The healthcare industry is a popular target for criminals looking to defraud the system. Criminal activities that could lead to massive financial losses include:
- Double billing.
- Billing for procedures that weren’t performed.
- Fraudulent reporting of reimbursement claim errors.
In a recent interview, Ileana Hernandez of Manatt, Phelps & Phillips explains what activities employers should watch for.
“The most common types of fraud include billing workers’ compensation carriers for treatments or procedures that didn’t occur, which is easy to spot if you are reviewing medical records regularly,” says Hernandez. “Employers also need to be sure that the treatment plan is consistent with the alleged injury.”
“In some cases, medical providers will prepare bills for more expensive procedures, services, or supplies than what was actually provided,” she adds. “This can increase a provider’s profit margin and bonus compensation,” Hernandez recommends that employers review bills and compare them to the treatment plan to avoid this type of fraud. In addition, employers should verify that the billing codes correspond to the services provided.
“In a similar vein, providers will often bill workers’ compensation carriers for treatments or procedures that were never performed,” says Hernandez. “If an employer is reviewing medical records regularly, they then have a good chance of spotting these types of fraud.”
“Employers should be wary if they receive an unusually large number of billing errors,” says Hernandez. “Healthcare providers often over-report the number of billing errors to gain more compensation for their practice.”
Hernandez also recommends that employers determine whether medical claims are reasonable and necessary, suggesting that employers consider “medical necessity” pertaining to workers’ compensation claims. In addition, when analyzing medical reports, she suggests employers ask themselves whether the treatment plan is reasonable or consistent with ongoing treatment guidelines.
Hernandez also notes that another common indicator of fraud is unusual billing practices. For example, if a worker’s compensation carrier flags a practice for writing off a large number of denied claims, that provider may have a problem.
“Employers should always be on the lookout for indicators of fraud,” says Hernandez. “With an effective system in place, they are likely to spot certain types of fraud before workers’ compensation carriers ever do.”
Another area of concern is the possibility that a medical provider is defrauding a government healthcare program out of federal funds by billing for services not performed or for equipment never provided.
“Fraudulent activity involving the Medicare program is also on the rise,” says Hernandez. “In fact, some doctors have been using their patients’ Medicare information to submit claims in their own names.”
Hernandez recommends that employers cross-reference medical claims with the diagnosis code, procedure code, and modifier. She also strongly suggests that they audit a sample of their workers’ compensation claims on at least an annual basis to see if there are any indicators of fraud.
“Employers should note that it is not always easy to spot fraudulent activity,” says Hernandez. “However, if they are aware of the common indicators, it may be easier for them to detect certain types of fraud.”