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Fraud + Abuse

There have been some eye popping headlines lately about the use of kickbacks to induce physicians and others to refer patients. Apparently, the FBI has just scratched the surface.

Kickbacks are career ending for healthcare professionals and cause significant issues for the company and investors involved. As someone who has experienced the organizational fallout, it’s a lesson that you don’t easily forget.

I worked for an organization under the first OIG settlement for use of kickbacks and other practices deemed abusive. What I learned is that people cross the line when they are under pressure to meet financial targets. 

Investors expect two things from leaders: growth and/or profitability. So I thought it might be helpful to frame the fraud and abuse risks that way too.

Growth:

A focus on growth increases the risk of kickbacks. To minimize the risk, you should have a process in place to:

1/ Identify all your potential referral sources. 

Potential referral sources are physicians, organizations owned by physicians or a family member and others who can influence patients.

2/ Review all the payments made to the potential referral sources to ensure they are supported by a contract. Contracts need to be reviewed for:

  • The nature of the agreement
  • The payment to ensure it reflects fair market value for the services rendered
  • The documentation requirements

3/ Review the documentation for services provided to ensure the services were actually provided in accordance with the contract.

4/ Educate those contracting with a potential referral source on the risks and requirements.

Profitability:

The shading things some people will do for their own gain is almost limitless. 

To minimize risk you need to be constantly looking at the financials, asking questions and validating the answers when something looks off.

With that said, the most vulnerable numbers are the revenue numbers.

1/ Trend and benchmark the charges

2/ Review the number of changes to the charges and the timing of the changes

3/ Review the methodology for contracted write-offs and discounts 

4/ Watch for deviations from the methodology

Potential issues:

1/ Out-of-network strategy 

2/ Over utilization

3/ Additional outlier payments 

4/ Tucking and smoothing to meet financial targets

All of these issues are problematic. The underlying reason and business practices will tell you how problematic.

The Risk is Real

For me, the most memorable cases is that of Richard Scrushy, Founder of HealthSouth and felon. Yes – felon.

Richard and his inner circle intentionally misstated HealthSouth’s revenue numbers by $2 Billion before the problem was uncovered.

The numbers alone make it memorable. However, the problem surfaced just after we launched our online training programs that focused on all the processes needed to accurately report revenue. The case validated our why.

The government is now using data and AI to catch fraudsters. It’s a good time to make sure your I’s dotted and T’s crossed and that you have a process in place to keep them dotted and crossed.