Computer software that scans Medicaid claims for billing irregularities helped crack the state's largest case of fraud involving an individual health care provider, but it's just the tip of the iceberg for DataProbe.
About $4 billion in Medicaid claims are billed to the state Department of Health and Human Services each year by 35,000 providers, said Kathleen C. Snider, chief of the Bureau of Compliance and Performance Review.
In fiscal 2010, the state opened 585 cases and closed 249, with the remainder under investigation or appeal, she said.
About half the cases are fraud or abuse, with the rest involving some kind of billing error on the part of providers, including hospitals, doctors, dentists, nursing homes, pharmacies and outpatient clinics, she said.
And at any given time, half the cases being investigated result from data mining, she said.
DHHS contracts with a vendor who reviews the claims with DataProbe, software that uses algorithms to look for billing patterns, she said. It's enabled DHHS to steadily increase the number of cases opened.
In fiscal 2010, the state recouped $3.8 million from providers, Snider said. And by the end of February, she said, the state had recovered $7.5 million so far in fiscal 2011, which ends June 30.
Average payments surging and a lag in filing claims often indicate fraud or abuse, she said. And some cases involve providers billing more than their peers for a particular code or a general practitioner billing for a code a specialist would rarely use, she said.
One case, for example, involved a general practitioner billing for removal of impacted ear wax that represented 40 percent of all such claims in the state, she said. That physician is paying back more than $100,000 in overpayments on a payment plan, she said.
"It's an art, not a science, and the data can only point us in the right direction," Snider said. "You don't know what you're going to find until you get in there, pull the records and see if they're squeaky clean or there's a suspicion of abuse or fraud."
DHHS began looking at Dr. Saroj K. Parida, who was practicing in Pennsylvania but was licensed here as well, when the software flagged his billing history, which had surged, Snider said.
He was on a list to be audited when a complaint was filed by a Medicaid managed care company about possible billing for out-of-network services without permission, she said.
DHHS eventually concluded he had billed for elaborate sleep studies he'd never performed, using the patient ID number and adding on services he didn't provide, she said.
When the South Carolina Attorney General's Office got involved, Parida pleaded guilty to first-degree computer crime and defrauding the Medicaid program of more than $2 million between 2005 and 2008.
Parida was sentenced to five years in prison and ordered to pay restitution and fees totaling more than $2.3 million - which authorities called the largest case of fraud involving an individual provider in the state. He also pleaded guilty to federal charges.
"We're happy to get the money back," Snider said. "With a lot of fraud cases, they don't have assets to be seized."
The state recoups about half of what is identified as fraud and abuse because in some cases, the provider has already spent the money or is no longer around, she said. One case last year involved a pediatrician convicted of filing false claims who hasn't made restitution.
But providers who have been convicted can no longer participate in Medicaid, though they can continue working, she said. And they're also reported to the federal government and thus face exclusion from Medicare and any other government plan, she said.
The contractor is paid on contingency - 11.9 percent of the amount recovered - and the program has a return on investment of $5 to $7 for every $1 spent, Snider said.
Fraudulent insurance claims add to the increasing cost of health care, according to the Attorney General's Office, which estimates it costs the state as much as $270 million a year. Snider said the ultimate goal is to have software that flags fraudulent claims before they are paid.