Fraud, Waste, and Abuse are terms that can have serious impact on not only the integrity of an organization but also the bottom line. The three are all basically interconnected and associated with the healthcare industry. It is vital to have a strategy to identify and mitigate the dangers posed to your organization by those with intentions to defraud, as well as those who may not be aware what they are doing is incorrect.
Fraud generally involves intentional acts done to increase profits for someone through the use of trickery or deceit in an attempt to line their pockets with money they are not entitled to. It is a criminal act and when it involves federal funding through the Medicare and Medicaid programs the penalties may be extensive. There are a host of schemes and methods providers, contractors, and employees employ to cheat the system. Billing for services never performed or billing for items that were never delivered are some of the largest areas of fraudulent activity health plans and businesses face today.
Waste occurs when services, procedures, or products are ordered which are not necessary. The impacts to the organization can be great, severely impacting sustainability. Waste can impact the bottom line of every business, healthcare plan, or provider when careless or irresponsible individuals and contractors are not diligent in their duties. Waste is usually a civil action void of criminal intent.
Abuse may involve costs to an organization through acts which were not done intentionally. The excessive use of individual services, paying the wrong provider or supplier, or accepting money that you are not entitled to are all areas inclusive of abuse. Abuse may involve oversight and mistakes that have a severe impact on the bottom line of any organization such as using the wrong billing or procedure code and billing errors.
Identifying and mitigating risks associated with fraud, waste, and abuse are not only critical to survivability of any organization, but may be mandated when federal dollars are involved, such as in the healthcare industry. There may be many different actors working alone or in concert who intentionally or negligently cause harm to organizations through practices which could be criminal or wasteful. These impacts may translate into millions of dollars when left unchecked and exacerbated if funds are reclaimed by the victim.
It is vital to have a strategy involving compliance, training, and ethics to help your organization avoid unnecessary loss. A culture of compliance is necessary to combat bad actors and financial impacts to the organization. You should consider a reporting mechanism allowing clients and employees to report unethical or criminal activity. Training materials and documentation addressing sound business practices and behavior can help you remain successful.
There are many federal and state statutes which impact business practices. Some examples include the Anti-Kickback law prohibiting rewards of any type given for referral for services applicable when there are Medicare and Medicaid funds involved. Another very relevant area of concern are Stark Law violations which deal with physician ownership and referral. Physicians are generally prohibited from making referrals for health services to organizations where they have a financial interest. There are many entities subject to Stark Law statutes.
Fraud, waste, and abuse concerns are certainly related to the healthcare industry, but the concepts are applicable in any organization. Fraud impacts the bottom line and left unchecked can bankrupt a company in short order. There are multiple state and federal laws dictating how business must operate, and when they are violated, the penalties can be severe.
Waste and abuse are present in most organizations and may not be immediately evident. Identifying and controlling waste can make the organization more profitable and sustainable. Waste risks can be mitigated by a holistic view of the organization and its operations.
Hiring a skilled compliance professional can help your organization improve operation and profitability. Measures can be developed and individually tailored to your needs to identify and mitigate risks arising from fraud, waste, and abuse. Contact In Your Corner Consulting for a consultation to see how we can tailor a compliance plan based on your needs.