About Alivia
Our Product
Our Blog

Fraud detection has always been about finding the apple not like the other apples. A subset of general anomaly detection, finding fraud is sometimes as obvious as picking out the basketball-sized, orange colored “apple” and cracking the imposter open to confirm it’s really a pumpkin. But what if a green granny smith apple and a fake red plastic apple both snuck into a batch of red delicious? The former would appear as an obvious anomaly while the latter would require more than visual input to detect as fraud – with overly simplistic forms of fraud detection, like basic outlier detection on paid amounts, you omit this necessary nuance.

Many healthcare payors are currently leveraging various forms of outlier detection as their front-line defense for identifying fraudulent providers. While oftentimes effective, these forms of detection only work if they’re configured properly with the right sample, metrics, and underlying statistical methods. Most forms of outlier detection would flag the pumpkin. It’s a significant outlier in every dimension; apples are not orange, do not have ridges, do not weigh 10 pounds, and are not the size of basketballs.

The other two apples still pose major problems. You want to avoid false negatives (fake plastic red apple) and false positives (green granny smith apple). Without any further context, how can we avoid identifying the granny smith as anomalous? This parallels to comparing outliers for a given procedure without first taking provider specialty into account. Oral surgeons perform various surgeries more often than any dentist, so grouping both specialties together as one sample for outlier detection will falsely flag many oral surgeons as fraudulent, while dentists that perform a surgery more frequently than the average dentist will slip through the cracks. If we split the two groups out, and compare apples to apples, we can detect oral surgeons and dentists that perform surgery at an abnormally high rate when compared to their particular peer group.

But is looking at the rate at which a procedure is performed enough? Most payors are only running outlier detection on a few dimensions, like amount paid and claims count by procedure code. A smart provider might evade these traditional forms of detection by not prescribing an exorbitant amount of Oxycontin, instead splitting their prescriptions fairly evenly between all opioids. But even the plastic apple can’t survive the knife; with more robust and descriptive metrics, you can slice across a broader range of dimensions that take these sly maneuvers into account. Our product Absolute Insight, for example, has metrics for opioids standardized to morphine-equivalent dosage to compensate for this specific scenario.

Finding a proper apples-to-apples comparison with the appropriate metrics for healthcare fraud detection requires extensive domain-knowledge alongside the statistical and computational know-how for implementation. Alivia Technology brings both. Our team of data scientists, all of which have years of healthcare experience, are partnered with leading healthcare experts to continually update our fraud schemes. Our methods take into account the abnormalities of healthcare data distributions and allow you to peer group with a variety of predefined metrics, all with a configurable user interface abstracted for the business user. Find out more on our product page.

Matt Perryman

Written by Matt Perryman