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With Cases of Medical Fraud on the Rise, Knowing What to Watch Out For is Key

Medical Fraud is on the Rise, Here's What to Watch Out For

January 26th, 2023
January 26th, 2023

In this day and age, there are countless types of fraud we need to be wary of - identity theft, cashier’s check fraud, phishing, and more. Another very real and malicious kind of threat is healthcare fraud. According to one legal definition, healthcare fraud is defined as “a crime in which healthcare claims are dishonestly filed to profit illegally from the payments received.” It is an expensive crime that leads to a loss of nearly $60 billion per year. And it affects both individuals and businesses alike, potentially raising health insurance premiums, exposing patients to unnecessary procedures, and even increasing taxes.

In this post, we’ll discuss different healthcare fraud scenarios along with tips on how to protect your organization.

Types of Healthcare Fraud

Both patients and medical providers can commit healthcare fraud by intentionally deceiving the healthcare system to receive payments or benefits not legally granted to them. There are a few different kinds of healthcare fraud or false claims. The ones committed by medical professionals typically fall under four different categories:

  • Double billing: Submitting multiple claims for the same service
  • Phantom billing: Billing for a service visit or supplies the patient never received
  • Unbundling: Submitting multiple bills for the same service
  • Upcoding: Billing for a more expensive service than the patient actually received

The potential damage of false claims is so large, that a federal statute, The False Claims Act (FCA), was enacted back in 1863 in response to defense contractor fraud during the American Civil War.

According to the Department of Justice, “the FCA provided that any person who knowingly submitted false claims to the government was liable for double the government’s damages plus a penalty of $2,000 for each false claim. The FCA has been amended several times and now provides that violators are liable for treble damages plus a penalty that is linked to inflation.”

The FCA also allows private citizens to file suits on behalf of the government against those who have defrauded the government called Qui Tam suits. “Private citizens who successfully bring Qui Tam actions may receive a portion of the government’s recovery.” In fact, many fraud investigations and lawsuits arise from such Qui Tam actions, with the Department of Justice obtaining more than $5.6 billion in settlements and judgments in 2021 alone.

Examples of Healthcare Fraud

It’s difficult to imagine defrauding the healthcare system, yet it happens every year. Here are three recent examples of false claims and what the outcome was for each perpetrator.

Case 1: Three Health Care Providers Agree to Pay $22.5 Million for Alleged False Claims to California’s Medicaid Program

Summary: Dignity Health, a for-profit health system that operates three hospitals, was found guilty of knowingly submitting false claims to Medi-Cal for “enhanced services” they purportedly provided to patients from 2/1/2015 to 6/30/2016. “These health care providers siphoned critical Medicaid funding for their own gain instead of using it to provide health care services to patients most in need,” said U.S. Attorney Martin Estrada for the Central District of California.

Case 2: Medical Services Contractor Pays $930,000 to Settle False Claims Act Allegations Relating to Medical Services Contracts at State Department and Air Force Facilities in Iraq and Afghanistan

Summary: In its first settlement of a civil cyber-fraud case, the Department of Justice brought Comprehensive Health Services LLC (CHS) to justice. Allegations state that CHS submitted claims to the State Department for the cost of a secure electronic medical record (EMR) system to store confidential patient information, and it was found that CHS failed to consistently store patient information in the secure EMR. It was also found that CHS gained access to controlled substances not approved by the FDA, without the proper permissions, and supplied the unapproved controlled substances to patients under State Department and Air Force contracts.

Case 3: Michigan Doctor to Pay $775,000 to Resolve False Claims Act Allegations

Summary: Vinay K. Malviya M.D., a gynecologist oncologist, was found to knowingly submit false claims for payment for federal health care programs related to radical hysterectomies when only simple hysterectomies were necessary. Claims also state that the chemotherapy services ordered by the doctor were in excess of what was medically necessary, and also that evaluation and management services were not performed or completed as needed.

One thing is clear, false claims are expensive and potentially damaging to patients. As Medical Services Professionals (MSPs), one of your key responsibilities is keeping patients safe. So, how can you keep your organization protected from healthcare fraud? It all starts with Workforce Validate.

About Workforce Validate

Workforce Validate empowers organizations to prevent fraud, reduce risk, and build a culture of compliance. From initial exclusion checks to ongoing monitoring, Workforce Validate ensures each member of your staff is clear to be on the floor and in compliance with healthcare requirements and standards. Once implemented, Workforce Validate works in three simple steps:

  1. You sync Workforce Validate with your employee, contractor, and vendor population.
  2. Workforce Validate then verifies and flags any compliance and potential fraudulent concerns based on hundreds of 3rd party sources including:
    1. The Medicare Opt-Out list
    2. Federal sites (like Department of Commerce and Departtment of State)
    3. Social Security Death Master File
    4. FBI Most Wanted List
    5. and many others

You review any exclusion flags and take action to ensure your staff and providers are up to par.

With access to over 900 board sanction sites, more than 70 federal and state exclusion lists (including OIG sanctions and SAM exclusions), and over one million healthcare professionals validated to date, you can be sure Workforce Validate has the information you need to prevent threats from entering your workforce.

Active, ongoing monitoring of your workforce is a key component of managing the risk inherent in providing healthcare today. Learn more about how Workforce Validate can help you prevent fraud, ensure compliance for your workforce, and ensure quality care in one fell swoop.

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