0. Countering Healthcare Fraud – The Professional Approach
JIM GEE (Director of Fraud Services)
AHIA Conference August 2007
KPMG FORENSIC

1. The Presentation Background
The emerging professional approach in the UK
Case study – the NHS
Countering healthcare fraud and corruption in Europe
Countering healthcare fraud in New Zealand
Some starting points
Twelve questions

2. Background - Personal 24 years a Counter Fraud Specialist
Central Government, Local Government, the NHS
Special Advisor to House of Commons Select Committee and Technical Advisor to Minister of State for Welfare Reform
Founding Chair of the Institute of Counter Fraud Specialists and Vice-Chair of the Counter Fraud Professional Accreditation Board
Steering Group member – UK Government Fraud Review

3. Background - Personal
DH Director of Counter Fraud Services appointed in September 1998 – 50 years after the NHS was established
Chief Executive of the NHS Counter Fraud Service
For more than 8 years charged with countering fraud and corruption in the largest organisation in Europe … and the second largest in the world … with more than 1.2 million employees and a budget of over £70 billion
Founding Director-General of the European Healthcare Fraud and Corruption Network
Now Director of Fraud Services for KPMG - remit to design and deliver counter fraud services across public and private sector

4. Background - Professionalism
Professionalism is the key.
What does professionalism mean in the context of counter fraud work ?
What are the key aspects of a real professional approach?
What should we be doing and what skills do we need to deploy?

5. Background - Professionalism
It means :
Having a clear REMIT
Having the AUTHORITY to fulfil it
Developing a clear STRATEGY and BUSINESS PROCESS
(Measuring the PROBLEM accurately)
(Creating an effective STRUCTURE)
(Taking ACTION in all key areas)

6. Background - Professionalism
It means :
Adopting the right APPROACH
Applying the highest STANDARDS
Having the necessary, specialist SKILLS
Generating and maintaining SUPPORT
Reducing LOSSES, delivering BENEFITS

7. Background – Developing the Counter Fraud Profession
1. Academically recognised common professional training
2. Recognised qualifications
3. A regulatory body
4. A professional representative association
5. A codified professional framework
6. A Centre of Excellence to test and develop new techniques

8. Background – Developing the Counter Fraud Profession
1. Academically recognised common professional training
2. Recognised qualifications
3. A regulatory body
4. A professional representative association
5. A codified professional framework
6. A Centre of Excellence to test and develop new techniques
2001 ?

9. Background – Developing the Counter Fraud Profession
1. Academically recognised common professional training
2. Recognised qualifications
3. A regulatory body
4. A professional representative association
5. A codified professional framework
6. A Centre of Excellence to test and develop new techniques
2001
2002

10. Background – Developing the Counter Fraud Profession
1. Academically recognised common professional training
2. Recognised qualifications
3. A regulatory body
4. A professional representative association
5. A codified professional framework
6. A Centre of Excellence to test and develop new techniques
2001
2002
2006

11. Background – Developing the Counter Fraud Profession
1. Academically recognised common professional training
2. Recognised qualifications
3. A regulatory body
4. A professional representative association
5. A codified professional framework
6. A Centre of Excellence to test and develop new techniques
2001
2002
2006 ?

12. The Developing Professional Approach
2001 onwards : the new profession
: the NAO Report ‘Tackling External Fraud’
2004 : the European Healthcare Fraud and Corruption Declaration
: the CIPFA ‘Managing the Risk of Fraud’ professional standards
2006 : the Government’s Fraud Review Report

13. The Developing Professional Approach
A common understanding of the need for a comprehensive, integrated approach aimed at reducing the burden of fraud on organisations across the economy
Agreement that this approach should follow a common business process …

14. The Developing Integrated Approach
ANTI-FRAUD CULTURE
DETERRENCE
PREVENTION
DEVELOP AN INTEGRATED STRATEGY AND BUSINESS PROCESS
CREATE A PROFESSIONAL STRUCTURE TO IMPLEMENT THE STRATEGY
USE THE STRUCTURE TO TAKE A RANGE OF ACTION
MEASURE FRAUD LOSSES ACCURATELY
DELIVER REDUCED LOSSES
DETECTION
INVESTIGATION
SANCTIONS
REDRESS

15. The Comprehensive Approach
ANTI-FRAUD CULTURE
DETERRENCE
PREVENTION
USE THE STRUCTURE TO TAKE A RANGE OF ACTION
DELIVER REDUCED LOSSES
You don’t just create a structure to be able to say you are doing something, to be able to defend yourself against accusations that you are doing nothing or to comply with regulatory requirements. The real reason to do this work is because of the massive financial benefits to be obtained. Fraud exists in all organisations and is just another cost to be managed and reduced.
It’s also important to use a common language which defines the necessary action properly and precisely.
DETECTION
INVESTIGATION
SANCTIONS
REDRESS

16. The Developing Professional Approach
Develop a real anti-fraud culture
Create a strong deterrent effect
Prevent fraud where it is not deterred
Detect fraud where it isn’t prevented
Investigate suspicions of fraud where they arise
Seek to apply sanctions where fraud is present
Seek redress and recover losses

17. The Developing Professional Approach
Recommended in the UK Government’s Fraud Review Report
Adopted in the European Healthcare Fraud and Corruption Declaration
Advocated in the CIPFA Professional Framework
Implemented in the NHS …
PROBLEM - STRATEGY - STRUCTURE - ACTION - DELIVERY

18. Case Study – the NHS - PROBLEM
IDENTIFYING THE PROBLEM
Six stages :
Research, define and obtain the statistically valid sample
Review each transaction or record
Obtain additional evidence or information to indicate that transactions are CORRECT or ERROR or FRAUD is present (including third party information)
Apply the civil law concept of fraud
Group the transactions and supply numbers and values for statistical examination
Estimate to determine total losses to < ± 1% accuracy

19. Case Study – the NHS - PROBLEM
IDENTIFYING THE PROBLEM
Patients
Professionals
Payroll

20. Case Study – the NHS - PROBLEM
IDENTIFYING THE PROBLEM
Patients
Professionals
Payroll
Procurement
Drugs

21. Case Study – the NHS - STRATEGY
Key features - Comprehensive, Integrated, Professional
Aims - Reduce fraud to an absolute minimum, hold it at that absolute minimum, free up resources for better patient care through:
Objectives - Changing the Culture, Deterrence, Prevention, Detection, Investigation, Sanction and Redress
ALL THIS SETS THE CONTEXT …

22. Case Study – the NHS - STRUCTURE

23. Case Study – the NHS - STRUCTURE
63.69 million AUD

24. Case Study – the NHS - ACTION
ACTION TO IMPLEMENT THE STRATEGY …

25. Case Study – the NHS - ACTION

26. Case Study – the NHS - ACTION

27. Case Study – the NHS - ACTION

28. Case Study – the NHS - ACTION
Preventing Fraud :
Designing fraud out of the system
Fraud proofing old policies
Fraud proofing new policies and ‘modernisation’
Removing generic local systems weaknesses
Learning from operational work to remove policy and systems weaknesses – the key to reducing recurring losses

29. Case Study – the NHS - ACTION

30. Case Study – the NHS - ACTION

31. Case Study – the NHS - ACTION

32. Case Study – the NHS - ACTION
119.3 million AUD

33. Cast Study – the NHS - ACTION
WHAT WAS FOUND
Some examples of fraud

34. Cast Study – the NHS - ACTION
GENERIC DRUGS CASE
1994 – 1999 : Price of more than 30 key drugs rises by an average of 700%+
Late 1999 : Information comes to light
Investigation
Civil and criminal investigation in parallel
£34 million (82.9 million AUD) recovered so far
Criminal charges laid – awaiting trial

35. Case Study – the NHS - ACTION
538.4 million AUD

36. Case Study – the NHS - ACTION
416 million AUD
186 million AUD

37. Case Study – the NHS - ACTION
44 million AUD
24 million AUD

38. Case Study – the NHS - ACTION
35 million AUD
14 million AUD

39. Case Study – the NHS - ACTION
1.977 billion AUD

40. Case Study – the NHS - DELIVERY
UP TO 522 COUNTER FRAUD SPECIALISTS IN THE NHS
UP TO 1,170,000 NHS STAFF AND CONTRACTORS COVERED BY AGREEMENTS TO WORK WITH NHS CFS
UP TO 1901 POSITIVE ARTICLES IN THE MEDIA OVER 6 YEARS
UP TO 2459 INVESTIGATIONS SINCE 2000
VALUE OF FRAUD DETECTED AND STOPPED UP TO £222 MILLION (538 MILLION AUD) - A 3000% INCREASE IN DETECTION RATES OVER SIX YEARS
UP TO 360 SUCCESSFUL PROSECUTIONS - WITH A 96% SUCCESS RATE
UP TO 434 CIVIL AND DISCIPLINARY CASES

41. Case Study – the NHS - DELIVERY
PATIENT FRAUD LOSSES IN ENGLAND DOWN BY 55% SINCE 1999
PATIENT FRAUD LOSSES IN WALES DOWN BY 45% SINCE 2000
PROFESSIONAL FRAUD LOSSES IN ENGLAND DOWN BY UP TO 61%
TOTAL FINANCIAL BENEFITS TO THE NHS UP TO £811 MILLION (1.977 BILLION AUD) BETWEEN 1999 AND 2005
A 12 : 1 RETURN ON THE BUDGETARY INVESTMENT OF £67 MILLION (163 MILLION AUD)

42. HEALTHCARE FRAUD IN EUROPE
Countering Healthcare Fraud in Europe
NHS CFS organised the first European Healthcare Fraud and Corruption Conference in October 2004
The Conference had delegates from 25 European countries plus US, Australia, New Zealand, Canada and South Africa
It unanimously agreed a Declaration setting out practical work to be completed by October 2005
Much to be done - 1 trillion Euros (2.44 trillion AUD) spent on healthcare each year across Europe to 80 billion Euros ( billion AUD) could be lost to fraud
Damage to patients
HEALTHCARE FRAUD IN EUROPE

43. HEALTHCARE FRAUD IN EUROPE
Countering Healthcare Fraud in Europe
Common problems  Common solutions – across countries and healthcare systems – public and commercial
Main strands of work being taken forward – including measurement of losses, staff exchanges, pan-european legal arrangements, common professional training and propriety checks
Second European Conference in Bratislava in October 2005 –formally established the European Healthcare Fraud and Corruption Network (EHFCN) as a legal entity
Third Conference in Madrid in October 2006 – many member organisations – website – real cooperation – next conference in Warsaw this October
HEALTHCARE FRAUD IN EUROPE

44. Countering Healthcare Fraud in New Zealand
Engaged to review their healthcare counter fraud arrangements
Started this work in 1993 – 5 years before the UK
Currently 48 staff and a 4 : 1 return – determined to do even better
Reported this week – decisions to be taken
Impressed

45. Learning the Lessons LESSONS TO BE LEARNT
What are the necessary starting points?
What is the proper strategic approach to fraud?
What questions should organisations be asking about the effectiveness of counter fraud work?
What difference can counter fraud work make?
LESSONS TO BE LEARNT

46. The Starting Points STARTING POINTS
Guarantees about remit and authority
A comprehensive strategy with clear aims and objectives
A clear business process to implement the strategy
Defining the nature and scale of the problem
Clear aims and objectives implemented by a strong structure of professionally skilled staff
A comprehensive range of action freeing up resources for better systems and services
STARTING POINTS

47. 12 QUESTIONS ALL ORGANISATIONS SHOULD BE ASKING
1. How much is lost to fraud and corruption in my organisation - and where? (What is the trend?)
2. What are the organisation’s aims and objectives concerning fraud?
3. What structure is in place and is it staffed by counter fraud specialists?
4. Does my organisation take a comprehensive range of action against fraud?

48. 12 QUESTIONS ALL ORGANISATIONS SHOULD BE ASKING
5. How does my organisation seek to develop a real anti- fraud culture?
6. How does my organisation seek to deter potential fraudsters?
7. How does my organisation seek to fraudproof new systems and policies? (Is there a defined process in place?)
8. How does my organisation seek to learn from each example of fraud? (Is there a defined process in place?)

49. 12 QUESTIONS ALL ORGANISATIONS SHOULD BE ASKING
9. How does my organisation seek to detect fraud? (Is it proactive?)
10. Does my organisation fully comply with the law relating to investigations?
11. Does my organisation apply ‘parallel’ sanctions?
12. Is my organisation getting the return on the costs of counter fraud work which it could do?

50. MAKING A REAL DIFFERENCE
WHAT DOES THAT MEAN?
Tackling 3 – 8% losses to budget
Reducing losses by up to 60% over 5 years as in the UK– billions to be saved
Achieving a 12 : 1 return on the investment in counter fraud work
Maintaining public faith in organisations providing key services and freeing up monies to provide better systems and services
The better you protect healthcare systems – public or private - the better they can protect the public’s health

51. MAKING A REAL DIFFERENCE
JIM GEE
Director of Fraud Services, KPMG Forensic
Tel:

52. Countering Healthcare Fraud – The Professional Approach
JIM GEE (Director of Fraud Services)
AHIA Conference August 2007
KPMG FORENSIC