Fraud Prevention and Detection COdataminingover.ppt

Fraud Management

1. Report Fraud 1-877-934-6361 1
LEAP Fraud Prevention and Detection
Colorado Department of Human Services

2. Report Fraud 1-877-934-6361 2
Update Topics
•Introduction
•Data Mining
•Fraud Detection
•Annual Data Mining
Techniques
•Continuous Monitoring
•LEAP Fraud Example
•What Your State Can Do to
Prevent Fraud
•Fraud Hotline

3. Report Fraud 1-877-934-6361 3
CDHS Audit Division
•Introduction to CDHS Audit
Division

4. Report Fraud 1-877-934-6361 4
Data Mining
Filtering data to locate
information or patterns
of information

5. Report Fraud 1-877-934-6361 5
Fraud Detection
•Use data mining
techniques to detect
fraud and abuse

6. Report Fraud 1-877-934-6361 6
Annual Data Mining Techniques
•Our office analyzes the data from
each year’s LEAP season
•We identify:
•Training issues
•Areas that may need rule or
policy changes
•Possible misuse of LEAP funds

7. Report Fraud 1-877-934-6361 7
Annual Data Mining Techniques
•Search for fields in the data that
are blank
•Identify duplicate entries in the
SSN, household number, and
address fields
•Review data for obvious data
entry errors

8. Report Fraud 1-877-934-6361 8
Annual Data Mining Techniques
•Perform data matches to the
Social Security Administration’s
death records
•Group like counties together to
perform data mining analysis
tests on benefit issuance data

9. Report Fraud 1-877-934-6361 9
Annual Data Mining Techniques
tech_number Count Percent of Count
1 32 0.91%
2 219 6.22%
3 284 8.06%
4 5 0.14%
5 291 8.26%
6 176 5%
7 306 8.69%
8 167 4.74%
9 299 8.49%
10 466 13.23%
11 197 5.59%
12 303 8.60%
13 312 8.86%
14 196 5.56%
15 265 7.52%
16 2 0.06%
17 1 0.03%
18 2 0.06%
Totals 3,523 100%

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Annual Data Mining Techniques
Number TotalAverage
Range - 600 -
Positive 466114,313 245
Negative 0 0 0
Zeros 0 - -
Totals 466114,313 245
Abs Value -114,313 -
Highest Lowest
700 100
700 100
700 100
700 100
700 100
NUMERIC10

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Annual Data Mining Techniques
NUMERIC10 Count
Percent
of Count
Percent
of Field
NUMERIC
10
100 - 159 21045.06%19.67% 22,488
160 - 219 5010.73% 8.25% 9,431
220 - 279 30 6.44% 6.36% 7,265
280 - 339 43 9.23%11.55% 13,198
340 - 399 38 8.15%12.11% 13,840
400 - 459 37 7.94%13.89% 15,875
460 - 519 26 5.58%10.99% 12,564
520 - 579 13 2.79% 6.24% 7,137
580 - 639 6 1.29% 3.23% 3,698
640 - 700 13 2.79% 7.71% 8,817
Totals 466 100% 100%114,313

12. Report Fraud 1-877-934-6361 12
Annual Data Mining Techniques

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Continuous Monitoring
•CEPS (LEAP System Reports)
•EBT Card Withdrawal Reports
•State Financial System Reports

14. Report Fraud 1-877-934-6361 14
LEAP Fraud Example
•LEAP lead worker issued LEAP
benefits to relatives
•Results - 3 years probation, 100
hours community service, and
restitution and court costs
•Conflict of interest in this county

15. Annual LEAP Fraud Prevention Training
•Fraud Investigations
•Results
•Monitoring
Report Fraud 1-877-934-6361 15

16. Other Fraud Prevention Ideas
•Review system controls
•Ensure proper separation of
duties are in place
•Rotate caseloads during the
LEAP season
•Create interfaces between
systems or perform data
matches between systems
Report Fraud 1-877-934-6361 16

17. Report Fraud 1-877-934-6361 17
What Your State Can Do to Prevent Fraud
•Have in-depth discussions with your
managers on how fraud could occur in
your State
•Review and walk through internal controls
•Ask whether they are effective
•Address risk, make changes
•Ask for your county’s EBT card control
procedures
•Ask whether they are effective

18. Report Fraud 1-877-934-6361 18
What Your State Can Do to Prevent Fraud
•Remind staff to be a prudent person
when making eligibility decisions
•Use common sense
•Use program knowledge
•Make use of your rules and regulations
•Make use of experience and expertise
•Document the rationale you used to
make the eligibility decision

19. Report Fraud 1-877-934-6361 19

20. Report Fraud 1-877-934-6361 20
Contact Information
•CDHS Audit Division
•Ryan Rivera, Audit Supervisor
•[phone]
• [email protected]
•CDHS Low-Income Energy
Assistance Program
•Todd Jorgensen, Director
•[phone]
•[email protected]