Fair Isaac introduces Payment Optimizer 2.0 to increase fraud detection capabilities for healthcare payers

Enhanced Fraud Detection Solution Enables Payers to Improve Payment Integrity

MINNEAPOLIS, MN, Aug. 9, 2004 -- Fair Isaac Corporation (NYSE:FIC), the leading provider of analytics and decision technology, announced today the release and immediate availability of Payment Optimizer(TM) 2.0. The newly enhanced version is the first fraud detection system for healthcare payers that provide both prepayment scoring and rapid retrospective analysis to reduce fraud losses and improve payment integrity.

Version 2.0 of Payment Optimizer incorporates six additional models, which offer clients more refined and highly effective pre-payment fraud detection capabilities. Other key enhancements include an improved ability to review at both the individual claim and the aggregate levels, such as provider, patient and procedure, resulting in a more insightful analysis of fraudulent activity prior to payment and before losses mount. Additionally, the integration of components from the leading business rules management software, Fair Isaac Blaze Advisor, help investigators efficiently gather relevant data and identify factors that are pertinent to an investigation.

"Payment Optimizer 2.0 gives users the ability to detect and reduce more fraud, abuse and billing errors -- which will directly benefit the payers' bottom lines," said Joel Portice, vice president of Healthcare Solutions at Fair Isaac. "In addition to the benefits Payment Optimizer delivers, we will continue to help the industry battle rising costs and improve care by developing more advanced enterprise-wide decisioning solutions that will help our clients create the most advantageous pricing strategies, identify cross-selling opportunities, increase customer retention and advance product development."

The National Healthcare Anti-Fraud Association estimates that up to 10 percent of every dollar spent on healthcare is lost to fraud, draining the system of $150 billion a year that could reduce consumer costs, reward shareholders and lead to improved treatments. To date, Payment Optimizer users have achieved a return on investment (ROI) of 4:1 to 10:1. As an early adopter, Government Employees Hospital Association (GEHA) realized hard-dollar savings from one in eight providers and a 300 percent ROI within the first year of deployment.

"Most of the factors driving double-digit healthcare price increases in the U.S., such as drug and treatment advances, an aging population and consumer demands, can't be controlled by payers," said Joanne Galimi, a Gartner research director. "But one of the biggest cost drivers, losses due to fraud and abuse, can be managed. Effective fraud management can deliver positive results directly to a payer's bottom line."

Payment Optimizer includes both pre-payment and post-payment fraud and abuse detection capabilities. The technologies are designed to help healthcare insurance payers pay claims within increasingly short turnaround times and avoid large fines that many states impose on plans that are late to pay or deny claims. Some states also are beginning to enforce time restrictions that prevent insurers from recovering alleged overpayments that date back more than 12 months.

Created by healthcare industry experts in conjunction with leading statisticians, software engineers and end-user groups, Payment Optimizer integrates advanced predictive modeling, statistics and rules to detect all types of fraud and abuse. Fair Isaac's approach uses available historical data to develop profiles, and constantly updates and revises these dynamic profiles to detect new and emerging fraud schemes. Payment Optimizer ranks claims according to fraud risk and pieces together a multi-dimensional picture of the entire healthcare delivery system to pinpoint complex and organized fraud. The technology is deployed for real-time or batch operation and is easily integrated with a client's current claims systems and existing workflow.

About Fair Isaac Healthcare Solutions

Fair Isaac healthcare analytics deliver proven solutions that unlock value and improve decision making for healthcare payers and providers. Analyzing over 600 million claims each year, the company's solution identify fraudulent or erroneous healthcare claims before payment is issued, without slowing claims process and payment systems or violating prompt-pay legislation. Fair Isaac's healthcare analytics suite is based on advanced and patented neural network modeling and dynamic profiling technologies, which Fair Isaac introduced in the financial services industry. These innovations have transformed the industry's approach to fighting fraud, helping lenders reduce fraud losses by as much as 50 percent. The healthcare solutions suite extends beyond fraud detection to include collections and recovery, consumer behavior, customer relationship management, data cleansing, enterprise decision management and pharmaceutical marketing. Fair Isaac's healthcare experts provide hands-on customer service and training, earning high customer satisfaction ratings.

About Fair Isaac

Fair Isaac Corporation (NYSE:FIC) is the preeminent provider of creative analytics that unlock value for people, businesses and industries. The company's predictive modeling, decision analysis, intelligence management, decision management systems and consulting services power billions of mission-critical customer decisions a year. Founded in 1956, Fair Isaac helps thousands of companies in over 60 countries acquire customers more efficiently, increase customer value, reduce fraud and credit losses, lower operating expenses and enter new markets more profitably. Most leading banks and credit card issuers rely on Fair Isaac solutions, as do insurers, retailers, telecommunications providers, healthcare organizations and government agencies. Through the Web site, consumers use the company's FICO(R) scores, the standard measure of credit risk, to manage their financial health. For more information, visit

Statement Concerning Forward-Looking Information

Except for historical information contained herein, the statements contained in this press release that relate to Fair Isaac, including statements regarding its Payment Optimizer 2.0 product offering and the benefits to be derived from this offering, are forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including any unforeseen technical difficulties related to the implementation, use and functionality of the offering, the risks that customers will not perceive material benefits from the offering, failure of the product to deliver the expected results, the possibility of errors or defects in the offering, regulatory changes applicable to the use of consumer credit and other data, and other risks described from time to time in Fair Isaac's SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2003, and quarterly report on Form 10-Q for the period ended March 31, 2004. Forward-looking statements should be considered with caution. If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, Fair Isaac's results could differ materially from Fair Isaac's expectations in these statements. Fair Isaac disclaims any intent or obligation to update these forward-looking statements.

Fair Isaac, Payment Optimizer and FICO are trademarks or registered trademarks of Fair Isaac Corporation, in the United States and/or in other countries. Other product and company names herein may be the trademarks of their respective owners.

Megan Forrester, 800-213-5542 (Investors & Analysts)
Angela Carlson, 415-492-5373 (Media) 

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