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Healthcare Fraud versus Healthcare Abuse

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Understanding Definitional Semantics

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Fraud Defined

Fraudmay be defined as any illegal healthcare activity where someone obtains something of value without paying for, or earning it. In healthcare, this usually occurs when someone bills for services not provided by the physician.

Abuse Defined

According to the Dictionary of Health Insurance and Managed Care, healthcare abuse is the activity where someone overuses or misuses services. And, according to the Center for Medicare and Medicaid Services [CMS]:

“although some of the practices may be initially considered to be abusive, rather than fraudulent activities, they may evolve into fraud.”


In the case of healthcare abuse, this may occur when a physician sees the patient for treatment more times than deemed medically appropriate. If there are reported issues or actions from other sources, such as the NPDB or a medical board, a health insurance program can take that opportunity to review healthcare providers’ activities. Most participation agreements allow for this type of scrutiny.


And so, now that a workable definition of healthcare fraud and abuse has been proposed, and we have some definitional clarity, any preliminary billing or invoice review program will usually request a sampling of specific medical records. This may progress to an on-site review of any and all medical records of patients that participate in a CMS program.

These activities can be generated by the plan’s quality assurance, or quality improvement program, and often are tied to the credentialing process for a provider’s participation.


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7 Responses

  1. Modern eHR Fraud and Abuse

    A known problem with electronic, or at least digital, medical records is the use of template-based documentation. And, macros and templates do save time.

    However, problems arise when doctors, inadvertently or not, document history or physical exam findings that do not exist. This problem is not new as digital word processing has been used for two decades now. But, the issue occurs more often than you think. Of course, with the traditional medico-legal mindset of “if not documented, it didn’t happen,” does the opposite extreme hold water?

    On the other hand, as one anonymous blogger opined, “It seems that more and more doctors are taking that to mean that if something IS documented, then whether or not it actually happened is moot, at least as far as payment is concerned.”

    Moreover, it looks just plain un-caring when chart-after-chart, or procedure-after-procedure, reads the same to a discerning quality review person or insurance claims adjuster. It looks even more sinister and evil to a malpractice jury.

    And so, should doctors, who know of others who fraudulently document, blow the whistle or issue a more subtle warning to the offending physician? Or, is this just a function of time compressed physicians? What do you do?

    Ann Miller; RN, MHA
    [Managing Editor]


  2. On False Medical Claims

    Billing for medical services at a higher reimbursement level than was justified by the services actually provided constitutes a false claim.

    In U.S. v. Lorenzo, a dentist billed for a separate oral examination for cancer that was actually only a part of his regular dental check-up examination. So-called “upcoding” is a basis for a False Claims Act charge, and it can take a number of forms.

    For example, if a patient comes into the office for a diagnostic test or a session of some therapy that is not personally delivered by a practitioner, and the practitioner tacks on an office visit to the bill, the claim is obviously false.

    A more troublesome area of potential liability, however, arises when the code and the actual intensity of care match up but the documentation does not. The practitioner may have done all the care needed to justify the billing code, but if the documentation is lacking, the claim may be false.

    Hope Rachel Hetico RN, MHA
    [Managing Editor]


  3. Fraud, Abuse and What Exactly is Unnecessary Medical Care?

    It’s become one of those trendy phrases, “unnecessary care.” When you hear it on television or talkshow radio it’s usually said with a sneer. Indeed, the speakers almost spit the phrase out — “unnecessary care” — like it tastes bad. It’s almost always accompanied by “fraud and abuse,” or a not so subtle accusation that some doctor is profiting off this unnecessary care at the expense of some poor patient.

    But is this true? Is this always the case? Are there no longer any circumstances whatsoever where the doctor really does know best?


    Dr. MJ Leonard


  4. Brief Review of Healthcare Fraud & Abuse Prosecutions

    In the first installment of this three-part Health Capital Topics Series, from colleague Bob Cimasi, the framework of current healthcare fraud and abuse laws, namely: (1) the Anti-Kickback Statute; (2) the Stark Law; and, (3) the False Claims Act, as well as, the regulatory thresholds of Fair Market Value and Commercial Reasonableness, were discussed within the current era of healthcare reform in the U.S.

    In this second installment of this three-part series, three notable Stark violations prosecuted by the federal government, i.e., (1) United States ex rel. Richard Rauh v. McLeod Regional Medical Center of the Pee Dee; (2) United States ex rel. Kaczmarczyk et al. v. SCCI Health Services Corp. et al.; and, (3) the Covenant Medical Center settlement with the U.S. Department of Justice, will be examined.

    These cases are illustrative of the government’s willingness to utilize the tools Congress has provided to combat healthcare fraud and abuse.

    Click to access Emboldened.pdf

    Dr. David Edward Marcinko MBA


  5. Beware of “Re-credentialing Traps”

    Here is a sneaky tactic borrowed from state medical licensing boards. Many times, a physician or an applicant for a license will be accused of some bad act for which he was investigated, but never prosecuted, often from many years prior. When the time comes to apply or renew a medical license, the applicant or physician unfortunately omits the episode in his application. His license is denied, or he is disciplined, not for the actual bad act, but for failing to provide truthful answers in the application.

    Insurance carriers are picking up on this tactic. Instead of licensure applications, they are using the credentialing, or re-credentialing, process to trap physicians. Recently, one provider singled out a class of providers for what it termed “heightened credentialing.” The carrier had information that certain providers were waiving co-payments. Rather than deal with the possible reasons why the co-payments were forgiven, the carrier sought to terminate the provider for failure to disclose the fact that co-payments were sometimes forgiven.

    Source: Martin Merritt, Physicians Practice [5/18/14]


  6. Payment Suspension for Credible Fraud Allegation Turns Up the Heat on Providers

    Providers should brace for more Medicare and Medicaid payment suspensions based on a credible allegation of fraud. CMS and state Medicaid agencies may block payments to large swaths of providers in one fell swoop, which happened in the nation’s capital this spring, and impose suspensions on a variety of services and care providers. “If someone learns they are under investigation, they need to be prepared for the possibility — moving up to the probability — for payment suspension, especially on the Medicaid side,” says San Francisco attorney Judy Waltz, with Foley & Lardner LLP.

    As defined in 2011 CMS interim final regulations, a “credible allegation of fraud” includes an allegation from patterns identified by audits, civil false claims cases, law enforcement investigations, hotlines, and claims data mining, Waltz says. “Allegations are considered to be credible when they have indicia of reliability,” the regulations state (42 CFR Sec. 405.370 for Medicare and 42 CFR Sec. 455.2 for Medicaid). CMS and states can skip payment suspensions for credible allegations of fraud if there is good cause (e.g., it would hinder beneficiary access or alert the target of an investigation). “A credible allegation is a much lower standard than what used to be required for payment suspensions,” she notes.

    Source: Nina Youngstrom, Report on Medicare Compliance [6/9/14]


  7. New CMS Rules Increase Medicare Provider Oversight

    CMS Administrator Marilyn Tavenner announced new rules that strengthen oversight of Medicare providers and protect taxpayer dollars from bad actors. These new safeguards are designed to prevent physicians and other providers with unpaid debt from re-entering Medicare, remove providers with patterns or practices of abusive billing, and implement other provisions to help save more than $327 million annually.

    New changes announced allow CMS to:

    • Deny enrollment to providers, suppliers and owners affiliated with any entity that has unpaid Medicare debt; this will prevent people and entities that have incurred substantial Medicare debts from exiting the program and then attempting to re-enroll as a new business to avoid repayment of the outstanding Medicare debt.

    • Deny or revoke the enrollment of a provider or supplier if a managing employee has been convicted of a felony offense that CMS determines to be detrimental to Medicare beneficiaries. The recently implemented background checks will provide CMS with more information about felony convictions for high risk providers or suppliers.

    • Revoke enrollments of providers and suppliers engaging in abuse of billing privileges by demonstrating a pattern or practice of billing for services that do not meet Medicare requirements.

    Source: CMS


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