Navigating Fraud, Waste, and Abuse in the Healthcare Industry
Fraud, waste, and abuse (FWA) in healthcare pose significant threats to both individual and societal health and well-being. These malpractices contribute to increased healthcare costs, deteriorating health outcomes, and substantial financial losses for both individuals and organizations.
Given the challenges in precisely quantifying the total annual losses from FWA, comprehensive training becomes crucial in mitigating its financial impact. In this blog, we'll provide you with everything you need to know about FWA and its effect on healthcare.
Healthcare Fraud, Waste, and Abuse (FWA) Definition
In 2015, Medicare estimated that fraud alone resulted in about $60 billion in excessive claims payments. Additionally, a study by the University of Texas suggests that the combined impact of FWA could reach as high as $700 billion annually. The definition of healthcare fraud, waste, and abuse (FWA) involves the deliberate misrepresentation or misuse of resources, funds, or services within a healthcare environment.
According to the Centers for Medicare & Medicaid Services (CMS), fraud is defined 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.”
Waste is defined as:
“Waste includes 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.”
Abuse is defined as:
“Abuse includes 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.”
Identifying Potentially Fraudulent Activity
Identifying healthcare abuse, fraud, and waste is crucial. One key distinction within FWA is that fraud involves the intentional commission of wrongful acts, whereas waste and abuse are generally the result of errors in billing. Let’s take a look at some examples:
Medicare Examples of types of healthcare fraud include knowingly:
- Billing for things that were never given to the patient.
- Billing for no-show appointments.
- Changing claim forms, medical records, receipts, or prescriptions to receive a higher payment.
Medicare examples of healthcare waste include:
- Scheduling excessive/unnecessary appointments.
- Writing for excessive/unnecessary prescriptions.
- Ordering excessive/unnecessary tests, labs, or imaging.
Examples of Medicare abuse include unknowingly:
- Billing for excessive/unnecessary medical services or supplies.
- Billing for brand name drugs (which are more expensive) but dispensing a cheaper generic version.
- Misusing ICD-10 codes on a chart or claim is called upcoding or unbundling codes.
Fraud and Abuse Laws
There are many fraud and abuse laws to be aware of, but the most critical ones are as follows:
- False Claims Act: This protects the government from being overcharged for false claims.
- Anti-Kickback Statute: Paying for referrals or receiving rewards for prescribing medication is a crime.
- Physician Self-Referral Law: You cannot refer a patient somewhere that ultimately results in more money for you or a family member (referring between businesses).
- Exclusion Statute: If convicted of violating laws that prohibit FWA, then you are banned from ever billing CMS again. This can be catastrophic for an organization.
- Civil Monetary Penalties Law: Fines can range between $10,000 - $50,000 per violation.
Moreover, the penalties for breaching laws that prohibit FWA 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
False Claims Act and Healthcare Fraud
Under the Civil False Claims Act (FCA), CMS imposes varying penalties for different offenses based on the state. They make a substantial effort to safeguard and reward individuals who contribute to reducing FWA.
- Whistleblower: An individual who reveals information or activities that are illegal, unethical, or in violation of professional or clinical standards.
- Protected: Individuals who report fraudulent claims or initiate legal actions to recover funds paid on such claims are shielded from retaliation.
- Rewarded: Individuals who successfully bring forward a whistleblower lawsuit are entitled to receive between 15 and 30 percent of the 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 compliance for healthcare providers.
The Importance of FWA Training
Now that we understand the importance of compliance in healthcare billing and fraud and abuse laws, let’s discuss how you can comply.
FWA training provides healthcare professionals with essential knowledge of the relevant laws and regulations alongside the tools and processes needed to identify, report, and prevent fraud, waste, and abuse. If a provider witnesses a violation, they are obligated to report it.
This training is crucial for detecting and preventing improper payments, kickbacks, and other unethical practices, and it guides professionals in developing effective compliance programs that adhere to relevant laws and regulations.
Furthermore, FWA training assists healthcare organizations in responding to, investigating, and mitigating any arising issues. Ultimately, such training ensures that healthcare organizations deliver quality care, safeguard patient privacy, and comply with regulatory standards.
Reducing FWA in Healthcare Systems With 360training
The advantages of FWA training are significant, including saving billions of dollars, enhancing the quality of care, and boosting efficiency. Most crucially, it safeguards both you and your organization.
To ensure compliance with FWA laws and to foster a safe workplace, it's essential to enroll your organization in FWA training. The CMS Fraud, Waste, and Abuse Training by 360training will broaden your knowledge of CMS Fraud, Waste, and Abuse Training in the workplace and teach you how to combat it.
