Those who go into the healthcare industry from physicians to lab technicians desire to help people.

See also Medical Practices

They transform the science of biology, chemistry and others into practical care to help patients with illness, disability and other conditions. In other words, they desire to make a positive difference. This is why it can be difficult to understand why fraud occurs in these organizations. Fraud is usually difficult to accept because business owners operate on the assumption that most, if not all, employees are honest. Unfortunately, this is not always the case. According to the 2016 Report to the Nations on Occupational Fraud and Abuse, the healthcare industry is one of the top industries experiencing fraud. The report reveals that of all cases reported globally there were 144 cases of fraud with an average loss of $120,000. The data suggests that fraud may not be as isolated as previously believed. To help clients, prospects and others understand common fraud tactics, Hanson & Co. has provided a brief summary below.

Healthcare & Medical Fraud Schemes

  • Billing – According to the study, more than 31% of the cases reported were billing related. Unlike other industries, healthcare is not a product based industry so the amount and type of fraud that can be committed is limited. More often than not, billing fraud that occurs happens when medical providers submit claims to an insurance company for services not performed. What’s interesting and happens often is that these false services are billed to insurance companies and are not even documented anywhere in patient records, etc. Because of this, once the pattern of fraud is established it can be easy to uncover the criminal behavior through an examination of records. Like with most billing schemes the additional money never makes it to the practice, but is taken by the offending party.

  • Corruption – The second most reported type of fraud was due to corruption. According to the study, 30% of reported cases were due to corruption. Note this includes bribery, improper gratitude or referral fees and even extortion. Since healthcare is so specialized it’s quite common for a patient to need a referral for things like X-rays, MRIs, lab work or other specialized procedures. Generally, the provider receiving the referral will find a way to compensate the doctor or other professional making the referral. Sometimes this comes in the form of cash payment and other times in the form or extravagant gifts and other items.

  • Check Tampering – According to the study, check tampering schemes account for 14% of the reported cases of healthcare fraud. This scheme takes place when an employee steals checks from the practice and writes them out to themselves, friends or possible vendors. It also happens when an employee intercepts an outgoing check and changes the amount due to the vendor to a higher amount and receives some financial benefit for doing so. Coincidentally, this is also one of the most common tactics experienced by businesses in the U.S.

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The best thing a medical or healthcare company can do to combat fraud is to establish and follow an internal controls policy. While this does not guarantee that fraud will never happen, it does provide a system of checks and balances to reduce the opportunity. If you are interested in learning more about fraud prevention or internal controls, Hanson & Co wants to help. For additional information please call us at (303) 388-1010, or click here to contact us. We look forward to speaking with you soon.