Milon Shah 0093264 04/28/2010

MEDICAL BILLING FRAUD

“NIGHTMARE” FOR PATIENTS

What is “Medical Billing”?

Medical billing is a complex procedure of billing and collecting professional fees for medical and healthcare services rendered by health care providers to patients.

Overview of Medical Billing Process

http://www.outsource2india.com/services/medical_billing_process.asp

Flow Chart of Medical Billing

What is “Medical Billing Fraud”?

Committing Fraud means “intentional deception” or “misrepresentation” of data in medical bills made by a person with the knowledge that the deception could result in some unauthorized benefit to him/her or other person.

Facts & Statistics

Uninsured PatientsNearly ‘50 million Americans’ do not have health insurances (15% of the population),Peoples with out medical insurance having an outstanding medical debt, averaging $ 9000 per person

Underinsured PatientsEstimated ‘25 million’ are underinsured,(Have health insurance but struggle to pay their health care bills) Face problems with higher premiums,

deductibles & Co-payments

Insured PatientsOver 60% of families who report having medical debt problems are covered by medical insurance.

“Medical debt” rank as the second-leading cause of personal

bankruptcy in united states.

http://www.healthcareproblems.org/health-care-statistics.htm

Facts & Statistics

According to Medical Bill Advocates of America (MBAA),

8 out of 10 medical bills (80%

of total) from hospitals and

providers contain errors.

Fraud associated with bills in health care accounts for an estimated 3% of all health care spending. ($68

billion)

The government losses 30 cents to every dollar from

fraudulent practices in the

hospital overbilling in

medical community.

Medical billing fraud has its significant effect on the private and

public health care system.

Fraud & Abuse accounts for total 3% of the total health care cost

Taxpayers are enforced to pay higher taxes in public programs

such as Medicare & Medicaid.

Because of fraud in private sector, employers and individual pay

higher private health insurance premiums.

Health Care expenditure in United States exceed $2 trillion

a year, in comparison to federal budget which is $3 trillion

a year.

(Source: Centers for Medicare & Medicaid Services, Office of Actuary, National Health Statistics Group)

Effect on U.S. Health Care System

Types of Medical Billing Frauds

1) Upcoding It assigns a diagnosis that warrants

a higher reimbursement than medically necessary

2)Downcoding Opposite of upcoding Inaccurately reports a lesser

diagnosis to show fraudulent patient improvement

Tactics of Fraud

Potential Indicators of Fraud

Double Billing Personal Injury Mills Quackery – Related Miscoding Viatical Fraud Bogus Health Insurance Companies Miscellaneous

http://www.quackwatch.org/02ConsumerProtection/insfraud.html

Double Billing

Most common error found in medical bills

Health Care Providers tend to charge twice for the services they rendered to the patients

Due to Complexity of medical billing system, it goes unnoticed by the patients and they end up paying higher medical bills.

Personal Injury Mills

What is an Insurance mill? A conspiracy in which unnecessary care is

provided in order to create large insurance claims.

Objective: To maximize medical expenses to get the

potential benefit through large insurance claims.

The potential players are Health Care Providers Attorneys

Scenarios of Personal Injury Mills

People with minor accidents are advised that they are injured seriously than they think

Set up diagnostic evaluation process in which it involves multiple practitioners

Patients get same treatment on a similar schedule irrespective of clinical need

Multiple diagnostic tests are recommended with no explanation, no discussion of results

Quackery Related Miscoding Non Standard Practitioners (Health Care

Practitioners) misrepresent diagnostic and procedural codes.

They also misrepresent their diagnosis. Because

Insurance companies rely mainly on codes recorded on the claim forms.

Based on miscoding for services rendered, practitioners boost their income

Examples of miscoding

Brief or intermediate-length visits may be coded as lengthy or comprehensive visits.

Patients receiving chelation therapy may be falsely diagnosed as lead poisoning and it may be billed as “Infusion Therapy”.

Non standard allergy tests may be represented as standard ones.

Diagnosis of cancer may be coded as “Chemotherapy”.

Viatical Settlement

A “Viatical Settlement” is an act by person who is terminally ill of cashing in a life insurance policy to pay for the necessary associated illness, medical expenses, and final wishes.

Viatical settlement companies who have assigned policies of terminally ill may sell the policy to third party investor.

The company or the investor becomes the beneficiary to the policy, pays the premiums , and collect the face value of the policy after the original policyholder dies.

How does Viatical Fraud occur? Agents recruit terminally ill people to

apply for multiple policies. They misrepresent truth and answer “no”

to all of the medical questions. The insurance agent who issues the policy

is a party to the scheme. The agent or one applicant may even

submit the same application to many insurance companies.

They purchase the policies and sell them to unsuspecting third-party investors

Bogus Health Insurance Companies Many of fraudulent insurers tend to bore

names similar to those of legitimate companies.

Health Insurance plans from such companies place the buyer at risk for financial disaster due to expensive medical bills that they need to pay for serious illness.

By this way patients may end up paying premiums without any coverage on expensive medical bills.

Cont.

E.g.From 2000 to 2002, 144 unauthorized entities enrolled at least 15,000 employers

and more than 200,000 policyholders

who got stuck for over $200 million in unpaid claims 

Miscellaneous Tactics

Not offering charity care Offering Expensive Credit Card Underprovision of care, High numbers of referrals to

emergency rooms, Inadequate treatment plan

Prevent Fraud

Understand Explanation Of Benefits (EOB) Checking the Explanation Of Benefits (EOB) can be

considered as first option to look for the probable billing fraud.

The EOB lists The medical provider, Date of service, Claim identifier, What was billed to insurance, What insurance company paid, what costs were disallowed and why, and Finally , what patient owes.

EOB Cont.

If bill matches the EOB that doesn’t mean it is correct, but it only means that insurance company had verified what amount you owe to the medical provider.

Patients need to be persistent to report suspicious error.

Patients need to learn how their care coded and how codes correspond to respective charges.

Review the Bills

Patients should review their medical bills with a close look.

They should compare the list of procedure with records that they had.

They should ask for explanation if they have any question about an item on a bill.

The things that patients can’t decipher, they can ask the medical records department for a copy of their doctor’s orders and nursing notes.

Look for Billing Errors

Incorrect data E.g. Length of Stay Advise patients to Refer to log for the

time patients admitted.

Duplicate orders Check out for the services that are

charged in the bill Also check the number of lab tests or

procedures that had.

Cont…

Unbundled fees Patients need to make sure that they are not

charged for the service whose charges should have been bundled with another charge.

Operating-room times Important for patients undergone surgery Patients should make sure that they are not

charged for items that should be included in the operating-room fee, such as gloves, linens, or light covers.

Cont..

Upcoding This practice inflates the patient's diagnosis

code to a more serious condition that requires more costly procedures, To spot it, compare the diagnosis on doctors’ orders and nursing notes with the charges on medical bill.

Upselling A charge can be needlessly inflated. Patients should not be charged for that

increased charges as they are not responsible for it.

Laws that Regulate Fraud & Abuse

False Claims Act (FCA) Stark Law Anti-Kickback Statute HIPAA Criminal Penalties for Acts involving

Federal Health Care Programs

Conclusion

Rising health care expenditures became the burning issues for economy of government of United States.

Health care frauds, especially fraud associated with medical billing undoubtedly one of the major reason behind this rising health care costs

Patients may end up filing bankruptcies due to their inability to pay medical bills.

Cont..

These issues of fraud need to be look with accurate precision and try to solve them with corrective actions.

If it would not be address as early as possible, it will end up being true “Nightmare for the patients” who will find their selves under debt that they can’t think of getting out.

Questions