October 4, 2016

Fraud Trends in the Healthcare Industry

SEE ALSO >>> Healthcare

Care giving is the nature of those that work in healthcare industry. Doctors, nurses and other professionals go into the field to provide care and support, often to those who are the weakest/most needy in society. This is why it can be particularly disturbing when fraud trends in the healthcare industry are discovered. Uncovering fraud is never a pleasant experience for any business owner because of the underlying assumption that employees are honest and would not act in such a way. According to the 2016 Report to the Nations on Occupational Fraud and Abuse, the healthcare industry is one of the top industries experiencing fraud. The report reveals that of all cases reported globally there were 144 cases of fraud with an average loss of $120,000. The evidence suggests that healthcare companies need to develop better processes to reduce the chance of fraud occurring in the company. To help clients, prospects and others understand common fraud tactics and the prevention process, Wilson Lewis has provided a brief summary below.

Common Fraud Schemes

  • Billing – According to the study, more than 31% of the cases reported were billing related. Unlike other industries, healthcare is not a product based industry so the amount and type of fraud that can be committed is limited. More often than not, billing fraud that occurs happens when medical providers submit claims to an insurance company for services not performed. What’s interesting and happens often is that these false services are billed to insurance companies and are not even documented anywhere in patient records, etc. Because of this, once the pattern of fraud is established it can be easy to uncover the criminal behavior through an examination of records. Like with most billing schemes the additional money never makes it to the practice, but is taken by the offending party.
  • Corruption – The second most reported type of fraud was due to corruption. According to the study, 30% of reported cases were due to corruption. Note this includes bribery, improper gratitude or referral fees and even extortion. Since healthcare is so specialized it’s quite common for a patient to need a referral for things like X-rays, MRIs, lab work or other specialized procedures. Generally, the provider receiving the referral will find a way to compensate the doctor or other professional making the referral. Sometimes this comes in the form of cash payment and other times in the form or extravagant gifts and other items.
  • Check Tampering – According to the study, check tampering schemes account for 14% of the reported cases of healthcare fraud. This scheme takes place when an employee steals checks from the practice and writes them out to themselves, friends or possible vendors. It also happens when an employee intercepts an outgoing check and changes the amount due to the vendor to a higher amount and receives some financial benefit for doing so. Coincidentally, this is also one of the most common tactics experienced by businesses in the U.S.
  • False Dates of Service – Another common fraudulent practice in many medical offices is to document services rendered to the same patient on different days. The reason this is done is because although services were delivered during the same visit, it’s more profitable to the practice if they were delivered on separate appointments.

Contact Us

Wherever there are dishonest people it’s safe to assume that fraud will follow. For this reason, it’s essential for medical and dental practices as well as healthcare companies to have and actively follow an effective internal controls policy. It’s necessary to protect the company from risks because the opportunity for theft is simply too high. If you have questions about fraud prevention or creating an internal controls policy, Wilson Lewis wants to help. For additional information, please call us at 770-476-1004, or click here to contact us. We look forward to speaking with you soon.

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