Outrageous fortunes
What you can do to stop healthcare fraud
By Jeff Matza, AHFI, CFE

Healthcare fraud costs Americans between $30 billion and $180 billion annually. That’s alarming information that angers most of us as consumers.

According to the Government Accounting Office and large anti-fraud organizations such as the National Health Anti-Fraud Association, that dollar amount is between 2 percent and 10 percent of annual health expenditures in the United States.

As healthcare professionals, we are further outraged at the adverse effects caused by a relatively small number of providers, estimated at 1 percent to 2 percent, who prey on this system and needlessly increase the taxes and insurance premiums we pay.

ELECTRONIC AND HUMAN SOLUTIONS

Because the dollars involved are so large, private and public payers are forced to seek both electronic and human means to detect fraud. According to most sources, the most common healthcare fraud schemes involve the following scenarios:

• Billing for services not rendered. This fraud is perpetrated through the fabrication of entire claims or by padding legitimate services with additional services that did not take place.

• Billing for services more expensive than were provided. This fraud is commonly known as “upcoding” and usually involves the artificial inflation of the submitted diagnosis to make the services appear consistent with the diagnosis.

• Performing unnecessary medical services to generate income. This fraud is seen in instances when noninvasive diagnostic testing is performed without a presenting medical condition to consider.

• Misrepresenting non-covered services as medically necessary and covered. This fraud occurs when the diagnosis and procedures are fabricated or grossly misrepresented in order to gain remuneration for non-covered procedures. This scheme has been noted in cosmetic surgeries when procedures such as tummy tucks or nose jobs are performed and then billed as medical procedures to treat conditions such as a hernia or a deviated septum.

SIGNIFICANT DIFFERENCE BETWEEN FRAUD AND ERROR

So what differentiates fraud from billing errors? Well, a general definition of fraud is an “intentional act of deception, misrepresentation, or concealment committed in order to gain something of value.”

It is the intentional component that separates the hard-working and honest providers, who may submit a claim in error, from the healthcare fraud perpetrators who simply use procedure codes to generate income without regard to the patient’s well being or cost to consumers.

Contrary to the beliefs of some, private payers, like their public program counterparts, handle millions of claims on a daily basis and must operate under the premise that most of the claims submitted are factual and honest. To think otherwise would bring our health-paying system to a screeching halt.

However, because of the potential cost of fraud, payers cannot and will not simply ignore the growing threat of fraudulent claim submissions.

Recently publicized suspected fraud matters such as the Southern California ambulatory surgery scheme or “rent-a-patient” scam illustrate what payers risk if they do not have an adequate fraud control program in place.

VARIETY OF DETECTION TECHNIQUES

Payers become aware of suspected fraud by using a variety of techniques to detect suspicious claim submissions, and by providing education and referral vehicles to their internal anti-fraud units. Some areas of focus include:

• Claim-system flags or edits. These may simply assure that billed expenses are covered or that the billed procedure fits the diagnosis provided.

• Sophisticated detection software. With the advent of electronic claim filing or electronic data interchange (EDI) and less human intervention with the submitted claims, a need has arisen to address this perceived vulnerability by utilizing electronic detection software.

These systems can be as straightforward as rules-based queries, or may use sophisticated fuzzy-logic and neural-networks designed to interface with large sums of data and identify anomalies or outliers.

• Anti-fraud training for claim-paying personnel. This training is critical to assure that they can detect and report a suspected fraud, and numerous state insurance departments require that payers conduct this training on an annual basis.

• Consumer fraud awareness. Several national associations and payers themselves provide fraud-prevention awareness programs to consumers as well as to providers. This training ranges from including fraud-protection tips within an Explanation of Benefits (EOB) statement to making formal presentations to provider groups and/or civic organizations.

• Fraud hotlines and Web sites. These lines of commun-ication also play a key role in payers receiving tips on suspected fraud. Both consumers and providers have become more educated on the impact of fraud and understand that we all have a stake in this battle.

YOUR ASSISTANCE IS NEEDED

As an honest provider, you may assist payers in detecting fraud in two ways:

• Be unwilling to bend the rules to submit questionable claims and

• Demonstrate intolerance for healthcare fraud.

Doing these two things sends a message that fraud has no place in the healthcare system.

Those providers who do prey on the system and bill strictly for profit and not for reimbursement of necessary services, present themselves statistically when compared to their honest peers.

Therefore, by billing appropriately and honestly, you will not only assist in keeping yourself from being questioned about your billing practices but also help identify those (aberrant) billers.

What if your claims are questioned?

If you are contacted by a payer anti-fraud unit about submitted billings, you should expect to provide clarification or supporting information concerning the services rendered, treatment dates, billing arrangements and any other pertinent information to assist in resolving the question at hand.

The investigator may contact the patient/client to gather information and may interact with your office several times.

It is recommended that you cooperate with payer representatives when at all possible in order to resolve the matter in a timely manner. You are entitled to understand fully what the concerns are relating to your submitted claims, and a payer will seek to elicit information quickly from you.

As partners in healthcare, both payers and providers may disagree on some aspects of the healthcare delivery system, but we can all agree that fraud hurts us.

If you become aware of a suspected healthcare fraud, contact the appropriate payer anti-fraud unit, government entity, or regulatory authority.

Additionally, you can find out more about healthcare fraud by visiting the Web site of the National Health Care Anti-Fraud Association (NHCAA) at www.nhcaa.org. NHCAA was created 20 years ago by private health insurers and federal and state law enforcement officials and is a unique, issue-based nonprofit organization of private and public-sector organizations responsible for fighting healthcare fraud.

Jeff Matza, AHFI, CFE, is vice president, special investigations, for the Mutual of Omaha Insurance Company. He has been a frequent presenter for the National Healthcare Anti-Fraud Association and the Federal Bureau of Investigation. He is the current vice-chairperson of the National Healthcare Anti-Fraud Association. He can be contacted by phone at 402-351-5079 or by e-mail, jeff.matza@mutualofomaha.com.