What is Hospital Fraud and How To Take Action To Stop It

Hospital fraud charges can amount to millions of dollars. Just a few months ago, the Department of Justice recovered over 18 million dollars from a hospital in Texas because of fraud allegations.

So to help you prevent these hefty fines, we have created this guide to give you a brief overview of hospital fraud and the things you can do to stop it.

What is Hospital Fraud?

Hospital fraud covers a broad subject. But very basically, these are the type of fraud wherein the liability falls to the hospital, clinic, and/or other healthcare service provider. The charges can stem from phantom billing schemes, receiving kickbacks, false billing, and many more.

Oftentimes, hospital fraud is a result of a violation of the False Claim Act and Anti-kickback statutes. Hospitals and clinics receive penalties, either through civil or criminal penalties. To help you better understand what this all means, let us quickly define all the terms that we just mentioned.

  • False Claims Act (FCA)

A federal law that gives liability to anyone who knowingly submitted false claims. An example of this is when a clinic submitted false claims to Medicare for a service that was never rendered.

  • Anti-Kickback Statutes

Federal law that prohibits a healthcare service provider from receiving any rewards or remuneration in exchange for referrals. This law is heavily enforced on service providers who are also part of federal healthcare programs like Medicare and Medicaid.

  • Civil Penalties

Civil penalties are the monetary amount a clinic has to pay for all the violations they committed.

  • Criminal Penalties

Criminal charges can either be a misdemeanour or felony that can result in incarceration or imprisonment. In the case of hospital fraud, doctors and executives are the ones who will receive the penalty.

How to stop it?

As a healthcare service provider, it is your responsibility to be aware of the laws and regulations surrounding our healthcare system. Any government authority or healthcare fraud lawyer would advise you the same as well. You need to comply with the statutory, regulatory, and requirements set by the federal and state government in order to avoid these hefty fines and penalties.

Other than that, here is an outline of your responsibilities as a healthcare service provider published by the Medicare Learning Network.

  • Look for suspicious activity

Healthcare fraud can happen right under your nose without you noticing it. So to avoid these from happening in your clinic or hospital, you should at least make it a habit to audit and double check your patient’s medical records every month. This way, you can immediately implement corrective measures once you know that trouble is already brewing.

  • Conduct yourself in an ethical manner

With hospital fraud, one of the most common and priciest forms of violation is having a relationship with your vendors (e.g. pharmaceutical industries and medical device companies). To avoid paying fines that can rack up to millions, it is best to distance your clinic/hospital with problematic and opportunist vendors.

  • Ensure accurate and timely data and billing

There are some cases wherein service providers face fraud allegations because of lapses in their documentation system. The best thing to do in this case is to simply hire a medical coder and implement a proper documentation system in place. Doing so would not only prevent fraud but would also save you and your team a lot of time when it comes to record-keeping and document processing.

  • Ensure coordination with other payers

Payment schemes may vary depending on the patient, their insurance, and their healthcare provider. There are some cases where the other services received by the patient are separately billed and not included in the actual hospital bill. So to avoid any errors or confusion on the patient, you should coordinate with them directly and properly explain all the services that they incurred in your clinic/hospital.

  • Know FWA policies and procedures, standards of conduct, laws, regulations, and CMS’ guidance

As mentioned earlier, the initial step to combating fraud is to know the laws and comply with the regulations set by federal and state agencies.

  • Verify all received information

Although this advice is often directed to patients, it is also applicable to hospitals and clinics as well. Given that identity theft has become rampant these days, one of the ways you can help combat it is to simply verify all the information given by your patients.