Navigating Fraud, Waste, and Abuse in the Healthcare Industry
Fraud, waste, and abuse (FWA) continue to be major challenges in the healthcare industry, costing billions of dollars annually and jeopardizing patient care. Whether it’s unintentional billing errors or deliberate misconduct, understanding how FWA happens can help to prevent it.
Below, we’ll introduce you to definitions and examples of FWA, the laws that prohibit them, the consequences of violating those laws, and how to learn more about FWA compliance.
Healthcare Fraud, Waste, and Abuse Definition
Healthcare fraud, waste, and abuse are deceptive or inefficient practices that involve the misuse of resources, funds, or services in a healthcare environment.
Although these practices wreak havoc across our entire healthcare system, regulations and enforcement are focused primarily on Medicare and Medicaid since those programs are funded with federal money.
The Centers for Medicare & Medicaid Services (CMS) define healthcare fraud as:
“...knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any health care benefit program or to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program. The Health Care Fraud Statute makes it a criminal offense to knowingly and willfully execute a scheme to defraud a health care benefit program.”
CMS defines healthcare waste as:
“…practices that, directly or indirectly, result in unnecessary costs to the Medicare Program, such as overusing services. Waste is generally not considered to be caused by criminally negligent actions but rather by the misuse of resources.”
CMS defines healthcare abuse as:
“…actions that may, directly or indirectly, result in unnecessary costs to the Medicare Program. Abuse involves paying for items or services when there is no legal entitlement to that payment, and the provider has not knowingly or intentionally misrepresented facts to obtain payment.”
Examples of Healthcare Fraud, Waste, and Abuse
One important distinction between these three acts is that fraud involves the intentional commission of wrongful acts, whereas waste and abuse don’t generally include the same intent and knowledge.
When trying to understand the difference, looking at examples of acts that fall into each category can help clarify things.
Examples of healthcare fraud often committed by healthcare providers include knowingly:
- Billing for services that were never performed
- Providing medically unnecessary services
- Falsifying a diagnosis to justify medically unnecessary services
- Misrepresenting procedures to obtain payment for non-covered services
- Billing for a more costly service than what was performed
- Unbundling, or billing for parts of a single procedure separately
- Accepting kickbacks for patient referrals or ordering specific services
- Double-billing the patient and their health plan, and/or billing a patient more than the copay amount for covered services
Examples of healthcare waste committed by healthcare providers include:
- Authorizing the refill of a medication without validating that it’s still needed
- Scheduling excessive or unnecessary services, including appointments, tests, labs, or imaging
Examples of healthcare abuse committed by healthcare providers include:
- Unknowingly billing for brand-name drugs but dispensing a generic version
- Unknowingly billing for unnecessary medical services or excessive supplies
- Unknowingly unbundling or billing for more costly services than performed
How Big a Problem Is Healthcare Fraud, Waste, and Abuse?
It’s hard to pin down the exact cost of fraud, waste, and abuse across the entire U.S. healthcare industry, but a University of Texas study in 2019 estimated the total at $700 billion annually.
In the Medicare system alone, known fraud in 2015 accounted for about $60 billion in excessive claims payments. This number doesn’t include waste, abuse, or fraud that was never discovered.
Fraud and Abuse Laws
There are many fraud and abuse laws to be aware of, but the most critical federal laws are as follows:
- The False Claims Act protects the government from being overcharged for false claims.
- The Anti-Kickback Statute makes it a crime to pay for referrals or receive rewards for prescribing medication.
- The Physician Self-Referral Law prohibits doctors from referring a patient to another business that ultimately results in more money for themselves or a family member.
- The Exclusion Statute bans you from billing CMS if you are convicted of violating laws that prohibit FWA. This can be catastrophic for an organization.
- The Civil Monetary Penalties Law allows DHHS to seek fines ranging from $10,000 to $50,000 per violation.
The penalties for breaching anti-FWA laws are severe and can include:
- Civil monetary penalties
- Civil prosecution
- Criminal conviction, fines, or both
- Exclusion from participation in all Federal healthcare programs
- Imprisonment
- Loss of professional license
The False Claims Act and Healthcare Fraud
Under the Civil False Claims Act (FCA), CMS imposes varying penalties for different offenses based on the state. Offenders can be held liable for three times the government’s damages plus penalties.
They make a substantial effort to safeguard and reward individuals who report FWA, including shielding them from retaliation and rewarding them with 15-30% of recovered funds.
Stark Laws and Healthcare Fraud
The Stark Law, or Physician Self-Referral Law, helps prevent healthcare fraud by restricting physicians from referring patients for certain designated health services to entities where they or their immediate family members have a financial relationship unless specific exceptions apply.
This law is a strict liability statute, meaning no intent to commit fraud needs to be proven for a violation to occur. Exceptions exist for legitimate financial relationships that meet fair market values and do not consider the volume of referrals.
The Stark Law reduces profit-driven medical decisions, helping to ensure they are made in the best interest of patients and preventing common forms of healthcare fraud like overutilization. Violations can lead to severe penalties, including civil monetary penalties and exclusion from federal health programs, emphasizing the importance of healthcare compliance training online for providers.
The Importance of FWA Training
Now that we understand the stakes, let’s discuss how you can comply with FWA regulations.
FWA training provides healthcare professionals with a more detailed knowledge of the relevant laws and regulations alongside the tools and processes needed to identify, report, and prevent fraud, waste, and abuse.
This training helps healthcare workers detect and prevent improper payments, kickbacks, and other unethical practices. This empowers employees to catch fraud, waste, or abuse as it happens, but it also enables them to comply with mandatory reporting requirements. It also guides professionals in developing effective compliance programs that help an organization adhere to relevant laws and regulations.
Ultimately, FWA training ensures that healthcare organizations reduce unnecessary costs, increase efficiency, deliver better care, follow regulatory standards, and avoid unpleasant surprises.
Get FWA Training Online!
Let’s face it, the healthcare industry requires a lot of compliance training – if it’s not time for FWA, it might be time for HIPAA, TJC, or simple HR. It can be costly to tackle all this training with bespoke training programs, whether they’re in person or on a screen.
Luckily, we offer up-to-date and comprehensive compliance training courses for the healthcare industry. Our CMS Fraud, Waste, and Abuse Training will ensure that all relevant staff know not just the basics but how to apply them to protect your organization.
We also offer enterprise solutions that allow you to bundle multiple types of compliance courses with a free LMS, allowing you to save money and streamline the administration and tracking of required courses.
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