According to the National Health Care Anti-Fraud Association, the U.S. loses tens of billions of dollars each year to health care fraud. Most health care fraud is committed by providers, such as physicians and hospitals, and much of that fraud involves fraudulent billing. This post discusses five common billing schemes, and how to detect and prevent them.Read More
As the two most recent Reports to the Nations have indicated, data analytics is one of the most effective anti-fraud controls an organization can use. It’s worth noting, however, that data analytics are also incredibly effective at fraud detection as well. Organizations in all industries, including government, have been implementing analytics for years. According to the Department of Justice’s (DOJ) 2017 Year in Review, they are no different.Read More
FROM THE PRESIDENT
James D. Ratley, CFE
I've met many whistleblowers in my time, and what’s always resonated with me is that they persist despite nearly impossible odds. Dr. Sam Foote, a physician with a genius mind and audacious spirit, persisted when he found himself facing Goliath: the Phoenix Veterans Affairs (VA) Health Care System. When scandal rocked the department in Arizona, he didn’t back down.
In 2011, Foote penned his first letter to the VA Office of the Inspector General (OIG) to report waste, fraud and abuse by Gabriel Perez, then-director of the Phoenix VA. Foote had heard rumors that Perez’s mismanagement of funds had put the hospital $12 million in the hole. The national inspector general for the VA investigated the allegations that same year and Perez retired while inquiries were underway.
Any whistleblower would sigh with relief at this point: The OIG listened, the alleged fraudster was ousted, and now Foote and the hospital could move on. However, during Perez’s tenure, seven physicians left the hospital, and he never replaced them, which left the hospital with a provider shortage.
In 2012, Sharon Helman, who’d previously served as director of the VA hospital in Hines, Illinois, joined as head of the Phoenix VA and nearly a year later was reporting a decrease in patient wait times. But in the next year, Foote discovered secret patient wait lists. “In April of 2013, they [Helman and senior staff] made two lists: They made one electronic list that they would take on and off about 150 names that they actually reported to central office,” says Foote in Fraud Magazine's latest cover article. “Then they had another electronic list that did not report to central office.” Helman and the other administrators were claiming bonuses for decreased wait times — and patients were dying while waiting for care.
Foote again brought his concerns to the attention of the VA OIG, but this time he faced some resistance. He then sent letters to several government officials, including Sen. John McCain, R-Ariz. Eventually, the office of then House Rep. Jeff Miller, R-Fla., the chairman of the Committee on Veterans’ Affairs, responded. Miller put Foote in touch with a CNN producer, and on April 23, 2014, CNN broadcast an interview with Foote, and the story went viral.
Thanks to Foote’s tenacious efforts, further investigations would reveal that 293 veterans died while waiting for care. Multiple high-ranking officials, including Helman, have been placed on administrative leave or fired. And Foote continues to speak out as the VA saga continues.
At the 28th Annual ACFE Global Fraud Conference in Nashville, Tennessee, this past June, Foote received the 2017 Cliff Robertson Sentinel Award “for choosing truth over self.” He might have taken on Goliath, but just like the result of that epic battle, Foote is taking down the giant.
Dr. Richard Lyschik, DDS, CFE, FAGD
President of Practice Rescue
Dr. Richard Lyschik, DDS, CFE, FAGD, President of Practice Rescue, was in the health care industry for many years before he added fraud prevention and detection to his skillset. While providing management consultation to many practices, he observed a variety of fraud schemes and was disheartened at how many medical professionals were hesitant to do anything about it. He warns that perpetrators in health care fraud schemes can be anyone and that doctors need to get more serious about punishing fraud.
How did you become interested in fraud prevention and detection?
My parents came to America from Austria and I traveled frequently to Europe as a child to visit family. Learning how to calculate exchange rates and even interpret travel schedules made me analyze groups of data. Traveling from country to country introduced me to strict border crossing protocols and accurate documentation requirements. Seeing the world definitely got my CFE analytical training off to an early start.
I later learned how to run three private practices and began to assist other doctors with their office operations. Eventually I became a management consultant for practices across the country and was exposed to a variety of fraud schemes. I was finally able to validate all of the fraud observations I made over the years as a health care provider when I joined the ACFE.
What are the most challenging aspects of investigating health care fraud?
It is shocking at how difficult it is to get doctors to believe that there could be fraud in the practice and just as hard to convince them to clean it up. I am always surprised at how when we initially discover fraud. Many doctors’ first reactions are that they don’t want to “rock the boat.” They don’t want you to upset the cash flow or their associated lifestyle, and they don’t want to go through a stressful firing and hiring encounter. They also worry about upsetting the morale of the employees — they often say, “What are the other staff going to think?” Some doctors believe they can solve the matter by having a staff meeting and others have even naively thought that if they speak to the fraudster the fraud will stop occurring.
Another type of doctor I’ve encountered is the one who thinks they are untouchable because they can call upon their CPA, their lawyer, or their malpractice carrier to get them out of “hot water.” It is rewarding though when the doctor recognizes the gravity of the fraud — we have assisted in successfully getting fraudsters fired, prosecuted and incarcerated. Unfortunately, there are times when a casual approach is taken and the fraudster mysteriously disappears and moves on to another similar health care business. It’s unfortunate to know the fraudster has access to money, supplies, drugs and confidential patient files again.
What is your most memorable health care fraud case?
I will never forget the office manager who took home the entire office computer while the doctor was on vacation. She had it cloned by her uncle to capture more than 2,000 patient records filled with social security numbers, insurance policy numbers and credit card data. When the doctor returned from vacation, and the patients’ credit card charges appeared on their monthly statements, it was discovered that the office manager went on a shopping spree for jewelry, exercise clothes, diet pills and more. My team assisted the doctor in the proper termination and subsequent prosecution of that employee.
Additionally, other employees in the practice were let go and strict new fraud prevention guidelines were introduced into the practice. The end result is that the practice became more profitable and added a second doctor within a year because of enhanced practice methods and controls.
Read Dr. Lyschik's full interview on ACFE.com.
LETTER FROM THE PRESIDENT
James D. Ratley, CFE
ACFE President and CEO
Death and taxes. Add health care to that short list of certainties. And while you're at it, tack on the word fraud to health care.
In May 2012, U.S. authorities charged 107 people, including doctors, nurses and other licensed medical professionals, for allegedly trying to defraud Medicare of about $452 million — the largest Medicare fraud sweep to date. The sad thing is that chances are that we'll probably soon be reading about an even more serious case.
"Health care fraud shows no sign of abating," said Dr. Joseph T. Wells, CFE, CPA, founder and chairman of the ACFE, during his keynote message at the 23rd Annual ACFE Fraud Conference & Exhibition. "Don't expect a downturn anytime soon."
Because health care fraud affects everybody, and many ACFE members work in the industry, we've begun the new "Rx for Fraud" column and will occasionally include feature articles on the topic.
In Fraud Magazine's cover article, "10 popular health care provider fraud schemes," author Charles E. Piper, CFE, CRT, writes that the difference between the health care realm and many other industries is its huge, alluring, easy pile of cash. According to the Centers for Medicare & Medicaid Services (CMS), national health expenditures in the U.S. reached $2.6 trillion in 2010 — 17.9 percent of GDP.
The CMS projects U.S. health spending to rise to 7.4 percent in 2014, as a result of the major coverage expansions from the U.S. Affordable Care Act (ACA) — an estimated additional 22 million people will be insured. Over the period of 2015–2021, health spending is projected to grow at an average rate of 6.2 percent annually.
Piper's 10 schemes aren't exhaustive — providers have many more tricks up their lab-coat sleeves. But these are representative of classic crimes. Of course, most health providers, facilities and institutions are dedicated to giving, not taking. However, the small percentage who are fraudsters can steal large amounts because they're close to the money, and they enjoy the trust of institutions and patients.
To learn more about the subject, here are two great possibilities:
- Healthcare Fraud: Auditing and Detection Guide
- Health Care Reform & the New Opportunities for the Ethically Challenged
Health care fraud — like death and taxes — isn't going anywhere. In fact, it will increase in the next decade. We're here to help deter and combat it.