Fraud is defined as an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to him/herself or some other person. It includes any act that constitutes fraud under applicable federal or state law.
What is Abuse?
Abuse is defined as Provider practices that are inconsistent with sound fiscal, business, or medical practices, and result in an unnecessary cost to Health programs, or in reimbursement for services that are not medically necessary or fail to meet professionally recognized standards for health care. It also includes recipient practices that result in unnecessary costs to the Health program.
Examples of Fraud and Abuse Activity
1. Falsifying Claims/Encounters
a. Alteration of claim - like Super imposed material, White Outs, Erasures, Different colored inks
b. Incorrect Coding
c. Inappropriate Balance Billing
d. Failure to collect coinsurance and deductible amounts
e. Lack of Integrity in computer systems (e.g. data entry errors)
f. Duplicate Billing
g. Billing for services not rendered
h. Misrepresentation of services/supplies
i. Substitution of services
j. Misspelled Medical terminology
k. Treatment of conditions which may suggest a pre-existing condition
l. No Provider information on claim
m. Diagnosis does not correspond to treatment rendered
2. Unbundling/exploding charges (e.g. the unpacking and billing separately of services that would ordinarily be all inclusive)
3. Coding a service at a higher level than what was rendered (e.g. up coding)
4. Inappropriate documentation for services rendered
5. Violation of provider agreement by provider
6. Breaches in provider agreement that result in members being billed for non-allowed amount
7. Billing for a service not furnished as billed; for example; submitted claim for 50 minute session, but provider session duration time did not meet service code minimum requirement
8. Billing for non-covered services as covered services (CPT codes)
9. False or fraudulent billing of claims
10. The acceptance of, or failure to return, monies allowed or paid on claims known to be false or fraudulent or documentation does not support services.
Potential Fraud Indicators in a Managed Care Setting
1. Limited time spent by providers with patients (under provision of care)
2. Frequent referral of patients to specialists (may be indicative of a kickback arrangement)
3. Inadequate treatment plan
4. Consistently poor outcomes may be a sign of lack of treatment
5. Unusual patient encounter ratios
6. High number of referrals to emergency rooms
7. High rate of services that fall outside those covered by capitated amounts
8. High incidence of claims for treatment performed outside HMO service area
Sanctions and Penalties for Fraud and Abuse violations
1. Conviction of Fraud & Abuse can carry civil and criminal penalties.
Civil Penalties:
• $5500 to $11000 per claim plus up to 3 times the amount of damages
Criminal Penalties:
• Felony conviction: 5-20 years in jail
• Misdemeanor conviction: 1 year in jail
How to Eliminate Fraud and Abuse?
To eliminate fraud and abuse successfully providers, facilities and vendors must work together to prevent and identify inappropriate and potentially fraudulent practices. This can be accomplished by:
1. Monitoring claims submitted for compliance with billing and coding guidelines.
2. Adherence by providers and facilities to Treatment Record Standards.
3. Education of all staff members responsible for medical records (billing, coding, maintenance)
4. Referring cases of suspected fraud and abuse
What is Abuse?
Abuse is defined as Provider practices that are inconsistent with sound fiscal, business, or medical practices, and result in an unnecessary cost to Health programs, or in reimbursement for services that are not medically necessary or fail to meet professionally recognized standards for health care. It also includes recipient practices that result in unnecessary costs to the Health program.
Examples of Fraud and Abuse Activity
1. Falsifying Claims/Encounters
a. Alteration of claim - like Super imposed material, White Outs, Erasures, Different colored inks
b. Incorrect Coding
c. Inappropriate Balance Billing
d. Failure to collect coinsurance and deductible amounts
e. Lack of Integrity in computer systems (e.g. data entry errors)
f. Duplicate Billing
g. Billing for services not rendered
h. Misrepresentation of services/supplies
i. Substitution of services
j. Misspelled Medical terminology
k. Treatment of conditions which may suggest a pre-existing condition
l. No Provider information on claim
m. Diagnosis does not correspond to treatment rendered
2. Unbundling/exploding charges (e.g. the unpacking and billing separately of services that would ordinarily be all inclusive)
3. Coding a service at a higher level than what was rendered (e.g. up coding)
4. Inappropriate documentation for services rendered
5. Violation of provider agreement by provider
6. Breaches in provider agreement that result in members being billed for non-allowed amount
7. Billing for a service not furnished as billed; for example; submitted claim for 50 minute session, but provider session duration time did not meet service code minimum requirement
8. Billing for non-covered services as covered services (CPT codes)
9. False or fraudulent billing of claims
10. The acceptance of, or failure to return, monies allowed or paid on claims known to be false or fraudulent or documentation does not support services.
Potential Fraud Indicators in a Managed Care Setting
1. Limited time spent by providers with patients (under provision of care)
2. Frequent referral of patients to specialists (may be indicative of a kickback arrangement)
3. Inadequate treatment plan
4. Consistently poor outcomes may be a sign of lack of treatment
5. Unusual patient encounter ratios
6. High number of referrals to emergency rooms
7. High rate of services that fall outside those covered by capitated amounts
8. High incidence of claims for treatment performed outside HMO service area
Sanctions and Penalties for Fraud and Abuse violations
1. Conviction of Fraud & Abuse can carry civil and criminal penalties.
Civil Penalties:
• $5500 to $11000 per claim plus up to 3 times the amount of damages
Criminal Penalties:
• Felony conviction: 5-20 years in jail
• Misdemeanor conviction: 1 year in jail
How to Eliminate Fraud and Abuse?
To eliminate fraud and abuse successfully providers, facilities and vendors must work together to prevent and identify inappropriate and potentially fraudulent practices. This can be accomplished by:
1. Monitoring claims submitted for compliance with billing and coding guidelines.
2. Adherence by providers and facilities to Treatment Record Standards.
3. Education of all staff members responsible for medical records (billing, coding, maintenance)
4. Referring cases of suspected fraud and abuse
