Patent ID: 7263492

Claim:
A computerized method of identifying potentially fraudulent healthcare reimbursement claims, comprising: determining a sequence of healthcare states for a client from healthcare reimbursement claims associated with the client, wherein determining said sequence comprises: segregating said healthcare claims by entity; for each entity, sorting by date; responsive to sorting, determining states to be modeled, wherein said states are identified at levels based on a state hierarchy process, and wherein each sequence comprises one or more states; storing said sequence in a data structure that lists the states in chronological order for each client, said data structure residing either in a system database or in working memory; processing healthcare reimbursement claims for a population of clients and healthcare providers for a selected time interval to identify a total set of potential healthcare states in a collection of healthcare data; for each individual transition between healthcare states contained in a model derived from the collection of healthcare data, determining a probability of the healthcare state transition as the ratio of the frequency count of a transition from a first state to a next state, to total count of transition for the first state to all other states in the reimbursement claims; calculating a transition probability of the sequence of healthcare states based on probabilities of individual transitions between healthcare states as contained in said model, wherein said transition probability of the sequence is the geometric mean of the transition probabilities between each state and the next state in the sequence; identifying the sequence as potentially fraudulent as a function of the probability of the sequence wherein said probability of sequence is distinct; and outputting a transition metric based on the transition probability of each sequence.