A Knowledge-Based System for Auditing Health Insurance Claims

A firm engaged in a cost-plus medical insurance policy can gain better control of expenditures by using a knowledge-based expert system to select a subset of previously paid claims for manual review. The selection process focuses on identifying probable errors in claim payments. Knowledge of medical practices and procedures provides the foundation for detecting errors. We obtained the knowledge from a number of health care professionals and encoded it in a rule-based system. The system has been refined over two years and is currently being used by RFE Associates, a health insurance consulting firm, to audit claim payments. A recent audit on behalf of one Fortune 500 retailer resulted in recovery of $377,000 from the plan administrator.