A Do-It Yourself Guide (Sort of…) Veritas Solutions Group, LLC Healthcare Fraud A Do-It Yourself Guide (Sort of…) Veritas Solutions Group, LLC

Greg Blate, CFE, CPA Managing Director Veritas Solutions Group LLC

The Impact of Fraud The average organization loses 5% of annual revenues to workplace fraud 72% of fraud involves employees of the organization Fraud is detected primarily by tips Best way to limit fraud losses – understand fraud risk areas, implement prevention practices and early detection

Health Care Fraud Challenges Huge industry Significant volume of transactions Lots of players Regulation The customer (patient) has different priorities and include the elderly and mental health patients

Popular Health Care Provider Schemes Billing for services not rendered Billing for a non-covered service as a covered service Misrepresenting dates of service Misrepresenting locations of service Misrepresenting provider of service

Popular Health Care Provider Schemes Waiving of deductibles and/or co-payments Incorrect reporting of diagnoses or procedures (includes unbundling) Overutilization of services False or unnecessary issuance of prescription drugs Corruption (kickbacks and bribery)

1. Billing for Services Not Rendered What is it? How do you find it? Provider or facility submits claim forms to government health care plans or insurance companies for services and care that were never provided. Review documentation – identify inconsistencies or missing information Talk to patients Talk to healthcare providers Implement best practices to report questionable behavior

2. Billing for a Non-covered Service as a Covered Service What is it? How do you find it? Provider or facility submits claim forms to government health care plans or insurance companies for services and care that have been intentionally coded for a different, covered service. (common with experimental treatment) Review documentation – look for few “non-covered services” Identify trends within patient records Talk to patients Talk to healthcare providers Implement best practices to report questionable behavior

3. Misrepresenting Dates of Service What is it? How do you find it? Provider or facility submits claim forms to government health care plans or insurance companies for services on multiple dates to increase “office visit fees” Review documentation –look at “date of service” Identify trends within patient records Talk to patients Talk to healthcare providers Implement best practices to report questionable behavior

4. Misrepresenting Locations of Service What is it? How do you find it? Provider or facility submits claim forms to government health care plans or insurance companies for services rendered at locations other than where the service was provided Review documentation – consider if anything was self-administered Identify trends within patient records Talk to patients Talk to healthcare providers Implement best practices to report questionable behavior

5. Misrepresenting Provider of Service What is it? How do you find it? Provider or facility submits claim forms to government health care plans or insurance companies for services rendered by a different provider – impacting the payments received Review documentation – are volume of patients seen reasonable and likely? Identify trends within patient records Talk to patients Talk to healthcare providers Implement best practices to report questionable behavior

6. Waiving of Deductibles & Co-Payments What is it? How do you find it? Provider or facility waives co-payments or deductibles to increase treatment, and may offset with other non-provided service claims Review documentation – can cash payments be identified? Identify trends within patient records Talk to patients Talk to healthcare providers Implement best practices to report questionable behavior

7. Incorrect Reporting of Diagnosis or Procedures What is it? How do you find it? Provider or facility make claims that inflate the billing through intentional misdiagnosis or through unbundling services Review documentation – look for typical unbundling schemes Identify trends within patient records Talk to patients Talk to healthcare providers Implement best practices to report questionable behavior

8. Overutilization of Services What is it? How do you find it? Provider or facility providing unnecessary services – more common in mental health and addiction areas Identify typical areas for abuse & exercise judgment-review documentation Identify trends within patient records Talk to patients Talk to healthcare providers Implement best practices to report questionable behavior

9. False or Unnecessary Issuance of Prescription Drugs What is it? How do you find it? Abuse in the distribution of prescription medications – typically with high street-value drugs like painkillers Review documentation Know your employees Talk to patients Talk to healthcare providers Implement best practices to report questionable behavior

10. Corruption What is it? How do you find it? Any type of scheme that includes collusion, bribery, kickbacks for referral fees, covering or participating in unethical or fraudulent behavior. Payments are likely disguised or in the form of other gifts. Review trends in business Talk to patients Talk to healthcare providers Implement best practices to report questionable behavior

How Can you Manage the Bleeding? Train & educate employees on what constitutes fraud and unethical behavior Implement steps to deter fraud Have a fraud risk assessment performed Provide employees (and clients & vendors) with access to a Fraud Reporting Hotline Employee tips are used three times more frequently than Internal Audit in detecting fraud

Steps to Deter Fraud Run pre-employment background checks Run ongoing credit and background checks Require employee vacation Pay attention to your employees Pay attention to your customers Pay attention to your vendors Employee tips are used three times more frequently than Internal Audit in detecting fraud

Steps to Deter Fraud (continued) Establish ethics policies, including implications for violations Institute policies to increase probability of fraud detection – Fraud hotline Act swiftly if fraud is detected Create environment where it is understood that fraudsters will be detected and subject to prosecution Employee tips are used three times more frequently than Internal Audit in detecting fraud

Employee Behaviors to Watch Comes in early, stays late Takes on additional responsibility Rarely complains Has management’s trust Has access to everything Attentive to customer complaints Personal financial troubles are resolved

How You Should Respond Do not terminate the suspect Do not confront or attempt to inspect employee files or computer Contact competent, legal counsel Contact insurance agent Contact competent investigator