Medical billing fraud has a very real and unfortunate presence in the medical billing industry. Every year private insurance companies, public health institutions and government payer agencies suffer significant financial losses to medical billing fraud.
In some cases, the fraud is accidental and simply related to poor practices or not using up to date codes. This is even more likely to occur with solo practitioners and small practices where the individual in charge of medical billing and coding is not a specialist in the area.
However, there are some instances where the act of medical billing fraud is intentional and can take place over a long period of time. When detected it often leads to a domino effect of critical changes that need to be implemented. Not to mention the potential legal problems that come from medical billing fraud prosecution.
Of course, not all medical billing fraud is the same. In general they can be broken down into three different categories, each with its own specific characteristics as well as punitive potential.
What Are The Four Most Common Types Of Medical Billing Fraud?
Beyond accidental or unintentional medical billing coding errors, the three most common types of medical billing fraud are: Upcoding, Excessive Billing, Providing Excessive Services To A Patient and Falsifying Records. Each has its own telltale signs and endemic practices that show up to the trained eye of an auditor looking for signs of medical billing fraud in a medical practice’s claims.
What Is Excessive Billing?
Excessive billing is generally the easiest type of medical billing fraud for an auditor to detect. It is essentially a practice of submitting too many bills for an insurer to detect.
However most private insurance companies have accurate information on a healthcare facility’s size as well as the various services that practice provides to their patients. This includes things like demographic information about the surrounding region, which tells insurers the number and type of procedures an average practice can expect to perform at any given period of time.
With modern day analytics fully at the ready, a short-term spike in a particular procedure might go undetected. However, a long-term increase that goes on for weeks or months will almost always draw a red flag, which leads to an in depth audit.
Many small practices and physician grounds are capable of detecting excessive billing as they are well aware of just how long it takes to diagnose and treat patients for a specific condition. This data makes it easier for these groups to calculate the number of patients a practice to treat in a single day or week.
Something as simple as a solo practice that submits an average of 100 or more insurance claims in a day will draw an obvious red flag quite quickly as it is physically impossible for them to see and treat that many patients in a single day.
Sometimes Upcoding is simply the result of a solo practitioner or administrative staff member who lacks the necessary understanding of Medical Coding best practices or who simply doesn’t have access to an updated code book. These accidental forms of medical billing fraud are often unintentional, though they could carry significant consequences none-the-less.
However, there are certainly just as many if not more cases of upcoding fraud that are intentional. When this happens, a diagnostic code is assigned for a more severe condition than the one the patient is actually dealing with. The net result is that the practice sees an increase in their overall revenue as the insurer or the payer institution reimburses higher for the more serious conditions.
How Is Upcoding Fraud Detected?
It’s worth noting that the Office of Inspector General keeps a list of codes that are particularly suitable for upcoding. When they are used excessively it generates a red flag that then requires a full audit of the practice that submits a higher level of these claims than falls within the pre-established parameters.
The Office of Inspector General further monitors the codes for a practice’s inpatient population to help detect conditions that are generally more severe than the norm. A practice can be heavily fined if the Office of Inspector General determines that it is intentionally upcoding multiple claims.
This is a general term to describe the process of “Improper Medical Documentation.” As such medical billing fraud linked to falsifying records can be one of the most difficult types of medical fraud to detect. Especially when you consider that many of these cases are unintentional.
One of the most significant reasons behind fraud linked to false records is that many types of claims may be submitted without attaching existing medical records or long-term medical histories. This potentially allows healthcare providers to build a good understanding of the insurer’s practices in a way that gradually increases their reimbursement rates via manipulating claims. All without triggering a red flag for an audit.
Unfortunately, altering medical records for the purpose of increasing the claim amount is highly illegal. It is also illegal to intentionally omit critical information on a claim. This is often done to cover errors in a patient’s treatment notes. It is also illegal for a medical coding professional to change a code on a claim even when ordered to do so.
Providing Excessive Services to Patient
Providing services to a patient beyond what they need, in order to receive a higher reimbursement rate is also another common type of medical fraud. This includes providing unnecessary services as well as charging for services that were never even performed.
This type of medical billing fraud can be difficult to detect for a single patient as it is often unintentional, or simply the result of poor billing practices. Though practices of every size should have processes in place to help detect inaccurate charges for each service and unintentional fraud can still have punitive consequences.
Outsourcing Your Medical Billing Can Prevent Unintentional Medical Fraud
The unfortunate reality is that even unintentional or accidental medical billing fraud can still carry some very stiff consequences for both solo practitioners and small practices. Outsourcing your medical billing services to a third party agency that specializes in medical coding will go a long way toward catching errors and correcting bad habits. It also has the net benefit of freeing up more time to focus on treating patients, rather than researching medical codes and spot checking for errors.