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Pondera FraudCast

Welcome to the Pondera FraudCast, a weekly blog where we post information on fraud trends, lessons learned from client engagements, and observations from our investigators in the field. We hope you’ll check back often to stay current with our efforts to combat fraud, waste, and abuse in large government programs.

Ugly Case of Health Care Fraud

Ugly Case of Health Care Fraud

A few weeks ago, I published a blog post titled “Money Obtained Fraudulently is Rarely Used for Good Purposes”. In it, I made the argument that government fraud is a serious, and at times very ugly problem. Now I no longer have to make that argument because the United States Justice Department is making the argument for me.

Last week, the Justice Department announced the largest health care fraud case it’s ever prosecuted; one that defrauded over $1 billion over the past 14 years. The alleged perpetrators of the fraud are said to have leased private jets and chauffeured limousines. One even bought a $600,000 watch! Remember, this is your tax money we’re talking about. The system ran on a complex network of bribes and kickbacks.

And if that’s not enough, here is one of the schemes they allegedly ran. They “treated” seemingly healthy, elderly people with medications they did not need in order to create addictions which would lead to further treatments. Pure evil. Unfortunately, fraudsters are most active where large amounts of money meet vulnerable populations. This is yet another example of that and more reason for us to do what we do.
Pondera’s High Potential Leader:  Amanda Huston

Pondera’s High Potential Leader: Amanda Huston

Established in 1636, Harvard University is the United States' oldest institution of higher learning and one of the world's most prestigious universities. A couple of weeks ago, I had the remarkable opportunity to participate in the Harvard Business School Executive Education Program for High Potential Leaders. To step foot on this amazing campus filled with brick buildings plush with deep green climbing ivy, you almost immediately feel like you are part of something special (or perhaps inside some Matt Damon/Ben Affleck movie). Stepping foot in the state-of-the-art classroom with the instructor "pit" in the center, surrounded by 100 of the world's most talented and up-and-coming leaders, I wondered if I fit in this group or would have any common ground.

My learning group, a smaller team designed to facilitate debate and discussion on assigned topics, included eight talented young professionals; only two originally from the United States. They represented a variety of industries, none of which had anything to do with mine.

What I learned by working with this group, is that despite my initial hesitation, we were far more alike than I could have imagined. No matter their business, job title, or Country of operation, we faced so many of the same challenges and experiences in our professional lives. During one group activity, I began to think about how this applied to the clientele I serve at Pondera. Whether it's a small State unemployment program or the Nation's largest Medicaid program, these teams of dedicated professionals face so many of the same challenges and share similar experiences. Perhaps, I could bring them together through the Pondera client network and facilitate cross-state, cross-program sharing and learning. My brain was really starting to kick into high gear now.

Reflecting back on my time at Harvard, I decided to focus on the key ways I could translate my experience into benefit for my company and clients. I decided upon three themes:

  • Bold, passionate, inspiring leaders can change everything. No matter if you are managing financial accounts worth billions or a Government employee overseeing a Federal entitlement program, the culture created from these kinds of leaders brings success to the whole organization. Skills can be taught, management can be improved, but make no mistake, there is no substitute for extraordinary leadership. We must find these leaders, and then cultivate and cherish them.
  • Networks are critical to continued learning and success; make time to grow and nurture yours. Your network could be persons within or outside of your organization, family, friends, peers, professional mentors, etc. Networks serve as a vibrant source of creative energy, partnership, and may just offer the solution to whatever challenge you or your organization is facing. Make time in your daily grind to have a coffee, make a quick call, or even share a meal with key persons in your network.
  • Always be willing to adapt and evolve or be prepared for extinction. This is especially true in leading innovation, particularly in the data analytics arena. Fraud schemes change, data sources emerge, programs transform. At Pondera, we can never get comfortable or diminish our aggressive pursuit to lead the way. Governments must embrace the "information age" and transform their processes, modernize their programs, and challenge the status quo.

Graduation

The Problem With Knowing What You Know

The Problem With Knowing What You Know

I bet you cna’t bvleiee taht you can uesdtannrd waht you are rdnaieg. Unisg the icndeblire pweor of the hmuan mnid, aocdcrnig to rseecrah at Cmabrigde Uinervtisy, it dseno't mttaer in waht oderr the lterets in a wrod are, the olny irpoamtnt tihng is taht the frsit and lsat ltteer be in the rhgit pclae. The rset can be a taotl mses and you can sitll raed it whoutit a pboerlm. Tihs is bucseae the huamn mnid deos not raed ervey ltteer by istlef, but the wrod as a wlohe.

The preceding paragraph, which has made its way around the Internet for years, can be really fun to share with friends. However, it also serves as a caution to anyone involved in fraud detection. In many ways, bad actors, knowingly or unknowingly, have depended on how the human mind works to perpetrate fraud schemes. Like the old expression goes, sometimes the best place for fraud to hide is in plain sight.

This is especially true in government programs that process massive amounts of transactions and must adhere to a staggering number of program regulations. Traditional “top down” systems can analyze large data sets and find nothing wrong (after all, the first and last letters are in the right place). “Bottom Up” systems, on the other hand, will identify individual problems (the word is scrambled) but may miss the patterns in the data (this entire paragraph is scrambled). A common example of this is the medical provider that always “flies just below the radar” by maximizing claim amounts and frequencies.

The best detection processes take both a “top down” and “bottom up” approach. They can identify individual transaction problems as well as identify patterns of bad behavior over time. In this way, you can make the old “80-20” rule work in your favor. 80% of improper payments are likely caused by 20% of program participants. If you only address each individual transaction, you’ll never run out of work but you also never really improve your program integrity efforts.

Click here for an infographic on the "80-20 rule".
Is your organization ready for change?

Is your organization ready for change?

By the time we engage with an agency, they are fully convinced that they need to change something: the way they are detecting fraud, waste, and abuse, or maybe the way they are managing cases. When it comes to change though, we’ve found that the devil truly is in the details.

Each of your staff will typically fall into one of the following categories. It’s important to recognize this and to staff your change projects appropriately.

Champions: These people embrace the future vision and want to help achieve it. They love new challenges but also expect that they’ll need to find ways around unexpected problems. They vocalize successes and accept changes for the “long haul”. Projects without champions will never meet their potential.

Cynics: Unlike champions, these people think that the change, usually any change, is not necessary. They perceive their value in their knowledge of how “things have always worked” and any threat to this is a threat to them. There is no way to change a cynic’s mind and no way to bring them on board. Cynics are never good for a change project. It’s important to recognize them and keep them to the side.

Skeptics: Skeptics, which can often be confused for cynics, need proof to get on board with a change effort. They need to be convinced that the change is good for the agency or for them. Skeptics are a vital component to project staffing because the rest of your agency will clearly see when a skeptic has been “converted” to a champion.

Followers: This category makes up the majority of staff assigned to most projects. At the beginning of the project, they will contribute and won’t do anything to undermine the effort. As the project progresses, they will move to whichever side is gaining momentum: success or failure. This is why champions and converted skeptics are so important—they generate excitement and commitment from followers.

If this all sounds obvious, I challenge you to think back to a change effort that you’ve observed that should have succeeded but managed to fail short of expectations. You may very well find that the reason was that identifying “change readiness” was either done incorrectly or ignored altogether. We’re not advocating expensive, complex, and lengthy change processes. But we are suggesting that you think about this before engaging in any important project or process change.
Welcome to the new Pondera Blog

Welcome to the new Pondera Blog

We’re all in this together. You may work in Medicaid, Unemployment Insurance, Integrated Eligibility, SNAP, WIC, TANF, or any of the other important government programs that so many Americans depend on. Regardless of the program though, we all share the common goal of fighting fraud, waste, and abuse to make sure that our programs help those people who qualify for and truly need the assistance.

The goal of the Pondera Blog is to post and share information that is relevant to all government program integrity professionals. If we’ve learned nothing else as we work across programs and across states, it’s that bad actors don’t limit their activities to one program or one state. They follow the money wherever it leads them. For PI professionals, this means there is a lot to learn from your peers in other states and other programs.

We hope you’ll check back often for new content. Our intent is to post information on emerging fraud methods, promising detection techniques, lessons learned from our projects, and a variety of other topics. Some might question why we would share this information in a public forum where Pondera’s competitors can easily view what’s of interest to us (clearly we’ll never post anything that could help fraudsters). Our answer to that question is simple: we’re all in this together.

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Pondera leverages advanced prediction algorithms and the power of cloud computing to combat fraud, waste, and abuse in government programs.



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