Countering Healthcare Fraud The Professional Approach JIM

Countering Healthcare Fraud – The Professional Approach JIM GEE (Director of Fraud Services) AHIA Conference August 2007 KPMG FORENSIC

The Presentation Background The emerging professional approach in the UK Case study – the NHS Countering healthcare fraud and corruption in Europe Countering healthcare fraud in New Zealand Some starting points Twelve questions 1

Background - Personal 24 years a Counter Fraud Specialist Central Government, Local Government, the NHS Special Advisor to House of Commons Select Committee and Technical Advisor to Minister of State for Welfare Reform Founding Chair of the Institute of Counter Fraud Specialists and Vice-Chair of the Counter Fraud Professional Accreditation Board Steering Group member – UK Government Fraud Review 2

Background - Personal DH Director of Counter Fraud Services appointed in September 1998 – 50 years after the NHS was established Chief Executive of the NHS Counter Fraud Service For more than 8 years charged with countering fraud and corruption in the largest organisation in Europe … and the second largest in the world … with more than 1. 2 million employees and a budget of over £ 70 billion Founding Director-General of the European Healthcare Fraud and Corruption Network Now Director of Fraud Services for KPMG - remit to design and deliver counter fraud services across public and private sector 3

Background - Professionalism is the key. What does professionalism mean in the context of counter fraud work ? What are the key aspects of a real professional approach? What should we be doing and what skills do we need to deploy? 4

Background - Professionalism It means : Having a clear REMIT Having the AUTHORITY to fulfil it Developing a clear STRATEGY and BUSINESS PROCESS (Measuring the PROBLEM accurately) (Creating an effective STRUCTURE) (Taking ACTION in all key areas) 5

Background - Professionalism It means : Adopting the right APPROACH Applying the highest STANDARDS Having the necessary, specialist SKILLS Generating and maintaining SUPPORT Reducing LOSSES, delivering BENEFITS 6

Background – Developing the Counter Fraud Profession 1. Academically recognised common professional training 2. Recognised qualifications 3. A regulatory body 4. A professional representative association 5. A codified professional framework 6. A Centre of Excellence to test and develop new techniques 7

Background – Developing the Counter Fraud Profession 1. Academically recognised common professional training 2. Recognised qualifications 2001 3. A regulatory body 4. A professional representative association 5. A codified professional framework 6. A Centre of Excellence to test and develop new techniques ? 8

Background – Developing the Counter Fraud Profession 1. Academically recognised common professional training 2. Recognised qualifications 2001 3. A regulatory body 4. A professional representative association 2002 5. A codified professional framework 6. A Centre of Excellence to test and develop new techniques 9

Background – Developing the Counter Fraud Profession 1. Academically recognised common professional training 2. Recognised qualifications 2001 3. A regulatory body 4. A professional representative association 2002 5. A codified professional framework 2006 6. A Centre of Excellence to test and develop new techniques 10

Background – Developing the Counter Fraud Profession 1. Academically recognised common professional training 2. Recognised qualifications 2001 3. A regulatory body 4. A professional representative association 2002 5. A codified professional framework 2006 6. A Centre of Excellence to test and develop new techniques ? 11

The Developing Professional Approach 2001 onwards : the new profession 2003 -2004 : the NAO Report ‘Tackling External Fraud’ 2004 : the European Healthcare Fraud and Corruption Declaration 2005 -2005 : the CIPFA ‘Managing the Risk of Fraud’ professional standards 2006 : the Government’s Fraud Review Report 12

The Developing Professional Approach A common understanding of the need for a comprehensive, integrated approach aimed at reducing the burden of fraud on organisations across the economy Agreement that this approach should follow a common business process … 13

The Developing Integrated Approach ANTI-FRAUD CULTURE DETERRENCE PREVENTION MEASURE FRAUD LOSSES ACCURATELY DEVELOP AN INTEGRATED STRATEGY AND BUSINESS PROCESS CREATE A PROFESSIONAL STRUCTURE TO IMPLEMENT THE STRATEGY USE THE STRUCTURE TO TAKE A RANGE OF ACTION DELIVER REDUCED LOSSES DETECTION INVESTIGATION SANCTIONS REDRESS 14

The Comprehensive Approach ANTI-FRAUD CULTURE DETERRENCE PREVENTION USE THE STRUCTURE TO TAKE A RANGE OF ACTION DELIVER REDUCED LOSSES DETECTION INVESTIGATION SANCTIONS REDRESS 15

The Developing Professional Approach Develop a real anti-fraud culture Create a strong deterrent effect Prevent fraud where it is not deterred Detect fraud where it isn’t prevented Investigate suspicions of fraud where they arise Seek to apply sanctions where fraud is present Seek redress and recover losses 16

The Developing Professional Approach Recommended in the UK Government’s Fraud Review Report Adopted in the European Healthcare Fraud and Corruption Declaration Advocated in the CIPFA Professional Framework Implemented in the NHS … PROBLEM - STRATEGY - STRUCTURE - ACTION - DELIVERY 17

Case Study – the NHS - PROBLEM IDENTIFYING THE PROBLEM Six stages : 1. Research, define and obtain the statistically valid sample 2. Review each transaction or record 3. Obtain additional evidence or information to indicate that transactions are CORRECT or ERROR or FRAUD is present (including third party information) 4. Apply the civil law concept of fraud 5. Group the transactions and supply numbers and values for statistical examination 6. Estimate to determine total losses to < ± 1% accuracy 18

Case Study – the NHS - PROBLEM IDENTIFYING THE PROBLEM - 2006 • Patients • Professionals • Payroll 19

Case Study – the NHS - PROBLEM IDENTIFYING THE PROBLEM - 2008 • Patients • Professionals • Payroll • Procurement • Drugs 20

Case Study – the NHS - STRATEGY Key features - Comprehensive, Integrated, Professional Aims - Reduce fraud to an absolute minimum, hold it at that absolute minimum, free up resources for better patient care through: Objectives - Changing the Culture, Deterrence, Prevention, Detection, Investigation, Sanction and Redress ALL THIS SETS THE CONTEXT … 21

Case Study – the NHS - STRUCTURE 22

Case Study – the NHS - STRUCTURE 63. 69 million AUD 23

Case Study – the NHS - ACTION TO IMPLEMENT THE STRATEGY … 24

Case Study – the NHS - ACTION 25

Case Study – the NHS - ACTION 26

Case Study – the NHS - ACTION 27

Case Study – the NHS - ACTION Preventing Fraud : Designing fraud out of the system Fraud proofing old policies Fraud proofing new policies and ‘modernisation’ Removing generic local systems weaknesses Learning from operational work to remove policy and systems weaknesses – the key to reducing recurring losses 28

Case Study – the NHS - ACTION 29

Case Study – the NHS - ACTION 30

Case Study – the NHS - ACTION 31

Case Study – the NHS - ACTION 119. 3 million AUD 32

Cast Study – the NHS - ACTION WHAT WAS FOUND Some examples of fraud 33

Cast Study – the NHS - ACTION GENERIC DRUGS CASE 1994 – 1999 : Price of more than 30 key drugs rises by an average of 700%+ Late 1999 : Information comes to light Investigation Civil and criminal investigation in parallel £ 34 million (82. 9 million AUD) recovered so far Criminal charges laid – awaiting trial 34

Case Study – the NHS - ACTION 538. 4 million AUD 35

Case Study – the NHS - ACTION 416 million AUD 186 million AUD 36

Case Study – the NHS - ACTION 44 million AUD 24 million AUD 37

Case Study – the NHS - ACTION 35 million AUD 14 million AUD 38

Case Study – the NHS - ACTION 1. 977 billion AUD 39

Case Study – the NHS - DELIVERY UP TO 522 COUNTER FRAUD SPECIALISTS IN THE NHS UP TO 1, 170, 000 NHS STAFF AND CONTRACTORS COVERED BY AGREEMENTS TO WORK WITH NHS CFS UP TO 1901 POSITIVE ARTICLES IN THE MEDIA OVER 6 YEARS UP TO 2459 INVESTIGATIONS SINCE 2000 VALUE OF FRAUD DETECTED AND STOPPED UP TO £ 222 MILLION (538 MILLION AUD) - A 3000% INCREASE IN DETECTION RATES OVER SIX YEARS UP TO 360 SUCCESSFUL PROSECUTIONS - WITH A 96% SUCCESS RATE UP TO 434 CIVIL AND DISCIPLINARY CASES 40

Case Study – the NHS - DELIVERY PATIENT FRAUD LOSSES IN ENGLAND DOWN BY 55% SINCE 1999 PATIENT FRAUD LOSSES IN WALES DOWN BY 45% SINCE 2000 PROFESSIONAL FRAUD LOSSES IN ENGLAND DOWN BY UP TO 61% TOTAL FINANCIAL BENEFITS TO THE NHS UP TO £ 811 MILLION (1. 977 BILLION AUD) BETWEEN 1999 AND 2005 A 12 : 1 RETURN ON THE BUDGETARY INVESTMENT OF £ 67 MILLION (163 MILLION AUD) 41

Countering Healthcare Fraud in Europe NHS CFS organised the first European Healthcare Fraud and Corruption Conference in October 2004 HEALTHCARE FRAUD IN EUROPE The Conference had delegates from 25 European countries plus US, Australia, New Zealand, Canada and South Africa It unanimously agreed a Declaration setting out practical work to be completed by October 2005 Much to be done - 1 trillion Euros (2. 44 trillion AUD) spent on healthcare each year across Europe - 30 to 80 billion Euros (73 195 billion AUD) could be lost to fraud Damage to patients 42

Countering Healthcare Fraud in Europe Common problems Common solutions – across countries and healthcare systems – public and commercial HEALTHCARE FRAUD IN EUROPE Main strands of work being taken forward – including measurement of losses, staff exchanges, pan-european legal arrangements, common professional training and propriety checks Second European Conference in Bratislava in October 2005 – formally established the European Healthcare Fraud and Corruption Network (EHFCN) as a legal entity Third Conference in Madrid in October 2006 – many member organisations – website – real cooperation – next conference in Warsaw this October 43

Countering Healthcare Fraud in New Zealand Engaged to review their healthcare counter fraud arrangements Started this work in 1993 – 5 years before the UK Currently 48 staff and a 4 : 1 return – determined to do even better Reported this week – decisions to be taken Impressed 44

Learning the Lessons What are the necessary starting points? What is the proper strategic approach to fraud? LESSONS TO BE LEARNT What questions should organisations be asking about the effectiveness of counter fraud work? What difference can counter fraud work make? 45

The Starting Points Guarantees about remit and authority A comprehensive strategy with clear aims and objectives STARTING POINTS A clear business process to implement the strategy Defining the nature and scale of the problem Clear aims and objectives implemented by a strong structure of professionally skilled staff A comprehensive range of action freeing up resources for better systems and services 46

12 QUESTIONS ALL ORGANISATIONS SHOULD BE ASKING 1. How much is lost to fraud and corruption in my organisation - and where? (What is the trend? ) 2. What are the organisation’s aims and objectives concerning fraud? 3. What structure is in place and is it staffed by counter fraud specialists? 4. Does my organisation take a comprehensive range of action against fraud? 47

12 QUESTIONS ALL ORGANISATIONS SHOULD BE ASKING 5. How does my organisation seek to develop a real antifraud culture? 6. How does my organisation seek to deter potential fraudsters? 7. How does my organisation seek to fraudproof new systems and policies? (Is there a defined process in place? ) 8. How does my organisation seek to learn from each example of fraud? (Is there a defined process in place? ) 48

12 QUESTIONS ALL ORGANISATIONS SHOULD BE ASKING 9. How does my organisation seek to detect fraud? (Is it proactive? ) 10. Does my organisation fully comply with the law relating to investigations? 11. Does my organisation apply ‘parallel’ sanctions? 12. Is my organisation getting the return on the costs of counter fraud work which it could do? 49

MAKING A REAL DIFFERENCE WHAT DOES THAT MEAN? Tackling 3 – 8% losses to budget Reducing losses by up to 60% over 5 years as in the UK– billions to be saved Achieving a 12 : 1 return on the investment in counter fraud work Maintaining public faith in organisations providing key services and freeing up monies to provide better systems and services The better you protect healthcare systems – public or private - the better they can protect the public’s health 50

MAKING A REAL DIFFERENCE JIM GEE Director of Fraud Services, KPMG Forensic Tel: +44 207 694 5614 Email: jim. gee@kpmg. co. uk 51

Countering Healthcare Fraud – The Professional Approach JIM GEE (Director of Fraud Services) AHIA Conference August 2007 KPMG FORENSIC