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Healthcare Billing Fraud: What You Need to Know

Healthcare billing fraud costs taxpayers billions of dollars each year. Local, state, and even the federal government are cracking down harder than ever. Even honest mistakes are being investigated and prosecuted, which can put you or your practice through a gauntlet of inquiries, hurt your reputation, and cost a ton in legal fees. While you’ll get the most accurate information about your unique situation from your Los Angeles federal criminal defense attorney, here is what you need to know about healthcare billing fraud:

Healthcare Fraud Defined

When someone in healthcare or Medicare commits a deliberate and dishonest act to benefit themselves or someone not entitled to the benefit, the Center for Medicare and Medicaid Services (CMS) calls it healthcare fraud. In simple terms, if someone knowingly and willfully dishonestly uses a healthcare benefit, it’s considered healthcare fraud. The most common place for this fraud to happen is in the billing process.

Here are some of the most common examples:

  • Upcoding

Upcoding is the most common form of healthcare billing fraud. This is when medical providers bill for a more complex procedure than what was performed. Upcoding can quickly happen by accident, but can also be used as a way to meet office goals or hit bonus targets.

An example of upcoding could be if a patient has a short consultation with a nurse or medical assistant. This consultation is less expensive than a more extended examination by a doctor. The provider could charge the patient for the more extended, more expensive visit with a doctor. Since the patient’s copy doesn’t change, they may never know that their visit was upcoded.

  • Unbundling

Unbundling is when components of a bundled package are billed separately. More often than not, breaking up the bundle results in a higher price. Unbundling is also easy to happen by mistake, especially if the billing staff isn’t aware that a particular procedure has bundled components.

For example, someone getting a hip replacement might be charged for the surgeon, support staff, and the operating room separately when the procedure should have one all-inclusive fee.

  • Coding the Kitchen Sink

When physicians throw in billing codes outside of a confirmed diagnosis, it’s known as coding the kitchen sink. If this is done on purpose, its goal is often to make it appear that the doctor is treating more issues during a single visit. This practice could set up an inaccurate story of the patient’s health. The paper trail could show false, pre-existing conditions that could be detrimental in the future.

Imagine a scenario where a patient comes in for a cough and runny nose. The actual, confirmed diagnosis could be for a viral infection. The doctor could also add that the patient described lower back pain that required a secondary exam. In the future, the patient gets into an accident at work that results in lower back troubles. The insurance company could look back at medical records showing complaints of this pain long before the accident and award no benefits.

  • Inconsistent Coding

When a patient’s diagnosis changes without a change in symptoms, it’s considered a consistency error. These errors are most common with procedures or surgery and the physician’s billing codes don’t line up with the bill from the surgery center.

An example of inconsistent coding could be a patient who sees their primary care physician regarding a skin tag. The physician assigns the patient a simple removal procedure from another department in the clinic. If the physician charges for a more expensive cancer screening, but the other department charges for a skin tag removal, it could indicate some miscommunication or fraud.

  • Kickbacks

Kickbacks or bribes in healthcare happen when companies pay or otherwise provide gifts to doctors in return for referring patients to them, whether the patient actually needs the treatment/diagnostic test or not.  

A very common example of this is when doctors order an expensive diagnostic like an MRI from a very specific provider not because it helps them with their diagnosis, but because the hospital or diagnostic center carrying out the procedure has promised them a referral incentive for doing so.  

Even supposing that the patient does need it, the fact that there is an incentive in place for the doctor makes this a prime example of a kickback and is in violation of the 1987 Anti-Kickback Enforcement Act.

To legally fall under the definition of fraud, fraudulent activities must be done knowingly and willingly. That means if the new person in the coding department makes an honest mistake, it won’t ruin your practice. While medical billing professionals should aim for perfection, it’s not uncommon for typos or incorrect billing codes to be used. Innocent mistakes often fall under the category of healthcare abuse, which can be just as dangerous as a fraud in certain circumstances.

Unfortunately, even fraudulent activity made by mistake can still result in an investigation. On that same note, doctors or staff who are unaware of fraudulent activities can still be involved in an investigation and suffer the consequences.

How to Avoid Medical Billing Fraud

Since Fraud can happen on both the patient and the practitioner’s end of care, it’s essential that everyone involved take the right steps to avoid even the appearance of healthcare billing fraud.

For Medical Professionals

  • Make sure to document everything. Most Electronic Medical Records (EMRs) and Electronic Health Records (EHRs) have the ability to add notes. Practitioners should keep track of all pertinent details of a patient’s visits: symptoms, complaints, concerns, etc. You’ll also want to document why you are recommending certain medication, medical equipment, referrals, etc.
  • Keep Your Staff Up-To-Date. Medical billing is extremely complex, so it’s worthwhile to invest in ongoing training for your staff. Eliminating typos and careless errors will go a long way in protecting your practice.
  • Have your team conduct regular audits to identify and correct errors. Use these audits to determine where your staff has the most trouble and create training around those issues. You can also identify employees that are a liability due to their many mistakes.
  • Always have a clear policy regarding all things related to billing fraud. Obviously, committing fraud is unacceptable. Make sure your policy points out attractive shortcuts and potential problems in hopes of shutting down fraudulent activities before they happen.

For Patients

  • Always keep your insurance information safe. Don’t give out your insurance card, policy numbers, etc. unless it’s absolutely necessary. If someone else gets this information, they may try to receive treatments under your account.
  • Make sure you understand why equipment, medication, or medical devices are being prescribed. Don’t accept anything that is unnecessary.
  • Check that you only get the medical supplies you ordered. It’s very easy for someone to slip in a little extra while making sure to charge for every item.

You’re Not Alone: Contact a Los Angeles Criminal Defense Attorney Today

The ramifications of medical billing fraud should be scary, but not enough to paralyze your practice. Mistakes happen, and you might find yourself under investigation. But make sure you always have your Los Angeles healthcare lawyer assist in any accusation or investigation regarding healthcare fraud. Even if you’re not under investigation, you’ll want to make sure you’re operating above water and a healthcare attorney will be there to help. Don’t go at it alone when help is closer than you think.

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