Evaluation of Large-scale Data to Detect Irregularity in Payment for Medical Services. An Extended Use of Benford's Law.
BACKGROUND
Sophisticated anti-fraud systems for the healthcare sector have been built based on several statistical methods. Although existing methods have been developed to detect fraud in the healthcare sector, these algorithms consume considerable time and cost, and lack a theoretical basis to handle large-scale data.


OBJECTIVE
Based on mathematical theory, this study proposes a new approach to using Benford's Law in that we closely examined the individual-level data to identify specific fees for in-depth analysis.


METHODS
We extended the mathematical theory to demonstrate the manner in which large-scale data conform to Benford's Law. Then, we empirically tested its applicability using actual large-scale healthcare data from Korea's Health Insurance Review and Assessment (HIRA) National Patient Sample (NPS). For Benford's Law, we considered the mean absolute deviation (MAD) formula to test the large-scale data.


RESULTS
We conducted our study on 32 diseases, comprising 25 representative diseases and 7 DRG-regulated diseases. We performed an empirical test on 25 diseases, showing the applicability of Benford's Law to large-scale data in the healthcare industry. For the seven DRG-regulated diseases, we examined the individual-level data to identify specific fees to carry out an in-depth analysis. Among the eight categories of medical costs, we considered the strength of certain irregularities based on the details of each DRG-regulated disease.


CONCLUSIONS
Using the degree of abnormality, we propose priority action to be taken by government health departments and private insurance institutions to bring unnecessary medical expenses under control. However, when we detect deviations from Benford's Law, relatively high contamination ratios are required at conventional significance levels.
Junghyun A
JA
Park
Minki Kim, SUPEX Hall 304, 85 Hoegiro, Dongdaemun-Gu, Seoul 130-722, Republic of Korea, Email: minki.kim@kaist.ac.kr.
Minki
M
Kim
Seokjoon
S
Yoon
D017048:Health Care Costs; D005102:Health Expenditures; D008962:Models, Theoretical; D013223:Statistics as Topic
Benford’s Law; Medical fees; claims analysis; diagnosis-related groups (DRG); healthcare fraud