Forensic data analytics for a state government insurer

A state government insurer, responsible for managing insurance policies and claims, including workers compensation, state-owned assets, and home builders, faced significant challenges in identifying and mitigating instances of fraud, error, waste, and abuse within their insurance policy and claims data. They sought a robust solution to detect and address these issues effectively.

The solution

1. Data collection and integration: Our expert team at PKF gathered data from multiple sources, including policy applications, claims records, provider / supplier information and customer interactions. Additional data sources, such as ABR data, OCR data and metadata relating to supporting documentation, were integrated to provide a more comprehensive view and add additional context to the existing data.
2. Pattern recognition: Leveraging our experience and using advanced analytics, we identified patterns and anomalies within the data.
3. Rule development for red flag indicators: We developed specific rules to identify red flags, such as:
   1. Unusual claim frequency: High number of claims in a short time frame.
   2. Inconsistent information: Discrepancies between the policyholder’s information and the claim details.
   3. Duplicate claims: Payments made to multiple claimants where the same documentation had been provided; or the same documentation submitted multiple times for the same claimant.
   4. High-value claims: Claims significantly higher than the average for similar policies.
   5. Clinician / vendor / supplier profiling: Identifying the over-representation of clinicians, vendors and suppliers within the claims value-chain.
   6. Suspicious timing: Claims filed shortly after policy inception or just before policy expiration.
   7. Breaches of policy rules: Transactions breaching policy, contractual, or fund rules (e.g., health insurance).
4. Detailed analysis: We conducted thorough analyses of flagged cases, examining the context and details of each claim or cluster of claims to determine the validity and potential issues.
5. Reporting and action: Detailed reports and live data dashboards were provided to the client, highlighting the findings and recommending actions to mitigate identified risks and recover / prevent financial losses. Semi-automated exception reports were developed for weekly action based on the rules developed.

The outcomes

PKF’s forensic data analytics services enabled the client to:

• Identify and address numerous instances of fraud, error, waste, and abuse.
• Recover funds through targeted recovery actions.
• Implement improved controls and processes to reduce the risk of future fraudulent activities.
• Enhance overall data integrity and operational efficiency.

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