Healthcare Compliance Violations, Fraud and Abuse

Major Categories of Health Care Fraud and Abuse

As in many other areas, in healthcare, there is a problem of fraud and abuse, which can contribute to a significant level of risk for patients and organizations. Research indicates that “the Federal Bureau of Investigation estimates that fraudulent billing constitutes 3% to 10% of total health spending, contributing to inefficiency, high health care costs, and waste” (Drabiak & Wolfson, 2020). Among the most basic deception schemes, there are problems with fraud and the integrity of programs. These may be errors related to administrative activities, for example, incorrect billing or inefficiency leading to waste, such as ordering excessive diagnostic tests. Moreover, in many organizations, there are serious violations such as non-compliance with the rules or abuse of them, and deliberate fraud, such as billing for services that were not provided. It is important to note that invoicing for unfulfilled services is the most common fraud and involves the flow of multi-million resources.

Upcoding refers to the practice of using an incorrect billing code to obtain financial benefits for the provision of medical services. Initially, such codes are used in clinical practice to identify patient services (Coustasse et al., 2021). Thus, many providers inflate the price for analog services, which simpler ones can replace. By assigning a more complex character to the treatment, the deceivers receive higher compensation. An example of such deception may be the appointment of the removal of a small skin lesion as the removal of a larger one, which subsequently leads to a difference in costs and an increase in cost. If the practice of step-up coding is found in the organization, following specific laws, it may be fined or may incur additional penalties.

Five Health Care Fraud and Abuse Laws

Specialized laws have been created to regulate the activities of medical institutions and reduce illegal activities in them. Their main goal is to prevent conflicts of interest and ensure proper and high-quality care for the population. The most crucial Federal fraud and abuse laws are the False Claims Act (FCA), the Anti-Kickback Statute (AKS), the Physician Self-Referral Law (Stark law), the Exclusion Authorities, and the Civil Monetary Penalties Law (CMPL) (“Fraud and abuse laws”, n.d.). These regulatory initiatives were chosen because they fully cover violations in clinical organizations, especially in relation to upcoding. Agencies such as the Department of Justice, the Office of the Inspector General of the Department of Health and Human Services, and the Centers for Medicare and Medicaid are responsible for compliance and enforcement of the laws mentioned above.

False Claims Act (FCA)

This government act provides protection against overpricing or selling and providing substandard services. Moreover, the FCA focuses on the illegality of upcoding and providing false statements about payment to Medicare or Medicaid. This activity is punishable by fines in the amount of up to three times the loss of programs plus eleven thousand dollars for each claim filed (“Fraud & abuse laws”, n.d.). In addition, this bill highlights the fact that when identifying and punishing a violation, the specific intent to deceive is not taken into account. This is since such actions are initially considered deliberate and neglect the truth. The most severe measure of the FCA is a criminal penalty in the form of imprisonment or fines.

Anti-Kickback Statute (AKS)

The Anti-Kickback Statute (ACT) restricts activities for intentional remuneration to encourage referral of patients by paid federal health programs. These processes may be related to supplies or Medicare or Medicaid medical services. In addition to financial payments, this may also include free rent or excessive fees for consultations or other similar services. It is acceptable to reward those who direct to business in some industries. Penalties for such activities include fines, imprisonment, or exclusion from participation in federal programs.

Physician Self-Referral Law (Stark law)

This bill concerns the independent referral of a doctor. Its other name is Stark’s Law, and it prohibits referral to clinical services under Medicare or Medicaid in an organization where a specialist has either a close or financial relationship (“Fraud & abuse laws”, n.d.). The latter implies both property rights or investment interests and compensation mechanisms. Thus, this government initiative excludes cases when health providers receive any referrals.

Exclusion Authorities

The Exclusion Statute prohibits participation in federal health programs of persons who were once convicted of criminal offenses. Examples of such violations may be fraud with Medicare or Medicaid programs, abuse of patients, or committing serious crimes for illegal financial manipulation. Moreover, within the framework of this document, it is possible to suspend or deprive a specialist of a medical license. Doctors deprived of the right to provide services also cannot bill directly for the treatment of patients under the Medicare and Medicaid programs.

Civil Monetary Penalties Law (CMPL)

Civil Monetary Penalties Law imposes fines for a number of violations defined by a government act. These overlays can range from ten to fifty thousand dollars (“Fraud & abuse laws”, n.d.). Examples may be violating the Anti-Kickback Statute, ignoring the introductory provisions on medical care, or neglecting agreements under Medicare and Medicaid. In exceptional cases, it is also possible to revoke the license and ban further activities.

Upcoding and the Law

The law that most touches on the topic of the upcoming is the Law on False Statements. This is justified by the fact that it regulates the sphere of unethicality on the part of service providers in providing medical care. It considers fraudulent intentions when acting under Medicare when specialists provide a patient with a more expensive service than it actually is. Since this process is coding, it is considered a violation of federal law on false statements. In addition, an invoice with an increased code can be sent both to a private health insurer and under the Medicaid and Medicare programs.

In real life, there are many examples of lawsuits concerning illegal encoding. The first, one of the most striking, is the 2013 case of Goldberg Kohn and IPC The Hospitalist Co. Inc. Goldberg sued one of the largest providers of medical services because of the false provision of bills for federal health programs. The case ended with the fact that in 2017, Team Health Holdings, which acquired the provider, paid a fine of eighty million dollars (Manson, 2017). Another example is the 2016 trial of 21st Century Oncology Inc. and the government of the United States of America. Thus, the provider of oncological care paid almost thirty million dollars to settle the lawsuit (“1st Century Oncology to pay $26 Million to settle false claims act allegations”, 2017). The key argument of the organization’s vice was the fact that it provided services that were medically unnecessary. Moreover, the procedures were carried out by insufficiently qualified personnel who could incorrectly analyze and interpret the results obtained and provide incorrect assistance.

Evidence-Based Recommendations to Address Upcoding

Therefore, it is necessary to develop specific guidelines that will prevent the occurrence of cases of excessive fees for services. In addition to following the legislation of the country, there are other methods that will significantly improve the practice of medical institutions and help avoid fraud by staff. There are often cases when falsification of the patient’s condition occurs in the absence of proper control. Furthermore, incorrect information about, for example, the date of birth, information about insurance, and the dates of medical services provided may be grounds for rejecting court claims. Hence, a recommendation to avoid such cases may be a thorough rechecking of the data already available to the organization and hiring specialists to manage this further. Research shows that “data mining techniques, such as unsupervised learning, must be explored using mostly unlabeled records in order to detect upcoding fraud” (Bauder et al., 2017, p. 31). If there are no resources for outsourcing, it is possible to invest in the training of the organization’s staff in this area.

Another valuable recommendation may be the introduction of guidelines on medical coding, which will track post-natively changing trends and data. It is important that medical coders are aware of the latest billing rules and regulations. Additionally, it is essential to check insurance payments and Medicare and Medicaid conditions prematurely. More importantly, policy details may change at any time. In this case, the Inspector General’s Office aims its forces at combating fraud and abuse, such as upcoding, and recommends policies to overcome this issue.

References

1st Century Oncology to pay $26 Million to settle false claims act allegations. (2017). The United States Department of Justice. Web.

Bauder, R., Khoshgoftaar, T. M., & Seliya, N. (2017). A survey on the state of healthcare upcoding fraud analysis and detection. Health Services and Outcomes Research Methodology, 17(1), 31-55. Web.

Coustasse, A., Layton, W., Nelson, L., & Walker, V. (2021). Upcoding Medicare: Is healthcare fraud and abuse increasing?. Perspectives in Health Information Management, 18(4).

Drabiak, K., & Wolfson, J. (2020). What should health care organizations do to reduce billing fraud and abuse?. AMA Journal of Ethics. Web.

Fraud & abuse laws. (n.d.). Office of Inspector General. Web.

Manson, P. (2017). Staffing firm settles fraud suit for $60M. Chicago Daily Law Bulletin. Web.