Man and Machine

Insurers generally tout the human factor as the most decisive element in successfully combating fraud, and Medical Mutual of Ohio is no different. However, the Cleveland-based carrier credits technology with a key role in its recovery of more than $4.5 million in fraudulent and erroneous claims in 2004.

In July 2003, Medical Mutual ($2 billion in annual revenue) installed ViPS (Baltimore) STARSentinel software, which helps the carrier detect fraudulent and improper claims, according to John Shoemaker, manager of the carrier's financial investigations unit. "ViPS STARSentinel software played a major role in all healthcare provider-focused cases," he says. "STARSentinel either generated the direct lead or was used to support a tip."

The technology also is helpful in identifying inappropriate claims that result from errors rather than criminal intention, Shoemaker adds. "The software is geared to identify these errors so that the mistakes do not continue to happen," he says.

Shoemaker describes STARSentinel as an early warning system that flags potentially fraudulent claims and identifies potentially abusive billing patterns. The solution provides online reports, utilizing a browser interface. "The package uses paid [historical] claims information and rules based on provider utilization, submissions and documented fraud schemes," Shoemaker explains. "It resides on an SQL server-based platform and utilizes an additional server platform for remote access using a simple browser-based technology."

Despite the carrier's record recovery of more than $9 million in fraudulent or otherwise improper claims over the past two years, Brien Shanahan, Medical Mutual's director of legal affairs, opines that people still are as important to the process as technology. "We still need the human element to review the information, think the case through and determine whether other steps are required," he says.

But the technology, according to Shoemaker, has freed investigators to pursue more fruitful tasks. "Whereas in the past an investigator spent hours in the field gathering and confirming data to support accusations, that investigator today leaves the office with the evidence supported by strong data analysis," he states. "The field time is spent working with providers in executing settlements and changing their behavior."

The total cost of STARSentinel, including associated platform costs, is less than $250,000 annually, according to Shoemaker. "The return on investment is running about four to one and will increase as we become more educated in the application of the results," he predicts.

Medical Mutual plans to add more fraud-fighting technology later this year, including "CS-PURE from Perdue Pharma [Stamford, Conn.] and a business contract with PHARMA/DUR, utilizing its trending software," says Shoemaker.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio