Many business owners rarely think that health insurance fraud will happen in their company but the fact remains that insurance fraud, waste and abuse happens across the board in companies large and small and is costing America’s health care system billions of dollars.
Insurance fraud, waste and abuse is estimated to take up at least 10 percent of total health care dollars spent with an estimated total of $260 billion annually by 2010, says Cissy Walker, director of audit services for AvMed Health Plans of Gainesville. “Health care fraud, waste and abuse is a menace to each person, their family and the future of health care,” says Walker. “It results in higher premiums or fewer benefits, higher co-payments and even higher taxes.”
Smart Business spoke with Walker about the serious problem of health insurance fraud and what businesses can do to prevent it.
Could you give an example of the financial impact of fraud and abuse on the average insurance premium?
As I mentioned, about 10 percent to 12 percent of total health care dollars are to cover fraud, waste and abuse. For example, of the $1.7 trillion spent on health care in 2004, 11 percent directly relates to prescription drugs. Approximately 11 million people are on prescription drugs without a medical need supporting the drug.
What are some ways that business owners and employees can detect and prevent insurance fraud?
As part of their compliance program, they can establish a rational, integrated, control-oriented anti-fraud program. Of major importance is education and awareness of detection and prevention. Companies need an active fraud awareness program to include a well-publicized referral system that allows employees to report any suspect fraud, waste and abuse. Anonymity and nonretaliation must be assured, as appropriate for reporters.
Businesses need to implement mandatory annual training for every level within the organization to include awareness for detection, prevention and a referral system. Sharing facts with employees of the financial impact to consumers along with examples of current fraud trends in the nation often is not only an eye-opener, but can discourage waste and abuse and help prevent fraud.
What, exactly, is considered health care fraud and abuse?
Fraud is the intentional deception or misrepresentation that an individual or entity knows to be false or does not believe to be true and makes, knowing the deception could result in some unauthorized benefit to him/herself or some other person. The five elements of fraud include false representation, knowledge of its falsity, intent to defraud, justifiable reliance by the intended victim, and results in damage. Similar, abuses are practices by facilities, physicians and suppliers that while not usually considered fraudulent are nevertheless inconsistent with accepted medical, business and fiscal practices.
An error is the unintentional deviation from accuracy that affects claim adjudication such as unintentional billing error, incorrect procedure code, date of service error, incorrect member name or claim form mistake.
What is common among members of a health care provider, or employees of a company that provides health care?
There are many trends including loaning a health care identification card, enrolling non-eligible person(s), using stolen prescription pads, altering prescriptions, and excessive emergency room visits (in order to obtain) controlled substances.
What are some other common fraud and abuse trends?
They include: inflating costs (such as supplies and equipment), failure to report overpayments, seeking reimbursements for costs not related to patient care, failing to disclose relationships between business entities, and upcoding using a code identifying a more complex diagnosis and/or procedure than what accurately reflects the patient’s condition and/or services provided, resulting in enhanced reimbursement.
Pharmacies can bill for higher supply than dispensed or bill for drugs not picked up. Other scams include billing for brand-name versus generic, excessive quantity dispensed, price fraud, and kickbacks using manufacturers’ products.
Physicians are also not exempt from participating in fraud schemes, to include performing medically unnecessary procedures, accepting kickbacks or bribery, billing free services, duplicating billing, waiver co-payments or deductible, misrepresenting a claim, selling filled prescriptions on the black market, prescribing to self or family and over-prescribing to patients.