Around the world, hospitals and other medical facilities are suffering from a loss of revenue. Medical revenue can be damaged in a number of ways.

What Hurts Healthcare Revenue

Both internal and external fraud and dishonesty can impact the revenue of a healthcare provider or practitioner. Such fraud can occur in a variety of manners. Internal fraud involves the intentional manipulation of healthcare practitioners. This typically occurs when a provider charges for services that are coded to be more expensive, are not medically necessary, or never even occurred. This type of manipulation may also involve the payment of kickbacks. Unfortunately, such fraud can go on for years before it is discovered, typically either through a whistleblower or an audit.

The loss of healthcare revenue can also occur as a result of patient dishonesty. Whether it involves refusing to pay bills or lying about insurance coverage, patient dishonesty can cause a loss of revenue, resources, and time.

Revenue Cycle Overview

Among the most significant challenges faced by many medical facilities and healthcare providers today is justifying the need for information technology systems. Yet, revenue cycle management can play a vital role in preventing loss of revenue. Far more than simple billing systems, RCM information systems cover a number of areas, including pre-service financial clearance as well as discharge billing and post-service billing.

Popular Fraud Schemes and Their Explanations

Some of the most popular types of healthcare fraud schemes include:

  1. Billing for More Expensive Services

Under this scheme, the facility will bill for more expensive services or procedures than were actually performed or provided. This is typically referred to as upcoding, which involves falsely billing for a more expensive treatment than the facility actually provided. Upcoding may also involve inflating the diagnosis code of the patient. For instance, a patient might come into the facility reporting chest pain, with the facility upcoding the diagnosis to a heart attack in order to generate more revenue even if the patient did not actually suffer a heart attack.

  1. Unbundling

In this scheme, each step of a procedure is billed as though it were a separate procedure. This scheme may also involving billing the patient multiple co-pays for services that were actually paid in full or prepaid under a benefit plan or managed care contract.

  1. Identity Theft

Identity theft is rapidly becoming a major concern in the healthcare industry. This can not only affect the credit ratings of patients, but also result in significant revenue loss for medical facilities and healthcare providers. Under this type of fraud, the perpetrator provides the name or identifying information of another individual without that person’s knowledge, in order to obtain medical services. Identity theft may also be used to submit false insurance claims. Even more concerning than the risk of revenue loss is the potential for medical identity theft victims to receive the wrong medical treatment. Victims of such identity theft may also be at risk for discovering that their medical insurance benefits have been used up. Individuals who have been targeted for medical identity theft may be surprised to fail physical exams for their jobs as a result of a medical condition or disease for which they have never been diagnosed.

  1. Misrepresenting Physician’s Privileges

While the thought of someone misrepresenting the identity of a physician is certainly frightening, it does happen. Investigations into healthcare fraud have uncovered situations in which physicians signed insurance claim forms stating they provided services, while in reality, healthcare professionals with less training actually performed the services. Under this scheme, the insurance company would pay more for the services rendered by physicians with more training.

  1. Bypassing Medical Necessity

This type of fraud involves coding to compensate for a shortfall in what is termed as medical necessity. Medical necessity refers to a type of code used by a payor who requests additional documentation. Minor adjustments may be made to ensure that a non-denial transaction is received.

  1. Duplicate Denials

Duplicate denials are yet another common form of healthcare fraud. Each year, numerous healthcare claims are denied as a duplicate service. This is often one of the most common billing errors in many medical facilities.

  1. Cash Drawer Misrepresentation for Self-Pay Patients

As is the case in any other facility in which a cash drawer is used, medical facilities and healthcare providers are at risk for fraud to be committed by cash drawer misrepresentation. This problem most occurs when treating self-pay patients who pay their own bills rather than having claim forms submitted to an insurance company. By misrepresenting the cash drawer, the staff in a medical facility can easily defraud medical facilities of massive amounts of money.

  1. Bypassing System Definitions

Under this scheme, system definitions are bypassed in order to categorize an outpatient as an inpatient for the purposes of achieving a non-denial encounter. As inpatient care is typically more expensive than outpatient care, this can result in staggering levels of fraud.

  1. Sharing Patient Information with Third Parties

Sharing unauthorized patient information with third parties might seem innocent enough on the surface, but can actually place patients at significant risk for becoming victims of identity theft.

  1. Theft of Time Via Overtime

An age-old practice, the theft of time by reporting overtime that never actually occurred can cost medical facilities massive amounts of money each year.

What Can You Do to Avoid or Prevent Healthcare Fraud

As complex as healthcare fraud can be, some simple steps can be used to keep healthcare costs in check and prevent fraud.

Consumers should begin by protecting their healthcare insurance identification card just as they would a credit card or debit card. When a healthcare insurance card makes its way into the wrong hands, it is easy to become a victim of fraud and identity theft. Furthermore, make a point of never giving out policy numbers to telephone solicitors, door-to-door salespeople, or online. Be cautious about providing your insurance information to other people. In the event that you lose your healthcare insurance card, be sure to report it to your insurance company right away.

If you become aware of healthcare fraud, contact your insurance company right away. An increasing number of insurance companies now offer a way to report suspected healthcare fraud directly through their website.

Take the time to become informed about healthcare fraud, as well as the health services you receive. Maintain careful records regarding your healthcare. Review all medical bills you receive and do not be afraid to ask questions if you notice anything that looks suspicious or erroneous.

Review your healthcare insurance policy, as well as benefits information. In particular, pay close attention to your Explanation of Benefits statements as well as any other paperwork you may receive from your insurance company.

Be wary of any free offers you may receive, including offers for free services, treatments, or tests. Such offers are often actually fraud schemes intended to illegally bill you, as well as your insurance company, for treatments you do not actually receive.

Healthcare fraud is a serious matter that can drive up the cost of healthcare for everyone. Taking the time to become informed about fraud schemes can help to keep this problem in check.