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Posted: 6/30/2010
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HealthNow New York Inc. Healthcare Company Gains 16-to-1 Return on Investment with Claims Auditing Solution

HealthNow New York Inc. has a vision of connecting people to high-quality, low-cost healthcare options. When it needed a more comprehensive claims auditing solution to improve how it identified improperly billed claims, HealthNow replaced its IBM solution with CGI Customized Audit System (CAS) 5.0 based on Microsoft technologies. HealthNow improved the claims auditing process, recovering U.S.$44.4 million in claims overpayments in five years.

Business Needs
HealthNow New York Inc. is a diversified health benefits and information company that provides healthcare products, services, and technologies to improve the availability, quality, and cost of healthcare for individuals and companies.

According to Jeffrey Snyder, Manager, Special Investigations Unit at HealthNow, the company, like most health payers in the United States, operates within a very slim profit margin. “To avoid raising premiums or reducing profit, we have to improve how we identify improperly billed claims and overpayments so that we can recover those costs,” he says.

HealthNow had used the IBM Fraud and Abuse Management System with an Oracle database. The solution wasn’t user friendly and required a dedicated analyst to administer it. “This inflexible analytical tool identified aberrant billing patterns, but it didn’t incorporate the claim-by-claim audit process component we needed to address complex billing practices for inpatient and outpatient services,” says Snyder. “We could identify provider fraud and abuse, but the majority of improperly billed claims, under [the category] ‘waste,’ is attributable to needless consumption of healthcare resources. We weren’t recouping much because we didn’t have a tool to process audits on a claim-by-claim basis.”

* Because Microsoft technology is so customizable, we can tailor the analytical engine in CAS [audit solution] with new edits that flag suspicious claims. In 2009, we had our biggest year yet, recovering $9.3 million. *

Dominic Bethel
Analyst Applications Support, Special Investigations Unit, HealthNow New York Inc.

Staff performed these audits manually. With no standard claims auditing workflow, no way to report and share findings, and no self-serve analytical tools, staff had a hard time prioritizing resources, analyzing risks, and identifying trends in billing practices. Poorly coordinated efforts slowed the recovery of funds and contributed to duplication of audits. “We needed a flexible, user-friendly solution that would give us the best of both worlds: analytical data mining for identifying fraud and audit and process components for investigating potentially abusive or wasteful situations,” says Snyder.

HealthNow chose a hosted claims auditing solution from Microsoft Gold Certified Partner CGI. The solution, CGI’s proprietary Customized Audit System (CAS) 5.0, is browser based and built on the Microsoft .NET Framework. It runs on the Windows Server 2008 operating system and uses Microsoft SQL Server 2008 data management software.

CAS uses Microsoft SQL Server 2008 Integration Services to extract HealthNow data and read it to CAS import tables, thus building a repository of HealthNow claims data. Using Microsoft SQL Server 2008 Analysis Services for sophisticated online analytical capabilities, CGI programmers can easily customize query logic to add more “edits” or filters, as identified by HealthNow staff. New edits generate additional claims that HealthNow staff can flag for audits. HealthNow auditors and nurse investigators use the CAS Claims Workflow module to streamline the audit process and ensure compliance with statutory requirements that state timeframes for provider communications. The CAS audit process generates Microsoft Office Word documents for provider communications and medical request forms.

CAS uses Microsoft SQL Server 2008 Reporting Services to deliver operational, audit, and claims-recovery reports. Investigators can use the CAS Business Intelligence module and ProClarity business analysis software (now part of Microsoft Office PerformancePoint Server 2007) to perform billing trend analysis and drill down into audit and claims data or to export to Microsoft Office Excel spreadsheet software. “CAS is built on Microsoft technologies that deliver ease of use, flexibility, and extensibility,” says Dominic Bethel, working in Analyst Applications Support in the Special Investigations Unit at HealthNow. “The ability to work with CGI and customize our solution is key to our ability to recover more improperly billed claims.”

Today, CAS is used by 25 employees, including nurse investigators, auditors, network staff, and managed Medicaid and Medicare programs’ staff.

Since deploying its new claims auditing solution, HealthNow has recouped lost dollars and streamlined its workflow for improved productivity and provider relationships.

HealthNow has increased the amount of recovered dollars from inappropriately reimbursed inpatient, outpatient, and professional claims, achieving a return on investment (ROI) of 16 to 1. Comparing operating expenses with recoveries over the past 10 years, operating expense increased 91 percent, while recoveries went up 912 percent. Since HealthNow implemented CAS in 2005, the company has recovered U.S.$44.4 million in improperly billed claims.

"Healthcare fraud, abuse, and waste are ever-evolving processes as providers create new schemes to replace revenue shortfalls,” says Snyder. “But using CAS’s improved investigative and auditing capabilities, we found the ROI to be sustainable over the long term.”

Today, HealthNow has a tool that employees can use to drill into data and perform trending analysis to quickly identify incidences of improperly billed claims that were missed previously. “We found that some providers had inappropriately billed their claims to take advantage of Medicare’s site-of-service [payment] differential policies,” explains Bethel. “Because Microsoft technology is so customizable, we can tailor the analytical engine in CAS with new edits that flag suspicious claims. In 2009, we had our biggest year yet, recovering $9.3 million.”

Employees are using standardized claims processing workflows that eliminate duplication of effort and reduce the time that it takes to recover funds by 50 percent, according to Snyder. “The entire audit process is automated and provides an audit trail to streamline compliance with our SAS 70 certification,” says Snyder, referring to the Statement on Auditing Standards developed by the American Institute of Certified Public Accountants. “Workflows around provider communications ensure we remain in compliance with state laws, such as the … bill [that] limits the time we can recover funds from providers. Improved provider communications helps us build better relationships with our providers.”

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Solution Overview

Organization Size: 2000 employees

Organization Profile

Based in Buffalo, New York, HealthNow New York Inc. offers a range of healthcare products, solutions, and funding arrangements. In 2009, company revenues grew to nearly U.S.$2.45 billion.

Software and Services
  • Windows Server 2008
  • Microsoft SQL Server 2008
  • Microsoft Office Excel 2003
  • Microsoft Office Word 2007
  • Microsoft Proclarity Components
  • Microsoft .NET Framework
  • Microsoft SQL Server 2008 Analysis Services
  • Microsoft SQL Server 2008 Integration Services
  • Microsoft SQL Server 2008 Reporting Services

Vertical Industries

United States

Business Need

IT Issue
Risk Analytics and Reporting