Health Care Fraud: How to Protect Yourself

Governments across the world allocate significant amounts of budgetary allocations to healthcare sectors to enhance the quality and improve access to healthcare services. The US is the largest spender in the healthcare sector in the world as it hopes to enhance equity in access and quality. Centers for Medicare and Medicaid Services (2019a) establish that in 2018, the US spent $3.6 trillion, which is about $11,172 per person accounting to 18 percent of the federal budget. While these figures are indicative of a government’s commitment to the health of its citizens, the US still scores low on healthcare delivery. Tikkanen & Abrahams (2020) assert that the US has worse healthcare outcomes as it has a lower life expectancy, high suicide rates, highest obesity rates, and chronic disease burden. The reason for worse health in US healthcare is health care fraud schemes where providers seek economic gains as opposed to improving the quality of care.

Healthcare fraud is classified in the white-collar crime involving a dishonest filing of healthcare claims to rake in massive profit margins. There are various forms of health care frauds, which can be categorized as those committed against or behalf of organizations. They include misrepresentations of dates, services and locations, billing for services not rendered, billing for uncovered services, and corruption. It is important to note that specific legal guidelines in existence, should be adopted in case health care providers and organizations engage in fraud. The focus of this research is on billing for services not rendered where medical providers and organizations submit claim forms for services and that were not provided.

Defining Health Care Fraud 

Health care fraud contributes to the lowering of the quality of care as the government spends significant amounts of healthcare budget on reimbursing fraudulent claims. The scope of losses on healthcare funds is dependent on the nature of the fraud scheme considering there are various types of fraud. Albrecht et al. (2011) divide fraud schemes into two main categories, which include those that are committed on behalf or against an organization. Organizational fraud is committed against organizations making the organization a victim, and it could incur losses. On the other hand, fraud against an organization usually involves executives who manipulate financial statements so that the organization can benefit. As a result, organizations tend to make losses or have reduced profits, which then affect the quality of services. The healthcare sector is not immune to such frauds as medical providers and institutions are keen on making extra money for services not rendered. It is for this reason that medical providers charge patients for services not provided not covered in healthcare insurance schemes. Still, other healthcare institutions and providers engage in corruption and over-utilize services to get extra money when they file reimbursement claims.

Fraud Involving Billing for Services That Have not been Rendered 

Health care insurance plays a crucial role in helping individuals to cater to their medical expenses, which could have been impossible with out-of-pocket costs. While healthcare insurance allows individuals to access high-quality healthcare services, it opens up chances for healthcare fraud. Healthcare institutions and providers are required by law to offer services and care to their patients and then record the cost of care and, in turn, file claims for reimbursement. In as much as healthcare providers are expected to adhere to a strict code of conduct, some of them manipulate the records so that they could increase their profit margins. The code of conduct requires healthcare providers to demonstrate high levels of professionalism since the field of medicine is a unique one. Grant-Kels et al. (2016) note that healthcare providers’ primary duty is to the patients, and as such, they must be dedicated to their welfare. The principles that are outlined in the code of conduct seem to conflict with modern-day medical practice. The reason for this proposition is the fact that monetary business concerns dictate how health care providers are to interact with and treat their patients. The insistence on the economic aspect of health care service delivery paves the way for a rise in healthcare fraud.

Drivers of Fraud Involving Billing for Services Not Rendered 

The most common form of healthcare fraud is the billing of services, which have not been rendered, considering that the insurance companies have no way of ascertaining it. Healthcare insurance providers such as Medicare expect healthcare providers to treat beneficiaries and then submit claims for payments. The providers are expected to submit electronic claim forms with CPT or HCPCS codes, which captures the services that have been rendered. In line with this, healthcare providers are expected to certify that the information that is provided for claims is accurate, correct, and complete (Forte, 2018). From here, health insurance providers review to claims basing their reviews on the information and on realizing that the services are covered in the health insurance reimburse the health providers. Health care insurance companies only rely on the information that is provided in the claims allowing for heightened chances for fraud. It is important to note that healthcare insurance companies such as Medicare deal with an enormous size of applications. The widened scope means that healthcare insurance companies cannot scrutinize and authenticate all claims

The situation becomes worse since the patients are not consulted to ascertain whether they received those healthcare services or not. The problem with this type of fraud is the fact that it hampers patients’ chances of obtaining life or disability insurance policies. The reason for such an outcome is that healthcare providers tend to create medical histories that are false to allow for the inclusion of procedures and medications. The patient appears to have incurred more expenses, paving the way for more reimbursement by the health care insurance companies. Centers for Medicare and Medicaid Services (2019 b) notes note that while a small proportion of healthcare providers commit this kind of fraud, it costs insurance companies millions in losses. Health care fraud involving the billing of services not rendered points to dire economic issues that define the current medical profession.

The modern professionals are operating in an era of rising overheads, declining reimbursements as well as increased rejection or scrutiny of charges by third parties. For this reason, physicians appear to be in a constant battle with healthcare insurers regarding the accurate payments for the services they have rendered to the patients. It is important to note what while upcoding or overbilling appears harmless as it does not equate to detrimental outcomes for patients, it should not be encouraged. Intentional or unintended overcharging tends to shortchange the available monies, which could be used in other areas of the healthcare system as well as interferes with the juice tenet of medical ethics. Apart from ignoring medical ethics, billing for services not rendered may influence patients’ financial well-being, especially those that are on high-deductible plans.

Patient’s Role in Billing Fraud 

The patients are central in the provision of healthcare services as well as funding the operations through either out-of-pocket or health insurance packages. Individuals who rely on health insurance companies are usually in the dark regarding the real cost of healthcare, considering that they are opaque (Arora, Moriates, & Shah, 2015). establish that more often or not, the question of healthcare costs come up, but it is hard to answer it since it is “obscured in layers of jargon and complex accounting” (2015, p. 1047). Patients are not privy to how healthcare providers base their charges as no provider to outline what forms the cost associated with procedures, use of space, and time. Charges within many hospitals are often overrated regardless of the fact that most of these hospitals have charge masters, which are similar to hotel menues. The inflation in prices is due to the fact most of the healthcare facilities hope to get reimbursements, which are many times the actual costs. The situation is made worse by the fact that there is a variation in how health insurance companies reimburse for the services rendered.

At times, patients end up paying less or more depending on the nature of their healthcare needs, which further clouds costs of health care. It is against this background that the ‘price transparency’ movement was created to ensure that health care charges re availed to patients. The result of this movement is the availing of charge masters for most common inpatients treatment services for hospitals that treat Medicaid patients. Patients are now able to compare the charges asked at their local hospitals with the national standard. While the move is positive,it is clear that most patients are still in the dark, and they cannot establish if they are being defrauded. Healthcare providers could use this knowledge gap to charge patients for services that have not been rendered to them (Grant-Kels et al., 2016). In the same manner, clinicians and physicians cannot be of much help since they, too, are not privy to how different healthcare insurance providers base their payment decisions.

Red Flags of Health Care Fraud 

Health care facilities have an important role in eliminating cases of fraud in their billing system, which can only be achieved by understanding some of the red flags that the facilities ought to consider. The following is an analysis of some of the red flags, which are common in health care fraud and may be of value in promoting efficiency in fraud prevention.

Similar Provider Notes For Multiple Patients 

Medical visits often vary from one patient to another considering that two patients cannot have similar symptoms or show similar signs that would make providers use similar notes (Bauder, Khoshgoftaar, & Seliya, 2017). When patients visit a hospital setting, the provider involved in providing care has to include some notes on the services rendered, which include treatments and medication provided. In cases where the billing system is experiencing fraud, the notes by service providers are often the same. In some cases, providers often provide similar documentation, such as medical history, for different patients, which serves as a red flag suggesting that the billing system is exposed to fraud.

Changes in Medical Charting After The Treatment Date 

One of the most common red flags to note when dealing with health care fraud is the fact that some health providers often make changes to patient records after the initial date of treatment. This is a red flag that arises in cases where some of the providers learn of a legal challenge that suggests possible fraud or medical malpractice. A comparison of the original provider notes and the altered notes shows significant differences where health providers seem to use such changes as an opportunity to cover their tracks based on their involvement in the fraud (Sullivan & Hull, 2019). However, this only exposes them further to fraud considering that it suggests falsification of medical records as a way of receiving payments for services not rendered to patients in question.

Medical Charting For Treatment On An Unlikely Day 

Except in cases where there is an emergency, patients do not go to hospitals in days such as Sundays, holidays, or when their area is experiencing a catastrophic weather event, such as the case of Hurricane Katrina (van Capelleveen, Poel, Mueller, Thornton, & van Hillegersberg, 2016). When looking at billing records, it is often important to consider the exact day when a patient received medical care. The idea is to look out for red flags involving cases where patients are alleged to have received treatment at an unlikely time. An example of such cases can be seen from the conviction of a New Orleans physician, on June 2, 2010, because he billed the government for alleged services offered after Hurricane Katrina. That was a red flag because many of the people affected by the hurricane focused much of their attention on rebuilding their lives and would only visit the facility in case of an emergency. Additionally, the physician’s office was closed during that period.

Inconsistency in Charting Notes Compared With X-Ray, Lab, Or Pharmacy Data 

Another key red flag to consider is the detection of health care fraud is inconsistencies associated with charting notes when compared to x-ray, lab, or pharmacy reports. When billing for services rendered, health providers are expected to include their charting notes to determine whether indeed the services were offered (Flasher & Lamboy-Ruiz, 2019). The charting notes must create a well-structured outline showing the exact history of treatment and services offered at that exact time. In cases where there exists an inconsistency in charting notes while considering the existing data, that would most likely point to fraud. Although this is a challenging red flag to note, its detection is often easy considering that most of the notes provided include information on some of the tests undertaken for individual patients.

Medical Records Showing The Same Patient Receiving Treatment In Two Hospitals 

Another red flag to consider in determining whether a billing system is fraudulent is when a patient's medical records reflect that the same patient received health care services at two hospitals on the same date and time (Waghade & Karandikar, 2018). For example, when a patient's medical records show that he/she received chiropractic care in Tacoma, WA, and, at the same time, was receiving treatment at an ER in Seattle, WA, it becomes clear that this is a fraud. A patient cannot receive health care services at two different facilities. In such cases, the payer must determine whether the facilities involved are engaged in fraud or whether the patient may have experienced identity theft. However, this is a reason for both payments to be declined considering that this shows a high possibility of fraud.

Patient’s Recollection Not Consistent When Medical Records 

In case of doubt, payers often contact patients to determine the exact services offered, which would be of value to eliminating false cases of fraud in billing for services rendered. A red flag arises in cases where a patient’s recollection of services offered do not align with what may have been included as part of the medical records. Patients’ recollection is important to consider in determining the course of treatment and medication provided at a time when a patient visits a health care facility to receive treatment. For example, if a patient visited an ER due to a broken limb but his/her medical records show that he/she had major surgery, the most likely suggestion is that this points to billing fraud. In such cases, the health facilities involved may be liable for their engagement in fraud considering that a patient’s medical records may have been altered to include other services provided.

Medical Records Show Treatment Protocols That Go Against Best Practices Or Exhibit Non-Fda Approved Treatment Plans 

Some cases of billing fraud reflect on the fact that hospitals often include bills for treatment protocols that go against best practices in health care or, in some cases, have not been approved by the FDA. The FDA has an important role in determining the best treatment approaches considered for individual patients, which must be approved for safe use by the patient (Herland, Khoshgoftaar, & Bauder, 2018). Payers often consider the validity of the treatments offered to determine whether indeed bills will be paid. The fact that such protocols are not recognized means that they should not be included as part of the bills for individual patients regardless of the condition in question. That serves as a red flag suggesting that some of the treatment procedures go against what is expected in promoting patient safety and the best possible outcomes.

Audit Procedures to Detect Health Care Fraud 

Audit procedures are important steps to detecting health care fraud when taken in the right context. The consideration of some of these audit procedures is important because it gives auditors the ability to identify possible instances of fraud or errors. The following is an analysis of some of the audit procedures that would help detect health care fraud.

Fraud Brainstorming Sessions 

The generally accepted auditing standards indicate that audit teams must be involved in audit brainstorming sessions at the beginning of every audit. The sessions give the auditors a clear view of what to expect while determining some of the key ways that the health facility may be involved in fraud (Joudaki et al., 2016). In other words, these sessions give auditors a leeway through which to determine some of the key areas that they need to consider to help in fraud detection. Additionally, the brainstorming sessions also help in setting a tone of professional skepticism that would guide the entire process.

Audit teams, involved in the audit process, must hold regular meets at different times as they engage in the process to aid in the discussion of any misinformation that they may have detected. Through these meetings, the audit teams will be able to build their capacity to engage in effective fraud detection with the focus being on some of the key approaches that a health facility may use to achieve efficiency in fraud. In cases where fraud has been detected, auditors use these meetings to determine the way forward with the focus being on ensuring that they report such cases. However, the auditors have a key mandate to ensuring that their information is accurate considering the implications that this is likely to have on the patients affected. Therefore, the auditors involved must come up with new approaches to build on their capacity to examine each case of fraud detected.

Medical Records Testing 

While considering that health care fraud requires the manipulation of medical records, auditors must come up with a well-structured procedure that would help test the medical records for any signs of manipulation. The medical records will be evaluated from each perspective to determine whether the treatment plans offered are consistent with the existing data or whether a patient may have received the best possible treatment. In some cases, auditors may go ahead to ask for supporting documents that would help validate the patient's medical records. An example of a supporting document to consider is a patient's medical history, which would outline whether indeed a patient's treatment approach is consistent. At each stage of testing, auditors will make sure that the records remain consistent to avoid cases of fraud arising from manipulation of such records.

Billing Estimates 

Another likely audit procedure that would be of value in detecting fraud is the use of billing estimates. Before embarking on any audit process, auditors must be given the chargemaster indicating the charges for each service rendered within the health facility. The basic expectation is that this would help give auditors a clear view of what to expect in determining the bills for individual patients. Auditors are then expected to use the estimates to evaluate each of the items included in bills as a way of determining possible inconsistencies in the bills included (Ghuse, Pawar, & Potgantwar, 2017). The estimates would determine whether indeed a patient may have received specific services at a specific period. Additionally, it would help in determining whether indeed what is included in the bill is an accurate representation of a patient’s exact bill. Any inconsistencies would point to the possibility of fraud in the billing system.

Unusual Billing 

Generally accepted auditing practices suggest that auditors must closely examine significant unusual transactions to help in detecting the possibility of fraud. In a health care setting, this would involve cases where it is indicated that a patient may have received care at an unlikely day. In the previous section, it was noted that one of the red flags of health care fraud is when a bill indicates that a patient may have received non-emergency care in unlikely days, such as Sundays and holidays. When an auditor comes across such bills, it is important to examine them much more closely to determine whether indeed the services were rendered or whether such bills are fraudulent. An in-depth audit of the bill will help detect the existence of fraud with the view being that such cases will be included in the bills.

Unusual billing may also be detected when a single patient is billed multiple times for different health conditions within a short period. As an auditor, one is expected to examine the billing trends for each patient with the focus being on trying to determine when a patient’s bill is not consistent with services that may have been offered (Sheshasaayee & Thomas, 2018). For example, when a patient visits a health facility more than four times a month for different reasons, auditors would need to evaluate such bills. The idea is to determine the overall possibility of whether the patient’s medical records are consistent with the alleged services offered. In each case reviewed, auditors must focus on the red flags, which would be of value towards determining the overall possibility of fraud. The red flags introduce new dynamics that auditors need to consider as they determine the existence of health care fraud.

Issues Affecting Billing for Services Not Rendered 

The billing for services not rendered is affected by a wide array of issues occurring within the health care setting. Understanding these issues is important because it helps create a new standard through which to ensure that such cases are handled in a much more effective way to reduce possible exposure to fraud. The following is a discussion of some of the issues likely to affect billing for such services.

Failure to Capture Patient Information 

The billing process begins at the exact point of contact between a patient and a health care facility where is expected that the health facility would capture a patient’s information. However, this presents a challenge because some of the patient information may not be captured in a manner that is expected; thus, affecting the billing process. The implication of failure to capture a patient’s information is that the bill would be detected as fraudulent although services were rendered. In such cases, the health facility finds itself exposed to serious losses considering that such services may not be paid for due to their detection as a fraud.

Not Informing Patients about Financial Responsibility 

This is a common issue when dealing with cases where patients opt to embark on non-FDA approved treatment protocols that are not covered by the payer. In such cases, failure by the health facility to inform patients of their financial responsibility towards such treatment protocols serves as a clear outcome contributing to the detection of a bill as fraudulent. It is expected that a health facility would provide patients with all information regarding their financial responsibility outlining the services that will be covered and those that will not (Wang, Pai, Wu, Wu, & Li, 2017). Additionally, the information will also help patients make an informed decision on whether to move ahead with a specific treatment protocol knowing that they were expected to cover the same away from the payer.

A manual System in the Management of Patient Medical Reports 

Medical reports are important to consider when determining the possibility of fraud, as they help in the evaluation of inconsistencies likely to suggest the existence of fraud. However, some health facilities use manual systems where a patient’s medical reports are stored manually. In such cases, it becomes much harder for a payer to determine the validity of a claim considering that they cannot evaluate manual systems. Therefore, this means that health facilities ought to build their capacity in providing care by investing in an electronic system that would ensure that the storage of patient information is effective. Payers would have access to patient information when needed; hence, avoiding possible cases where services rendered are considered as fraud leading to non-payment.

Inaccurate Coding 

Inaccurate coding is one of the key factors affecting medical billing in health facilities today, which becomes a significant challenge for service providers because the services they render are considered as being fraudulent. Health care billing involves the inclusion of codes for the different types of health care services offered reflecting on a patient's exact medical condition (Fan, Zhang, & Fan, 2019). However, this becomes an issue of concern in cases where the codes are given do not relate to the medical information provided. That becomes a key challenge for health providers because it means that their services go against what is expected in terms of overall capacity to ensure proper billing. It is often expected that health facilities would embark on a process through which to train their staff on billing codes, which must be evaluated before submission to avoid such inconveniences.

Recommendations 

From the discussion, it is clear that health care fraud remains one of the key issues of concern affecting the health care sector today. Therefore, it is important to examine some of the recommendations that would help health providers avoid fraud in its entirety. The first recommendation is that health providers needed to maintain an updated health care record system, which must contain accurate patient information. Additionally, providers would also need to make sure that they include all necessary documentation reflecting on each patient individually. Having an updated health care record and necessary documentation would mean that the provider is protected from any possible lawsuits associated with the fraud. Once fraud has been detected, health provided is taken through a legal process for fraud where it is expected that they would provide all necessary information and documentation. This shows the importance of having such information and documentation to assist health facilities in their billing processes.

The second recommendation is that health service providers must disclose any conflict of interest likely to amount to fraud. Fraudulent activities in billing often begin with conflicting interests, which providers fail to report immediately. The FDA and the National Institutes of Health (NIH) provide regulations on the disclosure of conflict of interest with the view being that lack of disclosure would serve as an indication of fraud. It is from this perspective that it is recommended that a health provider would disclose any conflicts of interest beforehand. The last recommendation is on maintaining transparency in every health service provider with the view being that this would avoid possible fraud. Physicians must ensure that they provide their patients with all information regarding the services offered including treatment and medications. The information given must be consistent with the information included in a patient's medical records. That will serve as a guarantee for transparency; thus, avoiding fraud.

Conclusion 

The cost of health care remains as one of the key challenges that governments across the world are facing because such costs have been on the rise. In the United States, for example, the federal government spent $3.6 trillion, which is about $11,172 per person accounting for 18 percent of the federal budget in 2018. The biggest contributor to such health care costs is billing for services not rendered, which amounts to health care fraud. A significant number of health facilities are billing for services not rendered as a way of enriching themselves at the expense of the patient. That highlights the need for the government, which is the payer for such services, to examine some of the red flags likely to determine the possibility of fraud. Additionally, the consideration of audit processes may also be of great importance in ensuring that the government deals with health care fraud to eliminate possible cases where health facilities bill for services not rendered.

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