Best Practices for Health Care Providers to Avoid Fraud

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Best Practices for Health Care Providers

In 2015, the federal government penalized a Houston pharmacist $5 million for buying referrals from a chiropractor who operated eight practices and received most disbursements from the United States Department of Labor. In 2012, a medical institution inadvertently allowed search engines to crawl their patient database for nearly two weeks during a server upgrade, resulting in a $2.1 million settlement. As the health care system grows more complex, illegal and negligent activity rises. In light of these and other incidents, it is crucial that health care providers take the following steps to avoid fraud and malpractice.

Understand Health Care Laws and Regulations

The False Claims Act (FCA) prohibits practitioners from submitting insurance claims for inferior and overpriced goods and services, delineating individuals who do not report their knowledge of such claims as committing fraud. The federal government may fine offenders up to three times the disbursements plus $11,000 for each false claim.

The FCA provides enhanced whistleblower protection and offers part of recovered funds to encourage fraudulent claim reports. Staff members, competitors or patients may report such claims.

Ensure Accurate Billing

Because insurers and patients place great trust in care providers, Congress mandates severe punishment for false claims. The government exercises broad power in auditing and investigating suspected fraud.  To avoid inadvertent fraud, care providers must maintain accurate billing practices to avoid inaccuracies such as overcharges or claims for undocumented or undelivered services.

Maintain Updated and Proper Documentation

Care providers should maintain accurate records to ensure that future treatments produce the best possible patient outcomes. Accurate records also assist care providers in defending themselves against malpractice suits.

Viewed from the Centers for Medicare and Medicaid Service’s perspective, if a practitioner does not document rendered services, the treatment did not take place. Duly, care providers should maintain proper documentation for all delivered services.

Avoid Unnecessary Referrals

The Anti-Kickback Statute and Stark Law expose care providers who invest in other practices, to increased risk. Some legislators believe that such arrangements promote excessive referrals for business partners.

Unwarranted medical treatments waste insurance funds and place patients at needless risk. When entering business relationships, care providers should question whether potential partners offer a significantly underpriced buy-in, indicating that the firm may expect undue referrals as recompense.

Maintain Physician-Industry Transparency

Research conducted by the Department of Justice (DOJ) and the Office of the Inspector General (OIG) of the US Department of Health and Human Services (HHS) shows that gifts from medical industry manufacturers can influence care provider judgement. Settlements with pharmaceutical companies and Affordable Care Act regulations have resulted in physician-industry transparency requirements, where medical drug, equipment and biological companies must disclose all gifts to care providers. The Pharmaceutical Research and Manufacturers Association (PhRMA) and the Advanced Medical Technology Association (AdvaMed) have created codes to guide care provider and manufacturer ethics.

Disclose Conflicts of Interests

Fraudulent activity often begins with legal but conflicting interests, which care providers should report immediately. Entities such as state agencies, the Food and Drug Administration (FDA), the National Institutes of Health and universities outline rules about disclosing conflicts of interest.

When accepting gifts from medical industry partners, care providers should consider how that relationship would affect their practice, disclose the gift to the appropriate boards or authorities and maintain discipline specific legal compliance. Care providers should also seek peer advice and consider how they would feel about public knowledge of the relationship.

Create and Follow a Compliance Plan

Care providers can avoid fraudulent activity by creating and observing a compliance plan, a practice that the Affordable Care Act mandates to remain Medicare and Medicaid eligible. Voluntary compliance plans consist of seven components:

1) Appropriate violation detection and response
2) Compliance and practice standards
3) Compliance officer election
4) Ongoing training and education
5) Internal monitoring and auditing
6) Organizational communication
7) Well-publicized disciplinary guidelines

The Office of the Inspector General publishes the Compliance Program Guideline for Individual and Small Group Physician Practices to assist care providers in establishing plans.

Seek Guidance from Law Professionals and Government Agencies

While most care providers conduct themselves ethically, legislators must enact laws to protect the public. Duly, the OIG disqualifies Medicare and Medicaid reimbursements for any care provider that commits insurance fraud, patient neglect or other felony offenses.

Care providers should seek legal advice when entering potentially prohibited arrangements, such as a partner that suggests limiting referrals to specific practitioners or facilities. Additionally, practitioners who believe that they have filed a fraudulent claim should immediately cease the billing practice and consult a health care attorney. Health care law professionals can offer care providers detailed risk analyses and legal evaluations for questionable business ventures and practices that the government may view as unethical.

The False Claims Act provides incentives and protection for witnesses that report fraudulent activity. Lawmakers, care providers, medical professionals, and patients must join forces to thwart insurance fraud. Furthermore, care providers should monitor for abnormal billing practices and provide ongoing staff member training to prevent fraudulent claims.

Learn More

To learn to speak the language of health law and distinguish your role as a leader with specialized health care compliance expertise, look to pursue a Master in Health Law and Policy from Hofstra Law.

Recommended Readings:

Important Steps for Health Care Compliance in 2017

5 Health Care Laws Protecting the Rights of Patients

Policies Protecting Senior Citizens

Medicare & Medicaid Eligibility Requirements


Coalition Against Insurance Fraud

Healthcare Finance

U.S. Department of Health and Human Services