1. NHCAA CONFERENCE Installing Predictive Modeling Claims Scoring Technology November 18, 2010

2. InterACT 2007
Welcome to Highmark
Primary Offices in Pittsburgh & Camp Hill along with satellite offices throughout the USA
18,500 Employees
4.6 Million Health Care Members
28 Million Members Across all Products
2008 Revenues: $12 Billion
This is a snapshot of Highmark today Highmark was created through the 1996 consolidation of Blue Cross of Western Pennsylvania and Pennsylvania Blue Shield. Today, we have 18,500 employees—the majority of which are employed here at our corporate headquarters and at our facilities in Camp Hill, Pennsylvania—outside Harrisburg.
Our health care membership totals more than 4 million members. Highmark is a very large business and, in fact, we are the largest health insurer in Pennsylvania. Our revenues in 2006 were in excess of $11 billion.
It's important to understand that Highmark is much more than an insurance company. Our product portfolio includes dental, vision and life insurance products offered through our subsidiaries. All told, through our health and subsidiary businesses, we cover more than 24 million people nationwide.

3. Strategic Initiative to Combat Health Care Fraud
Three Phase Approach
Enhance query capabilities of existing claims history repositories.
Purchase a provider scoring model which allows for automated detection of aberrant provider behavior.
Purchase an automated claims scoring model which scores suspicious claims prior to payment.

4. Fraud Detection and Investigation Process Flow
Rule
Based Detection
Data
Tools
People
Phase I
Evaluation /
Financial
Predictive
Prioritization
Recovery
Modeling
Investigation
Recovered or
Averted Costs
Data
Tools
People
Data
Tools
People
Phase II
Provider Scoring Model
Data
Tools
Data
Tools
People
People
Referrals
Provider Claims
Payment
Data
Tools
People
Review
Prevention
Data
Tools
People
Data
Tools
Phase III -
Predictive Modeling Claims Scoring Model
People

5. Implementing Pre-Payment Claims Scoring Technology
Critical Success Factors:
Efficient data transmission of claims (post adjudication but prior to physical payment).
Building an effective evaluation team:
Appropriate skill sets
New job rating/job class
Job performance measurements
Establish effective workflow processes between evaluation team and existing departments
Fraud cases
Abuse cases
Policy changes
System changes
Define and implement an effective value realization/ROI process

6. PROJECT ORGANIZATION
Executive Sponsor
Business Owner
Steering Committee
Business Owner
Program Manager
Project Manager
Claims Processing VP
Evaluation Team Manager
Program Manager
Information Services Group Project Manager
Governance Team
Audit VP
Program Manager
Evaluation Team Manager
Information Services Group Team
Pre Payment Team
Evaluation Team
Information Services Group Resources only needed until data extracts are in place

7. IMPLEMENATION TIMELINE
Hourly Extract Implemented 09/09
Model Construction and Data Gathering 09/09 – 03/26/10
Go Live for Testing 03/29/10
Implement IFM Pre-Payment Software 5/25/10
Initial Steering Committee Meeting 6/9/10
Year-end value realization and ROI statistics due to Steering Committee and Project Sponsor 12/31/10

8. Pre-payment process flow

9. Value Realization Term Definition
Identified Savings
Monies identified from suspicious providers, contracting, system edits or medical policy issues identified by the FICO pre-payment software. Calculations for ROI are 12 months.
Un-pursued savings
Dollars identified by Pre-Pay but cost prohibited to pursue.
Deny Button Savings
Calculated each time a team member denies claim payment.
Previously Identified Savings
Dollars identified by the software in which an active case is already addressing the issue.
Savings referred to other plans
Dollars identified by Pre-pay but the case has been transferred to another plan (IBC, NEPA, etc.)
Actual Savings
Monies received from refunds, restitutions, settlement agreements, claim offsets, and claim denials.
Included in calculation of identified savings

10. Case Summary Unique Highmark Cases Opened 100
Highmark Cases Opened affecting multiple providers 19
Total Highmark cases opened
259
Cases related to un-pursued savings 14
Events related to previously identified cases 2
Cases referred to other plans 5

11. Pre Pay Case Trending

12. Pre Pay Claim Trending

13. Net ROI per month: Identified savings divided by monthly operational costs

14. Hit Rate Claims reviewed 9,045 Highmark Cases opened 259 Case hit rate
2.9%
Deny button hit
513
Deny button hit rate
5.7%

15. Case hit rate: Claims reviewed divided by cases created

16. Deny Button Hit Rate: Claims reviewed divided by claims denied

17. Productivity Graph

18. Opened case value by monthly operating costs (MOC)
CONCLUSION: The identified savings of approximately 22% (18 of 83) of cases opened exceed the operational costs for an entire month.