyzed, the results will be distorted and inaccurate.

The provider vendor will be paid because all 50 iterations have an acceptable Tax ID. However, the problem surfaces when executing provider performance analytics. Different claims are attached to the 50 different records for the provider rather than consolidated in one record for the provider. Performance indicators are distributed across the faux entities rather than consolidated for the single provider, thereby distorting performance results, a new-age form of medical fraud.

Real solutions
As with many forms of fraud, the solution is to discover and subvert the effort early. Evidence-based quality networks composed of quality individual providers cannot be created using such distorted data. Payers should monitor their data to discover and expose such behavior as it occurs.

Payer systems are culpable, as well. Systems should be designed or updated so that multiple record entry is thwarted, either through administrative procedures for data entry or simple technical methods. Including individual identifiers such as NPI and state license numbers will add to the solution, forcing accuracy in provider records.

For the case described here, an additional solution was implemented. The multiple provider identities were merged electronically by the analytics company, thereby integrating the occurrences for this perpetrating provider. As a result, the provider’s performance can be analyzed as a whole rather than in fragments.

Because claims actually associated with this provider are distributed across the multiple artificial provider records in the data, analysis of performance is inaccurate. Not surprisingly, when this provider‘s data was merged and re-analyzed, the provider ranked in the lowest performance quartile. Gotcha!

Learn more about how MedMetrics can help you develop evidence-based quality networks or contact Karen Wolfe at karenwolfe@medmetrics.org, 541-390-1680 (v).

2012, a Leap Year—Leap to What?

by Karen Wolfe

Bob Wilson of WorkersCompensation.com wrote this tongue-in-cheek comment regarding technology in the Workers’ Compensation industry in his Top 10 Predictions for 2012 1

“3. Technology will continue its relentless march
The workers’ compensation industry, which prides itself on its use of cutting edge, innovative technologies, will discover that the internet is on the computer now. Some in the industry will launch an aggressive, 10 year implementation plan, or at least put together a feasibility committee, to exploit, or at least study the potential to exploit, this stunning new capability.” 1

We all know technology is hardly embraced by the Workers’ Comp industry. That technology is employed at all is only because it is the easiest and most cost-efficient way to document the claims management process. But to use technology beyond documentation, to actually leverage newer technology to achieve better outcomes, is not the “go to” methodology in Workers’ Compensation.

Change avoidance
It’s human nature to resist and avoid change, especially in the area of technology. Technology is foreign territory and only minimally understood by most people. Business managers are forced to relinquish control of their processes to the technical magicians. When that happens, they cannot monitor or control their projects because they do not have the unique knowledge and skill to stay involved. That is contrary to the nature of business managers, especially when they will be held accountable for the outcome anyway. So many managers simply do not go there.

Avoid pain through outsourcing
Nevertheless, Bob is right about this: the Workers’ Comp industry can embrace the Internet now and in entirely new ways. However, rather than trying to reinvent and develop the solution themselves, they can choose to outsource to those who have already created the solution. Outsourcing to vendors providing Internet-based software (Software as a Service, Saas) technology where design and development are complete is an easy, painless, and affordable leap to technology and to improved results.

Outsourcing avoids the cost of hiring subject experts to plan the new system and technology experts to design technical specifications and develop the new system, both time-consuming and costly efforts. The SaaS outsourcing approach also avoids software installation and maintenance. It maximizes the time-to-benefit opportunity. It is instant-on.

Still, outsourcing can offer even more.

Collaborative applications
Through outsourcing, organization can benefit from comparative studies where their performance is measured anonymously against others. For example, they can access the vendor’s full data set to identify best-in-class providers in a geographic area where their own data is limited.

Chasing technology
Technology continues to advance at an amazingly rapid rate. When organizations choose to build systems internally, they are required to sign up for keeping pace with evolving technology. On the other hand, when they outsource, they shift the updating burden to the vendor.

Not invented here
Traditionally in technology, resistance to outsourcing has rested in what is known as the “not invented here” syndrome. The implication is that if it is not invented within the organization, it won’t fit the needs of the organization and will not be as good. The “not invented here” syndrome (stated or implied) is also a means of resistance by internal IT departments, thereby protecting their own territory.

However, outsourcing is more correctly viewed as an extension of IT, an exponential complement to internal resources. Because the system design, development and implementation and maintenance are inclusive from the vendor, resources for new creative thinking and customization are more readily available. Rather than starting from scratch, jumping on board at the completion stage can be far more rewarding.

Outsourcing, a fait accompli
As the New Year commences, a leap year, organizations can leap to applying technology to maximize results. Workers’ Comp professionals can refute their regressive reputation by leaping directly to outsourced technology, thereby enjoying its benefits of using technology to boost claim cost control and improved outcomes. With outsourcing, improved performance is a fait accompli.


1 From Bob's Cluttered Desk, Bob’s Top 10 Predictions for 2012 30 December, 2011
Robert Wilson is President & CEO of WorkersCompensation.com