The federal government, in an all-out attack on fraud and abuse in the healthcare system, is conducting a $1 billion campaign to ferret out billing errors. And while the government has recovered hundreds of millions of dollars, recent estimates indicate that as much as 10% of all healthcare expenditures are still wasted on billing fraud and abuse.

Types of fraud
According to a 1993 survey by the Health Insurance Association of America, overall healthcare fraud activity can be broken down as follows: fraudulent diagnosis— 43%; billing for services not rendered— 34%; waiver of patient deductibles and copayments—21%; other—2%.

Fraud can cost you
The federal False Claims Act carries serious fines for healthcare providers who “knowingly” submit or cause the submission of fraudulent claims to federal payment programs, such as Medicare or Medicaid. Fines can run up to $10,000 per claim plus triple the damages sustained by the government.

Healthcare providers can be held liable for submitting a false claim under any of the following circumstances:

• actual knowledge that it’s false
• deliberate ignorance of the truth or falsity of the information
• reckless disregard of the truth or falsity of the information.

Even honest mistakes can lead to allegations of fraud. The government is likely to view either failure to fully document every chart, perhaps you’ve assumed that only you need to understand the chart and why the care was necessary, or plain ignorance of federal payment program guidelines as flimsy excuses for billing errors. And it’s not just the government going after wrongdoers; the False Claims Act allows private citizens to sue, too. Anybody with direct knowledge of fraud—such as an employee, a patient or a competitor— can bring a false claims suit on behalf of the government. If the government doesn’t join in the case, the “whistleblower” can pursue it alone.

To encourage whistleblowers to come forward, the False Claims Act entitles them to a share of any money resulting from a judgment against, or settlement with, the defendant. Senior citizens are being encouraged to help prevent Medicare fraud by calling a hotline if, after scrutinizing their bills, they answer “no” to any of the following questions:

• Did you receive the service or product for which Medicare was billed?
• Did your doctor order the service or product for you?
• Is the service or product relevant to your diagnosis or treatment?

Preventing allegations of fraud
There are several things healthcare providers can do to help prevent allegations of billing fraud and abuse. They include the following:

• Complete claims forms accurately.
• Ensure that patient records corroborate that services were actually rendered and necessary.
• Develop and install a comprehensive compliance plan.

Compliance plan guidelines
A compliance plan designed to prevent healthcare fraud and abuse is crucial for three reasons: One, an effective plan will prevent improper claims in the first place. Two, the fact that you have one will help mitigate your liability if you’re taken to court—it will provide substantial evidence that any improper billing submissions were honest mistakes. Three, it will help improve interoffice communications and overall efficiency. Your plan should contain the following seven elements, according to the American Medical Association:

• A clear commitment to compliance. The plan should ensure that everyone in the organization understands the obligation to comply with established standards, and that the organization will uphold those standards.
• Appointment of a compliance officer with a high level of responsibility. He or she should have the requisite authority to influence behavior and organizational practice.
• Effective training and education. This should be a routine process that addresses everyone’s role and makes participation in the plan understandable.
• Auditing and monitoring. There should be a regular review of the development and submission process for a claim form, starting from when a patient is initiated to the submission of a claim for payment. The monitoring process should include a way for employees to report suspected fraud or abuse.
• Communications. This should be an effective process that includes a telephone hotline for reporting suspected violations.
• Internal investigation and enforcement. The organization should be able to conduct investigations and take disciplinary actions when warranted.
• Response to identified offenses and application of corrective measures. After identifying a compliance problem, the organization should take corrective actions, including steps to prevent similar offenses.

Another component of a practical compliance program is a protocol for dealing with government investigators in the event of a search of your office or facility. Specifically, the protocol should instruct employees not to interfere in any way; designate by title the employees (and alternates) who will interact with investigators; require those employees to request and review a copy of the search warrant and relay its provisions to legal counsel; and include specific instructions for monitoring and documenting the search by designated employees. Last, the program should include information to be handed to all employees at the time of the search, including their legal rights and obligations and whether the company will pay for their legal representation.

Extra Protection: SCPIE Best Defense
Solo physicians or medical groups with nine or fewer physicians in California may want the extra protection a SCPIE Best Defense Billing Errors & Omissions policy offers. With this stand-alone policy, insureds will be in a much better position to fight any charges involving unintentional billing errors that the government levels against them.

To receive additional information and a free, no-obligation premium estimate, click here or call SCPIE at 800/717-5333.