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Under HIPPA, “fraud is defined as knowingly, and willfully executes or attempts to execute a scheme… to defraud any healthcare benefit program or to obtain by means of false or fraudulent pretenses, representations, or promises any of the money or property owned by…any healthcare benefit.

” Unlike Fraud, abuse is, “means that are improper, inappropriate, outside of acceptable standards of professional conduct or medically unnecessary. ” Health care fraud arises from an individual or group of individuals filing of a dishonest health care claim in order to turn it into a profit.Abuse; however, is harder for the investigator to identify and establish if the act was committed knowingly, willfully, and intentionally. Healthcare industry is one of the fastest growing sectors of the US economy; almost 10% of the US’s national GDP is consumed by the health care industry.

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According to Forbes’s report, the US National Healthcare expenditure of 2012 was nearly $3 Trillion. According to the National Healthcare Anti-Fraud Association, nearly $60 Billion is lost to healthcare fraud each year.The healthcare industry is an enormous market; therefore, making it easier for healthcare providers to take advantage of the American population. This paper will focus on why fraud and abuse occurs, different types of fraud, example cases of fraud and abuse, impact to present day healthcare industry, and potential solutions to fixing and preventing fraud and abuse from occurring. According to Hawaii Medical Service Association (HMSA), “Health care fraud occurs when a person or business intentionally misrepresents facts to receive reimbursement for health care services or supplies.It is a criminal offense under state and federal laws and can result in hefty fines, loss of health care coverage, and/or criminal penalties, including jail time. ” For an example, if a patient goes to the ER department because the patient has sprained their ankle and the reporting physician only prescribes rest and ice to the patient along with an ankle brace. The patient is later sent home and finds out that they were billed for services that weren’t rendered, such as: X-ray, medication, ambulance transportation, pharmacy fee, etc.

This was an intentional attempt by the healthcare provider to charge extra and collect more from the patient. An example of healthcare abuse may occur when a physician determines that he or she needs to see the patient with regular cough more often than eight times a month, which normally isn’t medically appropriate for this type of condition. This type of action results in unnecessary costs from the patient’s wallet to pay for to his or her insurance provider and/or directly to the physician itself. Health care fraud occurs everywhere throughout the industry.It doesn’t necessarily have to be between a provider and a patient. According to Medical News Today, “Medicaid and Medicare are two governmental programs that provide medical and health-related services to specific groups of people in the United States…Medicare is a social insurance program that serves more than 44 million enrollees (as of 2008)… Medicaid is a social welfare (or social protection) program that serves about 40 million people (as of 2007). ” Medicare fraud is a generic term that refers to, “an individual or corporation that seeks to collect Medicare health care reimbursement under false pretenses.There are many different types of Medicare fraud, all of which have the same goal: to collect money from the Medicare program illegitimately.

” “According to the Office of Management and Budget, Medicare “improper payments” were $47. 9 billion in 2010. ” Similarly according to the National Association of Medicaid Fraud Control Units, “Perpetrators of Medicaid frauds run the gamut from the solo practitioner who submits claims for services never rendered to large institutions that exaggerate the level of care provided to their patients and then alter patient records to conceal the resulting lack of care.”Here are various examples of ways in which organizations and individuals have defrauded the Medicare and Medicaid system. These examples are not exclusive, but are set forth to give an idea of the fraudulent schemes which have been successfully prosecuted in lawsuits: Services Not Rendered, Up coding schemes and unbundling, kickbacks and self-referrals, falsely certifying and giving false information, lack of medical necessity, fraudulent cost reports, and grant or research fraud.

The following information was taken with the permission from Warren and Benson Law Group.Service not rendered- “The most basic scheme of healthcare fraud is the billing for services that were never rendered to patients. Examples under this scheme include healthcare providers billing Medicare or Medicaid for services that were never performed, medical supplies and equipment that were never delivered, and lab or medical tests that never occurred. ” Medicare and Medicaid both use a set of codes for billing purposes. These codes are called HCPCS codes.

In this scheme, providers intentionally use a wrongful higher-paying code to “fraudulently reflect that a more expensive procedure or device was involved in the patients’ treatment. ”These codes are all processed electronically, which makes it harder for auditors to catch these acts. Unbundling is another example of coding fraud. “When procedures or lab tests involve a number of related services or tests that are typically performed together, Medicare and Medicaid have specific billing codes that must be used to obtain reimbursement for all of the associated services or tests as a whole, rather than allowing reimbursement for each of the related services or tests billed separately.”The federal anti-kickback statute is, “Physician is prohibited from making any referral to a provider of designated health services if the physician has a “financial relationship” with the provider, unless an exception applies. Financial relationship is defined as a compensation arrangement between the physician and the provider, and a compensation arrangement is defined as “any arrangement involving any remuneration between a physician (or immediate family member of such physician) and an entity other than an arrangement involving only remuneration described in subparagraph (C). ” 42 U.

S. C. § 1395nn(a)(2) and (h)(1)(A).Prohibited financial arrangements include compensation in personal service arrangements at above market rates and leasing of office space at below market rates. ” In the healthcare industry, trust is an important aspect in terms of providing service. “Healthcare providers are required to act openly and honestly with the Medicare and Medicaid programs and submit claims based upon accurate information. In addition, Medicare providers are required to disclose all known errors and omissions in their claims for Medicare reimbursement. Providers who submit false claims in violation of these requirements violate the False Claims Act.

”Violations to such requirements results in heavy settlement cases and financial losses. Lack of Medical Necessity involves the improper billing to Medicare for services and/or treatments that are not medically necessary. Medicare reimburses hospitals for most of its overhead costs, capital costs, and some finance costs and, not just including direct patient care costs. At the end of each year, hospitals submit a “cost report” to claim these costs and based on their claim on percentage of overall services rendered to Medicare patients, Medicare will reimburse a certain percentage in return.

Some hospitals however mask some non-reimbursable costs as “mis-labeled items” in their costs reports hoping that they won’t get caught. Many hospitals and research institutions receive money annually from federal and state level grants. These grants have very strict “parameters within which the money can be used [for].

” Some institutions however sometimes “shift costs between grant programs to cover up costs and overruns and mischaracterize the purpose for which they are spending the funds. ” These are only a few types of common Medicare fraud that occurs frequently in the healthcare industry.Though the generic understanding of these fraud cases will only give on the surface significance of the gravity of healthcare fraud; and an in depth analysis will provide a better understanding. The following examples are healthcare fraud investigations written on public record documents on file in the court records in the judicial district in which the cases were prosecuted. The cases presented in, “Examples of Health care Fraud Investigations- Fiscal year 2013”, are taken from the online library of the IRS. Doctor Sentenced for Health Care Fraud and Tax Evasion“On March 1, 2013, in Wheeling, W.

Va. , Barton Joseph Adams, of Parkersburg, W. Va. , was sentenced to 50 months in prison for health care fraud and tax evasion. Adams was also ordered to forfeit $3,724,721 to the federal government and to pay $3,136,293 in restitution to various healthcare providers, including Medicare and Medicaid.

According to court documents, Adams, a doctor of osteopathic medicine, owned and operated “Interventional Pain Management” in Vienna, W. Va. Adams previously admitted to making fraudulent claims for health care proceeds and to willfully attempting to evade taxes.Josephine Adams, the wife of Dr. Adams, was convicted of assisting her husband in the laundering of nearly $4 million dollars of health care fraud proceeds. The evidence presented showed that the fraud proceeds were first deposited into accounts in West Virginia and then were moved into accounts around the United States before being placed into accounts in Canada, China and the Philippines. ” A fraudulent claim is an assertion of a right to something that is made with the basis of misrepresenting facts and information; and in other words fraud.This is a prime example of fraud because there was intention to inflict damage to another party.

Dr. Adams had motivation to proceed with this fraudulent claim scheme with the intention of personal and monetary gain. Though the case text doesn’t specify what the fraudulent claim was about, but one can assume that as a doctor of osteopathic medicine the claims could be around services that weren’t rendered appropriately. Dr. Adams desired a monetary gain that would be concealed to the IRS. He floated money to different countries in hope that by not having money in the U.

 S he would escape from paying taxes on these funds.Dr. Adams nearly laundered $4 million dollars from fraudulent claims, now he is sentenced 4 years to prison for a mistake that could be easily avoided. The next case is different type of fraudulent scheme. Doctor and Mother Sentenced for Health Care Fraud, Drug Distribution, and Tax Crimes “On March 29, 2012, in Tacoma, Wash. , Antoine Johnson, a former resident of Aberdeen, Washington, and his mother, Lawanda Johnson, were sentenced for more than two dozen federal felonies connected with their operation of four health care clinics in Western Washington.Antoine Johnson was sentenced to 151 months in prison, three years of supervised release and ordered to pay $1,281,873 in restitution for 24 counts of health care fraud, four counts of filing false income tax returns and five counts of illegal drug distribution.

Lawanda Johnson was sentenced to 87 months in prison, three years of supervised release and ordered to pay $1,227,746 in restitution for 24 counts of health care fraud and six counts of filing false income tax returns.According to testimony at trial and court records, Antoine Johnson was the only medical doctor employed by four clinics, which churned out prescriptions for Schedule II controlled substances such as Oxycodone and Methadone. These clinics had thousands of patients and over half of those patients were prescribed controlled substances by Johnson.

Often, the patients would come to the clinic, get their weight and blood pressure taken by a nursing assistant and then pick up a Schedule II prescription that had been pre-signed by Johnson.Sometimes, a patient’s family member would pick up a prescription, but was required to pay a $75 or $100 fee to the clinic for the signed prescription. The clinics, through the business manager Lawanda Johnson, consistently billed Medicaid for a higher level of service than what was actually provided. ” This case involves a physician and mother filing false income tax returns, prescribing controlled substance drugs, and falsifying information to patients. Dr. Johnson would prescribe controlled substance to thousands of patients and in return he would charge them excessively as a “fee to the clinic”.The manager billed Medicaid for a higher level of service than what was actually performed. This goes back to the common types of fraudulent schemes – services not rendered and upcoding schemes.

By providing false information the clinic is able to receive more funding from the Medicaid program and Dr. Johnson and his mother were able to falsify that amount to their income tax. Giving false information on medical records is also one common type of medical fraud committed in today’s healthcare industry. The case Dimora v.Cleveland Clinic Foundation, from the book, Legal Essentials of Health Care Administration, by George Pozar is about, “ A patient who had fallen and broken five or six ribs; yet upon examination, the physician state in the progress notes that the patient was smiling and laughing pleasantly, exhibiting no pain upon deep palpation area. Other testimony indicated that she was in pain and crying. The discrepancy between the written progress notes and the testimony of the witness who observed the patient was sufficient to raise a question of fact.

The court considered the possible falsification of document by the physician in an effort to hide the possible negligence of hospital personnel. The testimony of the witnesses, if believed, would have been sufficient to show that the physician falsified the record or intentionally reported the incident inaccurately to avoid the liability for the negligent care of the patient. ” Mrs.

Dimora, a 79-year old woman, fell down while using the toilet with the aid of a student nurse. The nurse noted down that the patient has broken several rib bones.The discharging physician subsequent the fall noted down that the patient was in good condition. The physician failed to examine the patient thoroughly. The granddaughter of Mrs. Dimora failed a lawsuit against Cleveland clinic claiming that the clinic negligently provided medical care and treatment for her confinement at the establishment; also that the employees intentionally falsified her medical records or inaccurately reported her condition to avoid liability for their negligence.

The defendant was unable to prove that the plaintiff intentionally falsified the report, so the court denied the motion. This type of case is to be noted as an abuse case because it’s difficult to tell whether or not there was a presence of intention in this act. It is difficult to assume if any acts are indeed fraud or abuse because of proving intention.

One can only hope by constant monitoring of health care personnel that fraud and abuse can be avoided. Now that some potential consequences are shown, it is now important to see how this affects the health care industry.

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