FICO Equips Healthcare Insurance Payers to Detect New Forms of Fraud in ICD-10 Claims

Fraud Protection & Compliance
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SAN JOSE, Calif., July 11, 2013 —FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced that FICO® Insurance Fraud Manager, the most advanced system for detecting and preventing healthcare insurance fraud, waste and abuse, now natively supports International Classification of Diseases, 10th Edition (ICD-10). ICD-10 is the new diagnostic coding system implemented by the World Health Organization for healthcare resource allocation and reimbursement. By natively supporting ICD-10, FICO Insurance Fraud Manager will help payers make a smooth transition to the new coding system, continue to accurately detect fraudulent claims, and pay legitimate claims with greater confidence.

With the upcoming move to ICD-10, diagnosis codes will grow in number from roughly 18,000 to more than 55,000 globally and 140,000 in the U.S. The transition is complicated in the U.S. because providers are paid by procedure. Misuse of ICD codes can lead to one type of fraud known as upcoding, where providers use the higher-fee codes to charge the healthcare insurance payers for lower-fee procedures or, in some cases, services not rendered at all.

FICO Insurance Fraud Manager can now automatically access and process ICD-10 diagnostic codes, spotting unusual clams and unusual provider billing, and scoring and ranking these outliers by how far they depart from usual behavior patterns. The models used in FICO Insurance Fraud Manager instantly detect problems that rules and queries alone miss, enabling insurance healthcare payers to save money by not paying illegitimate and incorrect claims, while increasing throughput by automatically settling the vast majority of legitimate claims.

“Given the dramatic increase in the number and complexity of diagnostic codes, the new classification system provides an opportunity for fraud through new combinations of diagnosis and procedure codes not previously defined in rules-based fraud detection systems,” said Russ Schreiber, vice president for the insurance market at FICO. “FICO Insurance Fraud Manager relies on analytic detection that’s based not only on what happened in the past, but also on what is happening currently, so it finds more fraud under changing conditions than rules-driven detection. That way, payers can avoid the messy transition to ICD-10 that would otherwise open the door to an entirely new breed of claims fraud and abuse.”

About FICO
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 80+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption — such as the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health.

FICO: Make every decision count™.

Statement Concerning Forward-Looking Information
Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business 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 the success of the Company’s Decision Management strategy and reengineering plan, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, its ability to recruit and retain key technical and managerial personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions, and other risks described from time to time in FICO’s SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2012 and its last quarterly report on Form 10-Q for the period ended March 31, 2013. If any of these risks or uncertainties materializes, FICO’s results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.

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