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HNC Software to Provide Predictive Software Solution for EDS Team in Development of First Medicare Fraud Analysis Center.

Business Editors/Health & Medical Writers

IRVINE, Calif.--(BUSINESS WIRE)--March 28, 2000

Software Uses "Artificial Intelligence" to Reduce the Billions

of Dollars Lost to Medicare Fraud Each Year

HNC Insurance Solutions, a division of HNC Software Inc. (Nasdaq:HNCS), will provide a predictive software solution to establish one of the first Medicare fraud detection centers under the federal government's new Medicare Integrity Program.

HNC has signed a teaming agreement with EDS, a global leader in the information technology services industry. EDS was selected by the federal government to create the New England-based Benefit Integrity Support Center (BISC).

"We are very pleased that our Spyder predictive provider fraud and abuse detection software is recognized as an integral part of the fraud detection system for the Benefit Integrity Support Center," said Earl Malit, president, HNC Insurance Solutions. "This technology, which is known as 'artificial intelligence,' has demonstrated its ability to detect fraud more accurately and earlier in its lifecycle for both Medicaid and workers' compensation. It will be a valuable weapon in the fight against Medicare fraud, reducing the billions of dollars that are lost each year to fraud and abuse."

HCFA (Health Care Financing Administration, a federal government agency) estimates that approximately $12.6 billion in improper Medicare payments are made each year.

The BISC fraud analysis center created by the team will augment fraud prevention efforts currently provided by Medicare insurance contractors operating in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont. It will perform data analysis services for Part A Medicare transactions, which cover services provided by hospitals, nursing facilities and home health care agencies.

The results of the analyses will be used to determine the factual basis of complaints of potential fraud made by Medicare beneficiaries, providers, and state and federal agencies. Investigative and law enforcement agencies depend on strong evidence to successfully pursue and address fraudulent behavior within the Medicare program.

The assignment to establish the BISC was among the first under the recently created Medicare Integrity Program (MIP). It is anticipated that HCFA will award seven new assignments for competitive bid in the coming months. Over the next five years HCFA is expected to award approximately $500 million in Medicare fraud prevention contracts to companies in the MIP Program Safeguard contracting pool.

HNC is already part of another EDS-led team that is currently detecting fraud, abuse and waste in the Texas State Medicaid program, where state officials have identified millions in misused funds since the contract began two years ago. HNC's fraud detection technology was recently selected by Healtheon/WebMD to analyze its group health transactions. Its Spyder predictive provider fraud and abuse detection software will be used as part of this function.

Predictive software solutions analyze thousands of variables in claims data to find patterns that indicate potential fraud and abuse. The system "scores" claims based on the likelihood of fraud, giving adjusters and investigators objective information to identify suspects. The system can also help identify providers who may be well-intentioned but who are not compliant with billing and claims procedures so that these providers can be educated, not prosecuted.

About HNC Insurance Solutions

HNC Insurance Solutions, a division of HNC Software Inc., is the leading provider of predictive solutions to the insurance industry. These solutions use proprietary software technologies to analyze highly complex data and improve insurance claims and policy decision-making, resulting in dramatically enhanced productivity, decreased claims costs, and reduced fraud for insurers, TPAs, employers, and managed care companies. Seven of the top 10 insurance carriers and 15 of 29 state workers' compensation funds use HNCIS products.

About HNC Software

Headquartered in San Diego, HNC Software Inc. (Nasdaq:HNCS) is a leading provider of complete predictive software solutions for the services industry, including financial, telecommunications, insurance and Internet commerce. HNC's suite of predictive software solutions can provide real-time insight into customer relationships based on transaction-level data, helping companies manage their relationships with individual customers.

By accurately predicting customer behaviors, these companies can create initiatives to mitigate risk and attrition; improve customer service; develop marketing programs to enhance profitability, and detect fraudulent customer transactions. For more information, visit HNC's Web site at or contact Melinda Bateman, HNC Software Inc., 5935 Cornerstone Court West, San Diego, CA 92121, 858/799-3880. For the investor relations' hotline, call 800/396-8052.

Note: Spyder is a trademark of HNC Software Inc.
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Publication:Business Wire
Date:Mar 28, 2000
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