Health Care Fraud - The Perfect Storm

Today, health care fraud is all over the news.				sharks). Is tort reform a possibility from those
There undoubtedly is fraud in health care. The				pushing for health care reform? Unfortunately, it is
same is true for every business or endeavor				not! Support for legislation placing new and
touched by human hands, e.g. banking, credit,				onerous requirements on providers in the name
insurance, politics, etc. There is no question that				of fighting fraud, however, does not appear to be
health care providers who abuse their position and				a problem.
our trust to steal are a problem. So are those				If Congress really wants to use its legislative
from other professions who do the same.				powers to make a difference on the fraud
Why does health care fraud appear to get the				problem they must think outside-the-box of what
'lions-share' of attention? Could it be that it is the				has already been done in some form or fashion.
perfect vehicle to drive agendas for divergent				Focus on some front-end activity that deals with
groups where taxpayers, health care consumers				addressing the fraud before it happens. The
and health care providers are dupes in a health				following are illustrative of steps that could be
care fraud shell-game operated with				taken in an effort to stem-the-tide on fraud and
'sleight-of-hand' precision?				abuse:
Take a closer look and one finds this is no				- DEMAND all payors and providers, suppliers and
game-of-chance. Taxpayers, consumers and				others only use approved coding systems, where
providers always lose because the problem with				the codes are clearly defined for ALL to know
health care fraud is not just the fraud, but it is				and understand what the specific code means.
that our government and insurers use the fraud				Prohibit anyone from deviating from the defined
problem to further agendas while at the same				meaning when reporting services rendered
time fail to be accountable and take responsibility				(providers, suppliers) and adjudicating claims for
for a fraud problem they facilitate and allow to				payment (payors and others). Make violations a
flourish.				strict liability issue.
1. Astronomical Cost Estimates				- REQUIRE that all submitted claims to public and
What better way to report on fraud then to tout				private insurers be signed or annotated in some
fraud cost estimates, e.g.				fashion by the patient (or appropriate
- "Fraud perpetrated against both public and				representative) affirming they received the
private health plans costs between $72 and $220				reported and billed services. If such affirmation is
billion annually, increasing the cost of medical care				not present claim isn't paid. If the claim is later
and health insurance and undermining public trust in				determined to be problematic investigators have
our health care system... It is no longer a secret				the ability to talk with both the provider and the
that fraud represents one of the fastest growing				patient...
and most costly forms of crime in America				- REQUIRE that all claims-handlers (especially if
today... We pay these costs as taxpayers and				they have authority to pay claims), consultants
through higher health insurance premiums... We				retained by insurers to assist on adjudicating
must be proactive in combating health care fraud				claims, and fraud investigators be certified by a
and abuse... We must also ensure that law				national accrediting company under the purview of
enforcement has the tools that it needs to deter,				the government to exhibit that they have the
detect, and punish health care fraud." [Senator				requisite understanding for recognizing health care
Ted Kaufman (D-DE), 10/28/09 press release]				fraud, and the knowledge to detect and
- The General Accounting Office (GAO) estimates				investigate the fraud in health care claims. If such
that fraud in healthcare ranges from $60 billion to				accreditation is not obtained, then neither the
$600 billion per year - or anywhere between 3%				employee nor the consultant would be permitted
and 10% of the $2 trillion health care budget.				to touch a health care claim or investigate
[Health Care Finance News reports, 10/2/09] The				suspected health care fraud.
GAO is the investigative arm of Congress.				- PROHIBIT public and private payors from
- The National Health Care Anti-Fraud Association				asserting fraud on claims previously paid where it
(NHCAA) reports over $54 billion is stolen every				is established that the payor knew or should have
year in scams designed to stick us and our				known the claim was improper and should not
insurance companies with fraudulent and illegal				have been paid. And, in those cases where fraud
medical charges. [NHCAA, web-site] NHCAA was				is established in paid claims any monies collected
created and is funded by health insurance				from providers and suppliers for overpayments
companies.				be deposited into a national account to fund
Unfortunately, the reliability of the purported				various fraud and abuse education programs for
estimates is dubious at best. Insurers, state and				consumers, insurers, law enforcers, prosecutors,
federal agencies, and others may gather fraud				legislators and others; fund front-line investigators
data related to their own missions, where the				for state health care regulatory boards to
kind, quality and volume of data compiled varies				investigate fraud in their respective jurisdictions;
widely. David Hyman, professor of Law, University				as well as funding other health care related
of Maryland, tells us that the widely-disseminated				activity.
estimates of the incidence of health care fraud				- PROHIBIT insurers from raising premiums of
and abuse (assumed to be 10% of total spending)				policyholders based on estimates of the
lacks any empirical foundation at all, the little we				occurrence of fraud. Require insurers to establish
do know about health care fraud and abuse is				a factual basis for purported losses attributed to
dwarfed by what we don't know and what we				fraud coupled with showing tangible proof of their
know that is not so. [The Cato Journal, 3/22/02]				efforts to detect and investigate fraud, as well as
2. Health Care Standards				not paying fraudulent claims.
The laws & rules governing health care -				5. Insurers are victims of health care fraud
vary from state to state and from payor to				Insurers, as a regular course of business, offer
payor - are extensive and very confusing for				reports on fraud to present themselves as
providers and others to understand as they are				victims of fraud by deviant providers and
written in legalese and not plain speak.				suppliers.
Providers use specific codes to report conditions				It is disingenuous for insurers to proclaim
treated (ICD-9) and services rendered (CPT-4				victim-status when they have the ability to
and HCPCS). These codes are used when seeking				review claims before they are paid, but choose
compensation from payors for services rendered				not to because it would impact the flow of the
to patients. Although created to universally apply				reimbursement system that is under-staffed.
to facilitate accurate reporting to reflect providers'				Further, for years, insurers have operated within
services, many insurers instruct providers to				a culture where fraudulent claims were just a part
report codes based on what the insurer's				of the cost of doing business. Then, because they
computer editing programs recognize - not on				were victims of the putative fraud, they pass
what the provider rendered. Further, practice				these losses on to policyholders in the form of
building consultants instruct providers on what				higher premiums (despite the duty and ability to
codes to report to get paid - in some cases				review claims before they are paid). Do your
codes that do not accurately reflect the				premiums continue to rise?
provider's service.				Insurers make a ton of money, and under the
Consumers know what services they receive				cloak of fraud-fighting, are now keeping more of
from their doctor or other provider but may not				it by alleging fraud in claims to avoid paying
have a clue as to what those billing codes or				legitimate claims, as well as going after monies
service descriptors mean on explanation of				paid on claims for services performed many
benefits received from insurers. This lack of				years prior from providers too petrified to
understanding may result in consumers moving on				fight-back. Additionally, many insurers, believing a
without gaining clarification of what the codes				lack of responsiveness by law enforcers, file civil
mean, or may result in some believing they were				suits against providers and entities alleging fraud.
improperly billed. The multitude of insurance plans				6. Increased investigations and prosecutions of
available today, with varying levels of coverage,				health care fraud
ad a wild card to the equation when services are				Purportedly, the government (and insurers) have
denied for non-coverage - especially if it is				assigned more people to investigate fraud, are
Medicare that denotes non-covered services as				conducting more investigations, and are
not medically necessary.				prosecuting more fraud offenders.
3. Proactively addressing the health care fraud				With the increase in the numbers of investigators,
problem				it is not uncommon for law enforcers assigned to
The government and insurers do very little to				work fraud cases to lack the knowledge and
proactively address the problem with tangible				understanding for working these types of cases.
activities that will result in detecting inappropriate				It is also not uncommon that law enforcers from
claims before they are paid. Indeed, payors of				multiple agencies expend their investigative efforts
health care claims proclaim to operate a payment				and numerous man-hours by working on the
system based on trust that providers bill				same fraud case.
accurately for services rendered, as they can not				Law enforcers, especially at the federal level, may
review every claim before payment is made				not actively investigate fraud cases unless they
because the reimbursement system would shut				have the tacit approval of a prosecutor. Some
down.				law enforcers who do not want to work a case,
They claim to use sophisticated computer				no matter how good it may be, seek out a
programs to look for errors and patterns in				prosecutor for a declination on cases presented in
claims, have increased pre- and post-payment				the most negative light.
audits of selected providers to detect fraud, and				Health Care Regulatory Boards are often not
have created consortiums and task forces				seen as a viable member of the investigative
consisting of law enforcers and insurance				team. Boards regularly investigate complaints of
investigators to study the problem and share				inappropriate conduct by licensees under their
fraud information. However, this activity, for the				purview. The major consistency of these boards
most part, is dealing with activity after the claim				are licensed providers, typically in active practice,
is paid and has little bearing on the proactive				that have the pulse of what is going on in their
detection of fraud.				state.
4. Exorcise health care fraud with the creation of				Insurers, at the insistence of state insurance
new laws				regulators, created special investigative units to
The government's reports on the fraud problem				address suspicious claims to facilitate the payment
are published in earnest in conjunction with efforts				of legitimate claims. Many insurers have recruited
to reform our health care system, and our				ex-law enforcers who have little or no experience
experience shows us that it ultimately results in				on health care matters and/or nurses with no
the government introducing and enacting new				investigative experience to comprise these units.
laws - presuming new laws will result in more				Reliance is critical for establishing fraud, and often
fraud detected, investigated and prosecuted -				a major hindrance for law enforcers and
without establishing how new laws will accomplish				prosecutors on moving fraud cases forward.
this more effectively than existing laws that were				Reliance refers to payors relying on information
not used to their full potential.				received from providers to be an accurate
With such efforts in 1996, we got the Health				representation of what was provided in their
Insurance Portability and Accountability Act				determination to pay claims. Fraud issues arise
(HIPAA). It was enacted by Congress to address				when providers misrepresent material facts in
insurance portability and accountability for patient				submitted claims, e.g. services not rendered,
privacy and health care fraud and abuse. HIPAA				misrepresenting the service provider, etc.
purportedly was to equip federal law enforcers				Increased fraud prosecutions and financial
and prosecutors with the tools to attack fraud,				recoveries? In the various (federal) prosecutorial
and resulted in the creation of a number of new				jurisdictions in the United States, there are
health care fraud statutes, including: Health Care				differing loss- thresholds that must be exceeded
Fraud, Theft or Embezzlement in Health Care,				before the (illegal) activity will be considered for
Obstructing Criminal Investigation of Health Care,				prosecution, e.g. $200,000.00, $1 million. What does
and False Statements Relating to Health Care				this tell fraudsters - steal up to a certain amount,
Fraud Matters.				stop and change jurisdictions?
In 2009, the Health Care Fraud Enforcement Act				In the end, the health care fraud shell-game is
appeared on the scene. This act has recently				perfect for fringe care-givers and deviant
been introduced by Congress with promises that				providers and suppliers who jockey for
it will build on fraud prevention efforts and				unfettered-access to health care dollars from a
strengthen the governments' capacity to				payment system incapable or unwilling to employ
investigate and prosecute waste, fraud and abuse				necessary mechanisms to appropriately address
in both government and private health insurance				fraud - on the front-end before the claims are
by sentencing increases; redefining health care				paid! These deviant providers and suppliers know
fraud offense; improving whistleblower claims;				that every claim is not looked at before it is paid,
creating common-sense mental state requirement				and operate knowing that it is then impossible to
for health care fraud offenses; and increasing				detect, investigate and prosecute everyone who
funding in federal antifraud spending.				is committing fraud!
Undoubtedly, law enforcers and prosecutors				Lucky for us, there are countless experienced
MUST have the tools to effectively do their jobs.				and dedicated professionals working in the
However, these actions alone, without inclusion of				trenches to combat fraud that persevere in the
some tangible and significant				face of adversity, making a difference one claim
before-the-claim-is-paid actions, will have little				case at a time! These professionals include, but
impact on reducing the occurrence of the				are not limited to: Providers of all disciplines;
problem.				Regulatory Boards (Insurance and Health Care);
What's one person's fraud (insurer alleging				Insurance Company Claims Handlers and Special
medically unnecessary services) is another				Investigators; Local, State and Federal Law
person's savior (provider administering tests to				Enforcers; State and Federal Prosecutors; and
defend against potential lawsuits from legal				others.

Prevent Fraud

Health Care Fraud - The Perfect Storm