Identifying Healthcare Fraud: Key Types and Legal Implications

Identifying and Addressing Healthcare Fraud and Abuse Capella University BHA-FPX4006: Healthcare Regulation and Compliance 1

Identifying and Addressing Upcoding Major Categories of Healthcare Care Fraud and Abuse Category of Health Care Fraud and Abuse Description of Category and Example from Authoritative Source* Medical Identity Theft CMS defines medical identity theft as "the misuse of a person's medical identity to receive healthcare services, goods, or funds." For example, a person may obtain someone else's Medicare Beneficiary Identifier (MBI), impersonate the individual, and receive medical care. Billing for Unnecessary Services or Items This type of fraud is when a clinician bills Medicare or a private insurance company for services deemed "medically necessary" but was not. An example of this type of fraud and abuse is a physician performing procedures, such as cancer treatments, which were not needed. Billing for Services or Items not Received This occurs when a healthcare professional bills for a covered item, such as durable medical equipment, provided to patients but never received. CMS provided an example in which a Medicaid personal care attendant billed for care provided to a patient and forged

Category of Health Care Fraud and Abuse Description of Category and Example from Authoritative Source* the patient's signature to receive payment. Upcoding This type of fraud is defined as billing for higher complex evaluations instead of standard or essential services provided. According to CMS, Medicaid audited a psychiatrist who billed patients for 20-minute sessions, but they were only 5 minutes or less. Unbundling Unbundling encompasses a healthcare professional submitting claims as separate line items to receive a higher reimbursement instead of combining the services as necessary and receiving the appropriate payment, which may be at discounted rates from the insurance company. For example, a lawsuit settled for $1 million due to a physician billing for anesthesia and cardiac services separately, although they had been performed together (Coutasse, 2021). Kickbacks According to CMS, a kickback is soliciting or receiving compensation in return for patient referrals or assistance with generating business. Compensation is usually paid through federal health care programs. An example would be a physician receiving compensation

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Category of Health Care Fraud and Abuse Description of Category and Example from Authoritative Source* from a pharmaceutical company for referring or prescribing a specific medication.

Five Health Care Fraud and Abuse Laws Number Health Care Fraud and Abuse Law Description of Law Rationale: How Does This Law Apply to Health Care? 1. False Claims Act The False Claims Act (FCA) is a federal law that imposes liability on individuals or companies that knowingly submitted false or fraudulent claims to government programs such as Medicare and Medicaid for payment. According to the Office of Inspector General (OIG), individuals who act in "deliberate ignorance" or "falsity of information" are also found liable. The penalties for filing false claims may result in fines up to $11,000, plus three times the government's sustained loss. Individuals who submit false claims can be The purpose of the FCA is to recoup funds obtained through fraudulent activity. The act protects the government from being overcharged, ensures program integrity, and promotes accountability in the healthcare system.

Number Health Care Fraud and Abuse Law Description of Law Rationale: How Does This Law Apply to Health Care? personally subjected to fines up to $250,000 and 5 years imprisonment and may be excluded from participating in Federal healthcare programs (CMS, 2016). 2. Federal Anti-Kick Back Statue The OIG states that the Anti-Kick Back Statute (AKS) prohibits the "remuneration" to induce or reward for patient referrals or assistance generating business referrals involving Federal healthcare programs. The kickbacks may be in the form of cash, discounted services, professional positions, or gifts. Clinicians who pay or accept kickbacks Prohibiting kickbacks ensures that medical decisions are in the best interest of the patient rather than the receipt of financial incentives. Additionally, it prevents increased costs, unfair competition, and overutilization of services.

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Number Health Care Fraud and Abuse Law Description of Law Rationale: How Does This Law Apply to Health Care? can face penalties of up to $50,000 per kickback plus three times the amount of remuneration or compensation and exclusion from Medicaid and Medicare programs (HHS-OIG, 2021). 3. Physician Self-Referral Law (Stark Law) The Stark Law prohibits clinicians from referring Medicare or Medicaid patients for "designated services" to an entity with which the clinician or their immediate family has a financial relationship. Those designated services are clinical laboratory services, physical or occupational therapy, DME Physician Self-Referral Law aims to prevent conflicts of interest that could hinder ethical decision-making and mitigate overutilization of healthcare resources or services.

Number Health Care Fraud and Abuse Law Description of Law Rationale: How Does This Law Apply to Health Care? supplies, and prescription drugs, to name a few. However, exceptions are permitted when they do not pose a risk to the patient or federal programs (HHS-OIG, 2021). 4. Exclusion Authorities Statute This statute allows OIG to exclude individuals and entities from participating in Federal healthcare programs such as Medicare and Medicaid. You may receive exclusion from programs for committing the following criminal offenses: 1. Medicaid or Medicare fraud, 2. Patient neglect and abuse, 3. Fraud, theft, or financial misconduct, 4. The The Exclusion Authorities Statute prevents individuals and entities convicted of fraudulent activities from participating in Federal healthcare programs, thus saving taxpayer dollars and protecting patients. The statute sets a precedent to ensure the program's integrity and prevent entities and

Number Health Care Fraud and Abuse Law Description of Law Rationale: How Does This Law Apply to Health Care? unlawful manufacturing, distribution, prescribing, or dispensing of uncontrolled substances. When a physician or entity is excluded from participation in federal healthcare programs, Tricare and the Veterans Health Administration are not required to pay for any items, services, or prescriptions you have ordered (HHS-OIG). healthcare professionals from continuing to defraud the government. 5. Civil Monetary Penalties Law (CMPL) The Civil Monetary Penalties Law imposes monetary penalties against physicians and entities participating in fraudulent activities, including submitting false claims to federal The CMPL imposes significant financial penalties to deter physicians and entities from engaging in fraudulent activities.

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Number Health Care Fraud and Abuse Law Description of Law Rationale: How Does This Law Apply to Health Care? healthcare programs. The penalties range from $10,000 to $50,000 per violation. In addition to submitting false claims, other violations may include violating the Anti- Kick Back Statute, violating the Medicare physician agreement, and making false statements or misrepresentations on applications or contracts to participate in federal healthcare programs (HHS-OIG, 2021). Upcoding and the Law

Law Pertaining to Upcoding Explanation of Upcoding Case Example of Upcoding The False Claims Act Upcoding involves billing for healthcare services or procedures using Current Procedural Technology or CPT codes. These codes allow physicians and healthcare facilities to bill Medicare, Medicaid, private insurance, and private-pay patients. Each code is assigned a contractual dollar amount, which allows reimbursement to the clinician or facility for services provided based on the diagnosis or procedure performed. Some clinicians are paid based on their relative value units (RVUs) or their performance, which can fluctuate, and they worry about receiving lower pay, causing them to upcode claims to offset their compensation (Coustasse et al., 2021). A recent study of hospital-acquired conditions found that patients presented to the hospital with an infection and were admitted for extended care. It was estimated that 10,000 out of 60,000 claims were reimbursed, and 18.5 percent were upcoded as "hospital-acquired infections" (Coustasse et al., 2021).

Evidence-Based Recommendations to Address Upcoding Recommendation* Source Increased periodic monitoring and auditing would ensure that all current policies and procedures are in place. Auditing would determine whether physicians, staff, and facilities follow those policies and submit claims correctly. The audits measure the number of claims submitted correctly against the number of errors such as billing, coding, and documentation. If any risks are found, the physician should make a poignant effort to focus on correcting those risk areas. (Federal Register, Pg.4, 2000) Education and continued training are essential in controlling fraud and upcoding. Medical school education focuses on anatomy, science, medicine, patient care, and ethical decision-making, but a curriculum on fraud and abuse, appropriate billing practices, malpractice, and quality assurance would be highly beneficial. The physicians will be more versed in compliance, billing, and the potential civil and criminal liabilities of fraud. Additional yearly continued education credits should be required to maintain licensing. (Drabiak et al, 2021) Compliance and practice standards would protect physicians from potential errors and (Federal Register, Pg. 5, 2000)

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Recommendation* Source unknowingly committing fraud. The OIG suggests that physician practices should join a physician practice management company (PPMC), independent practice association (IPA), or third-party billing company to provide additional resources and allow the practice to incorporate their standards and procedures. A final suggestion is that the facility create a manual and update clinical forms. A physician practice can designate a Compliance officer to oversee daily operations and compliance program implementation. An alternative solution to having a compliance officer is splitting duties among other employees. One is assigned to maintaining written policies and procedures; the other is responsible for conducting audits and resolving billing questions or issues. However, if the practice cannot designate either method, the compliance officer can be outsourced to a third-party associate such as IPA, PPMC, or MSO. The practice and outsourced compliance partner must maintain open communication as is necessary to ensure effective compliance. (Federal Register, pg. 8-9, 2021) Open lines of communication are vital to implementing a compliance program. OIG encourages an "open door" policy between compliance officers, physicians, and (Federal Register, pg. 11, 2000)

Recommendation* Source employees. Communication can be via phone and email or in less formal ways such as bulletin boards. The open-door policy should encourage employees to report any activities believed to be fraudulent without retaliation. For a compliance program to be effective, corrective action initiatives are required to address any violations uncovered. The practice can create internal controls that identify drastic changes or patterns in claim rejections or reductions, any correspondence challenging claims' medical necessity or vitality, issues with CPT-4, HCPCS, or ICD-9, and high volumes of unusual charges or adjustments. If the internal controls identify any discrepancies, they need further evaluation to determine whether the violation is accurate. Thus, the compliance program's procedures must be reassessed due to newfound violations. (Federal Register, pg.10, 2000) Disciplinary action for any practice employees found liable for violations or refusing to report violations is necessary to alleviate fraudulent activities. The disciplinary action could be addressed as follows: the first offense is a verbal warning, the second offense is a written warning, followed by probation, demotion, temporary suspension, and then termination of employment. Additionally, the OIG recommends a referral for (Federal Register, pg. 11, 2000)

Recommendation* Source prosecution. Lastly, practices are suggested to check OIG and GSA lists for employees and future hires excluded from participating in federal healthcare programs.

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References Center for Medicare and Medicaid Services. (2016, July). Common Types of Healthcare Fraud. https://www.cms.gov/files/document/overviewfwacommonfraudtypesfactsheet072616pdf Center for Medicare and Medicaid Services. (2016, July). Laws against Health Care Fraud Fact sheet . Laws Against Health Care Fraud. https://www.cms.gov/files/document/overviewfwalawsagainstfactsheet072616pdf Coustasse, A., Layton, W., Nelson, L., & Walker, V. (2021). UPCODING MEDICARE: IS HEALTHCARE FRAUD AND ABUSE INCREASING?. Perspectives in health information management , 18 (4), 1f. Drabiak, K., & Wolfson, J. (2020, March 1). What should health care organizations do to reduce billing fraud and abuse?. Journal of Ethics | American Medical Association. https://journalofethics.ama-assn.org/article/what-should-health-care-organizations-do- reduce-billing-fraud-and-abuse/2020-03 Federal Register. (2000, October 5). OIG compliance program for individual and small group physician practices https://oig.hhs.gov/authorities/docs/physician.pdf HHS Office of Inspector General. (2021, October 5). Fraud & abuse laws. Office of Inspector General | Government Oversight | U.S. Department of Health and Human Services. https://oig.hhs.gov/compliance/physician-education/fraud-abuse-laws/

BHA-FPX4006_Assessment 2-1

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