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AI for Provider Fraud & compliance for Insurance & Healthcare Industry By Srini Madala & Samuel King

Srini Madala
CEO at Aquila Systems Inc.
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AI for Provider Fraud & compliance for Insurance & Healthcare Industry By Srini Madala & Samuel King
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About speakers

Srini Madala
CEO at Aquila Systems Inc.
Samuel King
Vice President at Employers Insurance Group

Srini Madala is a successful entrepreneur based in silicon-valley. He is the founder and CEO of Aquila Systems AI, a cloud-based analytics and AI product to address fraud in insurance and healthcare industry. Srini also is the founder and Chairman of the SoftSol group of companies based in the US and India. He has excellent experience and track record in starting companies from scratch boot strapping them to grow, and had prior experience in taking a company public as well as M&A.Srini served on the Board of Directors at KQED (www.kqed.org), Pratham USA in Silicon Valley, and has also served the city of Monte Sereno in the capacity of Site and Architecture Commissioner. Srini is involved in multiple charitable activities, including personal contributions for nonprofits in health, education, and entrepreneurship. Srini, through his foundation www.Madala.org founded the Center for Community

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During the past 28 years, Mr. King’s workers’ compensation fraud investigations have resulted in more than 800 criminal prosecutions in 23 states, including the first criminal prosecution for workers’ compensation fraud in a number of states. Mr. King’s SIU Team results received national recognition in numerous trade publications including the Journal of Commerce, National Underwriter, Business Insurance, and the California Workers’ Compensation Institute as being the leader in insurance fraud fighting efforts and identified the unit as the most proactive Special Investigative Unit in the nation. Mr. King chaired the State of California, Fraud Division SIU Training Committee that created the “Workers’ Compensation Insurance Special Investigations Unit Guidelines and Protocols” which has been the leading Workers’ Compensation SIU Training Resource in California for that past 16 years.

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Wonderful, good morning everybody. And dr. Mooty. Thank you for the very kind introduction and very detailed. I think he's been very very generous and shouting lots of places on which I think I'm maybe halfway there somewhere but Sam I want to thank you for joining today. And unfortunately, we can't see you on the video, but maybe if it's gas up you can share your video as well. Looks like you are admitted on the video. So today you different than previous sessions have been listening to my previous

speaker here in any for very interesting and enlightening a subject on using a high for a health care what we have here. It is actually a real life use case when we deployed as solution for solving insurance fraud. What we have is call. Akilah, Jae Jackson diploid at this company employees is a publicly-traded nasdaq-listed company and the fraud and also used to punish in this industry and health care because we are dressed what is called as for why did fraud and I think we will get to all of those things in just a few seconds because Sam can start from you know, Livingston

from what is fraud insurance fraud and then go on with me. yes, yes, and so So this is about a product called lucky life is deployed mean elect and Empires for the last more than two years now and I'm seeing him already have Sam King and Sam has more than 20 years industry industry experience in addressing fraud and he was also in line for spent before and he is very active in the professional association of associations in the country dealing with the four days in Northern California fraud Association for when she was a president

for a couple of years. And then before that I know in a different capacity and even now is a q speaker and the talk later in the space. Malcolm Sam and I'm glad that you're here to talk about 4. Thank you so much. Just go ahead and say a few things about you know, what exactly do do it Empire sand and maybe you can also at this little bit about what is workers comp insurance and truck. That'd be great. Good morning. And thank you for this opportunity. I've been a little about my background is actually I've been in the industry for over

25 years the insurance in Street specifically in workers compensation in property casualty lines. I am vice president of employers Insurance Group. We are in In all 50 states, we operate except for those four states where they have a state-run work comp program. So we are only in 46 days actually ignore life. So we we we are nationwide our Focus as a company is the small business employer. We we are we at a house that we are America Small Business Insurance Specialist in the end. We only do Workers Compensation Insurance my background before coming to employers. I've been

here almost 5 years and my background before coming to employers is Iran Nationwide private investigation companies. And then I also I was a The director at travelers insurance and I was a director at a Liberty Mutual insurance for their special Investigation Unit. So What I think I want to get into is. What is workers compensation and who needs it? What's the purpose? What does it serve Workers Compensation Insurance is required by every state if you're an employer and you have an employee you are required to have Workers Compensation Insurance by state

law and it's almost like auto insurance, you know, you required to have auto insurance the same thing and it works similarly in regard to being a compulsory Insurance product. It is a disa understand, you know, what is covered. We use the term aoec Ali and what it means is that if employee is injured on the job. It has to be the injury has to arise out of their employment and it has to occur in the course and scope of their employment. So at least answer

arising out of employment Celie stands for course of employment. And so those the 2 caveat One deals with what were they doing at the time they were injured with a doing something to benefit. The employer at the time they were in secondly is you know, what what time were they doing it? So if they are on the clock and they were they were doing something and they were really supposed to be off the clock they may or may not be covered depending on what the facts tell us. So before

I'm able to work they get actually it's a weekly pay for the lost wages. And it's usually about two-thirds of their income depending on how much money they make and so secondly is they get all the medical care they need so far goal in Workers Compensation Insurance claims is to actually get the injured worker back to work as soon as possible, but get them back to work healthy and take care of their medical needs. Unfortunately with workers compensation. There's a lot of there's a lot of fraud is a lot of people to take advantage

of the work comp system and that's where I come into play in. 3D if we can go to the fraud and workers compensation industry the types of fraud. Can you see it? Yeah, I can't see it right now. But I have so the Frog we usually do it is in three categories one is provider fraud that could be a medical provider a doctor or chiropractor and it's turning it could be you know, anybody billing the work comp system or claim is Secondly is we have premium fraud which is really an

employer not paying the proper rate for insurance. So if the employer lies about it and it'll education here, this is when we talked about fraud were talking about a lie. I always tell people the LIE is the fraud The Prodigal. I don't know how much payroll they have or how many employees they have an area that we looked at it in people can be prosecuted for that as well. And then claim a person is involved in in telling us lies in order to get benefits or in

order to pursue a claim that we believe will they lied? So TV that's what you're describing your it was actually keeps a lot of these stats in the problem and workers compensation just a fraud area loans in these three areas and workers compensation is 7 point. billion dollar problem I can tell you that the Lion's Share of that that 7.2 billion is in the provider fraud area. And I and that's something that we work with cerini and his company softball to create Aquila to really battle so you can see

why is it significant? And what does it do in Insurance Company? Yeah, there's out of all 50 states. There's 26 states that require an insurance company to have a special investigation unit. And that's what I run. I'm the vice president of our fraud investigation program, which is our special investigation unit. We have investigators have a team of fraud analyst and investigators in the focus is to identify and refers to spected fraud to the Department of

Insurance and see various costs oil in it. He's such as the attorney District Attorney's offices in California in other states like Nevada. It might be the Attorney General's office. So and then we have to submit annual compliance reports to describe what we're doing in attacking for and what is going on with the, you know, our production in regards to a pursuing fraud flagellants. Submissions to accompany an Indian and see how we can go from there. And then what kind of complex products that you see nowadays and why is it so complex and why the traditional

tools anak ID create? Right. You definitely we talked about it, you know, we categorize them but there's several ways we get tip tip hotline insurance companies have a fraud hotline for tips can come in to be a tip from an employer to beat a tip from a competitor of an employer that we're ensuring or it could be a tip from, you know, another employee or someone or even the person Industries. Sometimes we get tips from them, but as we get you know alerts on cases we have we will do undercover filming or surveillance and that's something we hire private

investigation companies to to do for us, but typically that's done in primarily as he claimed it area or we believe the the the person making the is a worker is not as injured as a Play me they are so we'll follow them and will actually do surveillance and filming to find out what they're doing when they don't know we're watching and then that's the Gators week. We take statements. We interview people we try to fight do fact-finding in finding out what is going on with a claim and is there is

someone lying to us or does it really check out? You know, so most of our investigators come from law enforcement background? I have a law enforcement background myself prior to coming in that is is very helpful because we understand how to investigate matters including workers compensation claims. He can do then we can talk about one or two quick examples to give you an idea of what kind of source typically occur and how complex they are and then You know, I'm often times fraud is not going

to do that. You can't actually see any particular individual or a party whose who's benefiting it. Usually these things happening. So many Small Smiles, I guess action send nationz that don't make you do something benefiting somebody somewhere and it's very hard to see them with the naked eye and very obviously so you have to have some kind of tools to do so, I'm showing the screen that I don't know. If you have it in front of example one that the few hundred million dollars for skin that I'm here. Yes, this is an interesting fraud

scheme and in onset of share it because of this is one of the reasons we begin to really work on building to land in really needing a solution. It's something to help us with it is to combat this kind of fraud which hit us hard this particular case $290 in fraud that was paid out. It hit us. We were in the billions in this to the company basically just the scheme was they had this was a call center album doctors attorneys. And what they would do is they had to call center. They would sign up date of a sign-up agents they fill and sign up for they would they would they would recruit people to file

workers compensation claims, even though they were not injured and then they would sign them up and they would tell him they can get a lot of money by doing so they set him up with an a 30 through a sign-up agent they would file the paperwork is claim workers to various doctors. They had copy Services they had interpreters so that they would actually utilize you know in bill for copy services and interpreting and they would bill for Medical Treatments often times. It was even

rendered and then they would submit that through the attorney to the work comp carrier and ultimately every time they did something they would bill us for that work in and I'll get into the three schemes as we go to the next slide. Yes. Here's are some specific examples. That was 3 indictments. In this case on patients to this call center. They would send them to a chiropractor. The chiropractor would do manipulations or maybe not new to manipulations because a lot of this was fraudulent

Imaging and they had numerous locations over 12 locations in California, and they would take an MRI of a specific area that was hurt and then they would submit the claim their claim to the end the bill to the insurance carriers and what the chiropractor's patients to California Imaging to them is because they created a healthy Imaging created middle company called Lewis Consulting. They would actually get a kickback it would pay it through, you know wasn't directly from California. To the chiropractor. It was through a company created Willis Consulting in

the Neck chiropractor created two companies called line of sight and desert Blue Moon which were paid. They paid them for Consulting. So it was a shell Caesar shell companies for the purpose of getting a kickback back to the chiropractor for referrals of patients. Let me go to next flight. I'll show you this second indictment the second indictment involved. The the George Reeves who owned the California Imaging he would send patients again to another

two other doctors and it was several doctors and they had the same scheme. They would Bill insurance company and most of these were for Shockwave treatment and they would do a Shockwave treatment for 20/20 $100 each and it is what it sounds like it they call it a Shockwave. It's much like a TENS unit. They shock the area of your body that you know is with small shocks that is supposed to help you and it's very helpful with some people if they really had a problem but they would utilize

that the insurance company $2,100 again, they had an intermediary. So George Reese was getting paid for sending patients to them. And so this is kind of this is the same. $290 fraudulent act in what was going on and it is one more example go they would be a diaper number three is they would actually these patients all with you to an attorney when they did a sign up and they had to sign up agents that he turned his typically made $5,000 on every claim that they had or every injured worker that they had an so Julian Garcia was an attorney and he would actually pay $50

per patient back to the sign up Agency for referrals to get patients. Okay, so as you can see Sam, I think you know the kind of things that you just showed us. They're very difficult to solve with the traditional tools that you mentioned before which is basically the surveillance send you in a private investigators and and hidden cameras and stuff like that. That's where we're typically you know, we we we we would be able to connect these people building in the same address. Are they billing from the

same location? We really have to look at their billing and end the reports that are being submitted to to tie them together that hate way. There's something wrong here and we're getting you know set the services being rendered at the same location. No matter what what what energy is providing service for some used cases. Do you want to talk to him or some music is this? Which is the kickback for referrals suspicious connections stuff like that. Yeah, we can get it at you want to keep going through this five little bit and talk

about some of the modern approaches that where you wandered. Are you have this slight 13 the dashboard link analysis. Yeah. Yeah, go ahead. Yes, I have it. You know chime in anytime kids, obviously. What we did is we took we took a millions of lines of data of all about all the providers that have billed us that are in our in our system and then we put we put them into a data analytics school where we can really slice and dice and really analyze things and in one of the first

things we created was a provider dashboard and we created a lot of information from our side in regard to is the provider there if they are doctor on a properly license or if they are a doctor do they have the proper fictitious name permit if they're not using their own name things like that that their legal requirements in order to properly Bill and insurance company. So I began to look at all the then we began to look at, you know, is this provider Wheatley we created. Abuse cases where we look at things like

is this Vidor, you know billing us on a holiday public holiday or on a weekend in typically unless you were an urgent care or you are a hospital. You don't bill in the Weekender or no public holidays. So those are things that just kind of stood out the service date that they were billing for begin to look at that and often time those type of things become kind of the tip of the iceberg. We start digging into you look at it when you can only find a tall is all

these other problems when you're not as we start targeting and looking at that provider based on that indicator, that's where we can actually see who is connected to who who is referring what doctor is referring. The patient or the injured worker to another doctor or to another provider of some sort like an MRI provider. Who and who is your what is the connection between all of these inity understanding what we're seeing in the data? We begin looking at claim analytics in regards to really digging down into using some of our use cases and

understanding, you know, what is you know, what are the other providers that are building on a public holiday or on a weekend and then billing information to call the billing information so you can the lines of Defense a cell in like your other provider was the other present prisoner was talking about we begin looking at the CPT codes in the ICD-9. And looking at all of that the actual bill what they were building is 4 and the the the code the building so that they were going us

for the drawing down from there and in regard to you know, why why in and try to figure out why are they doing this so many of these particular modes of treatment or evaluation and then we have a provider search so we can actually look at every provider. It doesn't mean their fraudulent that we get every provider is there in just in case we want to dig into that and understand how much do they build how much are we paying them? Overall? One of the problems that we had is You know insurance companies have typically they have a bill review a company or they had of the old

one. They have one. They Outsource with and Bill review companies. They don't they look at individual bills. They say, okay. Well this individual Bill their billing for this procedure or this evaluation and it seems like you're feeling pretty high and the end the standard rate should be lower. So they reduce that one bill to a lower rate, but they don't look at all the bills are we getting from this particular provider are this particular doctor this particular chiropractor?

How many bills are we getting from? This MRI company among all of our claim so I can so we began to really look at that billing information to understand it and then be able to drill that down by provider in string. I don't know if you want to go in tomorrow. Analogy Samuel Navy always talked about this photos of you. I think you know what example if you're driving and you could get that, you know, somebody cop catches somebody for speeding life is a traffic ticket on on the face of it. It looks like a simple thing. Okay, you know, it's a speeding you going to take

it you go on but then that whole thing will change completely differently. If you look at jurong Island out that after the first car that was used in the spitting incident actually was stolen and you know, and it was stolen from a location where in a robbery or something has been reported before and something else is after I've been basically what I'm saying is if you look at one small thing, it looks very benign and simple and a multitude of that in the in the context of bigger picture and a lot more shares lot more light on it and a different actions are required for some

of those things and that's exactly what we do here. You know, it's simple photocopying thing is it is a simple Building Singapore weather can build insurance company for photocopying 20 medical records for each letter simple smart-ass section 20 $30 if it'll be done, but then imagine imagine that happening on it in a multitude of scale from for the same incident but hundreds of times and the month after month and actually things like that have happened and that's what you know, the

use of this analytics and tools and I would help in reducing dose in in putting the contacts into contacts a big picture. Send me can you see if you like in? Oh, yeah, some of the cases that we look at is we developed numerous use cases, but we have a use case involving suspicious Connections in this kind of goes back to what I was saying, you know, it's a It is kind of like the you know getting pulled over for a ticket analogy. If we start seeing the same provider everything that provider bills us then we get another bill from another provider

in another provider and this is like there's three or four providers that our billing us every time on the same claims routinely then there's that become suspicious because you know, you may have people you like to use or whatever but every time you have or five of the same people that you know, that that's the suspicious type situation. So we've been looking at that one of the biggest problems we have is Kickbacks for referrals in the examples that we discussed of the three indictment all three of those for Kickbacks for referral of patients. And so we

created use cases just involving Kickbacks for referrals and understanding. You know, what what are we going to see if if we dig down into the building? What are the things that we normally see if we find out later that there's a kick back and you have to look at the actual cases that you had before so examples, we shared we look at those at those companies and we kind of trace it back. Like what could we have learned at the beginning of those planes understand? There

was a really a kickback referral going on and that's how we build are used to what was what was happening. And what could we see from a filling Viewpoint from a paperwork Viewpoint be submitted to us from a data analytic Viewpoint and then build those use cases to understand that and be able to dinner. Why those things early on? Unlicensed Services is that in the big one? You know if they're not licensed we don't have to pay them. And unfortunately we have we have people that are it's unfortunate but we have come individual better running

medical offices in medical clinics in hiring doctors to work for them that are not even doctors and that's illegal. You can't do that is the corporate practice of medicine. It happens all the time. It's unfortunate in but it's fraud fraud if they do it and you're really thinking and looking and undercutting covering that information until after a long time and in the current weather right now, we have an interface with the medical board for example, and that would actually he was before the you know,

Somebody has been suspended last week and then you have a bill come in and because build during the time that suspension is in effect. You could immediately cash that kind of thing right away. I need this kind of things were extremely laborious almost impossible before exact exactly you're now able to do it without having to do manual check ourselves in and it's just it puts, you know this information right on her provider Gasport. So it it's outstanding the others

area is treatment not rendered. This is something with that. You know, there's there's How do we know if it was not rendered? That's the big question and so one of the things we do there is a Sweet Leaf bass begin to uncover. Well, you know, there's certain types of treatments the treatments for that particular patient takes a certain amount of time and so we're able to evaluate example 20 minutes. But we uncover that we received 148 treatments for 20 minutes each. From among all of our claims on the same day as

well. There's not enough time in the day to have that many treatments if you if they if they require 20 minutes with the doctor and so we're able to undercover that kind of information how many of those we catch? Unbundling mo-deck that deals with wheat, we have people that will fill to CPT codes, which is a billing code with a payment amount attached to it. I'll double to codes when they should have built one and if it's not true, but it's it's it's a method of getting higher higher higher billing on your bills.

For example, like a cowboy in McDonald's like if you order a meal they will charge you for each one separately a drink and a sandwich and and the price and everything and then add up like a lot more than the combo would cost. Exactly exactly in and the difference is it's required to bill you the lower amount if it fits into this category, so that's required by law to the next slide. How much time do you have a 5 minutes 60 minutes? That's okay. Okay. Okay,

great. I will take over and then conclude the next few slides if it's okay with you. That sounds good. So, you know, what I like to do is I like to just quickly and go over. This is a real life case study and then we present you did last year and then there's some interesting results were there. I like to share that as well. But for those of you who are technology for two at most of you are and in a lot of speakers are covered with lots of new technologies used and what I like to do that quickly summarize what we did end up just to get an idea of how we did it. So, so if you could

give me an idea of the insurance industry and how the technology has been impacting in especially in the front sight recap. This was the traditional way of doing and and basically what we saw was an evolution today from imagine that the leftmost one was where we have everything was done manually like it there in under surveillance camera and private investigators and if you look at the late, Rifle sight of the side view TV Guide the cloud and Cloud Ai, and you know, this is where we are today and in the transition occurred in multiple stages, I

think for 10 years ago, you know, we were able to really start taking advantage of big data, but then by having you know why I was actually, you know, I guess a lot more than what we had in just about $0.05 for 10 years ago. know the value proposition of what we did, you know it is basically, you know You did what normally would have taken for Sam and his team to for example of a legal lawsuit came in to actually comply with all the losses things you just company according to the district attorney or they don't legal department to take months to

compile evidence today in less than one one day. They can see how you can actually put together all the evidence including what all the violations are. And what is the magnitude of the rod and who committed in the pockets in war and that's it significant advantage in having something like this and what Sam had was in the past year goal of saving $1000000 and the first year Auto. I miss me the savings about 14.3 million dollars in inferred data saved and finally, I like to share this to pick slides and and you're not a

very high level. When was we had multiple external data sources and multiple internal data sources and then we used our secret sauce and how we organized it and then how Granddad Gardens and and and provided the the uses. I'm just get the fraud department with all the peoples required not just individual analytics on also the power to link analysis, which would you know really identify the connections between different parties when there's a collision in Ward 90% of the challenges not just do research and Reporting

but what is more valuable to do the floor in the department is when they come in every day Alexa example Sam comes to the office today. They should know the top 10 providers day should be focusing on now. They have hundreds of thousands of providers. They're all doing their job. You can keep on knocking everybody store in titan. Mist Academy don't have the resources to do it. What is a justification for it? So what I want them to single purpose of this if I were to tell you is they give them as they come to the office and a fraud and listen to vice president can send two days time.

You should worry about distant people and he told reason why and he does the extent of the fraud that is like you to be there too. Suspicious Behavior indicates the 5 million fraud in this provided and for this business and I think that is the powerful information that they provide to them and and for those are people who are involved in one of those small thing. I'd like to share is it start from the very beginning of the captured ourselves as previously refused to do this for months and years apart as I could sometimes, you know, because of the date is set up right now

if it came from, send for those of you who can see the slide here as soon as the data is captured, even if there's a scanned document, you know, if information is captured and we have the Guitar to immediately check at that point if that's how I Met Your Mother license for that day for example, and saving the humongous amount of time and effort to wait for six more months to catch this fraud. They can catch it right away. So these are I mean, I just want to quickly add these things and I'll leave you with the talk. Okay, you can eat me to come up with a lot more

possibilities and lot more than what we have articulated, but I do come across those ideas. Please share that with me and I like to thank you for participating and dr. Moti for giving us the opportunity and see that and go and Sam also for his fine. Thank you.

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