The Expert Guide to Fraud, Waste, and Abuse in Healthcare

Fraud, waste, and abuse (FWA) in healthcare are serious problems that hurt the health and well-being of individuals and society. They lead to higher costs for care, worse health outcomes, and exorbitant financial losses for individuals and organizations.

Medicare estimates that in 2015, fraud alone accounted for up to $60 billion in overpaid claims.1

A study from the University of Texas believes that FWA combined could be as much as $700 billion per year.2

Because it’s virtually impossible to estimate the annual loss due to FWA accurately, training is essential to reducing its financial burden. Are you doing your part to reduce FWA?

Definition of Fraud, Waste, and Abuse

Fraud, Waste, and Abuse (FWA) in healthcare refers to misrepresentation or intentional misuse of resources, funds, or services in a healthcare setting.

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 misusing healthcare resources or services that lead to unnecessary costs.

“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 the improper use of resources or services that can lead to unnecessary costs or damage.

“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.”

Why is FWA Training Important?

FWA training equips healthcare professionals with the knowledge and understanding of relevant laws and regulations and the tools and processes necessary to identify, report, and prevent fraud, waste, and abuse. If a provider sees a violation, they are required to report it.

FWA training helps healthcare professionals detect and prevent improper payments, kickbacks, and other unethical practices. It shows them how to develop effective compliance programs that align with applicable laws and regulations.

Lastly, FWA training helps healthcare organizations respond to, investigate, and mitigate any potential issues that arise. Ultimately, FWA training will help ensure that healthcare organizations provide quality care, protect patient privacy, and meet regulatory guidelines.

5 Types of Fraud, Waste, and Abuse Training

1. Overview of Fraud, Waste, and Abuse

This training provides an overview of FWA, including definitions, examples, and typical schemes. It is designed to raise awareness and provide a basis for future training.

2. Internal Controls and Detection

This type of training focuses on an organization's internal controls to detect and prevent FWA. It covers risk assessments, fraud prevention and detection policies and procedures, data analysis, and internal control reviews.

3. Investigation and Prosecution

This type of training focuses on the investigation and prosecution of FWA. It covers evidence gathering, case management, working with law enforcement, and developing a prosecution strategy.

4. Culture and Compliance

This type of training focuses on creating a culture of compliance within an organization. It covers ethics, values, transparency, and anti-corruption policies.

5. Regulatory Requirements

This training covers applicable laws and regulations related to FWA. It is designed to help organizations understand their legal obligations and ensure compliance.

Detecting Potentially Fraudulent Activity

One of the most significant differences between FWA is that fraud involves voluntarily committing wrong actions, whereas waste and abuse tend to be accidents in billing.

Examples of Medicare 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.

Examples of Medicare 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, which is called upcoding or unbundling codes.

Preventing and Investigating Fraudulent Activity

For example, a pharmacist in Pennsylvania that submitted claims for nonexistent prescriptions went to prison for 15 months and had to pay over $166,000 in restitution to Medicare Part D.

While this may sound harsh, the pharmacist received a light sentence. Persons who knowingly commit criminal health care fraud can receive fines up to $250,000 and 20 years in prison.

Another physician in Rhode Island was receiving kick-back payments for overprescribing fentanyl. He was sentenced to 51 months in federal prison and over $750,000 in restitution.

As part of the Civil False Claims Act (FCA), CMS has different penalties for various crimes depending on the state. They make an impressive effort to protect and reward those who help reduce FWA.

• Whistleblower: Someone who exposes information or activity deemed illegal, dishonest, or violates professional or clinical standards.
• Protected: Persons who report false claims or bring legal actions to recover money paid on fraudulent claims are protected from retaliation.
• Rewarded: Persons who bring a successful whistleblower lawsuit receive at least 15 percent of the money collected, but not more than 30 percent.

Fraud & Abuse Laws

There are numerous laws to know, but for the sake of brevity, the most important 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, etc 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.

Benefits of FWA Training

The apparent benefits of FWA training include saving billions of dollars, improved quality of care, and increased efficiency. But most importantly, it protects you and your organization.

Penalties for violating laws that prohibit FWA include:

• Civil Monetary Penalties
• Civil prosecution
• Criminal conviction, fines, or both
• Exclusion from all Federal healthcare program participation
• Imprisonment
• Loss of professional license

Are you a witness to a colleague committing fraud or accidentally wasting valuable resources?

Take the critical first step towards creating a safe and compliant workplace by enrolling your organization in FWA training today!

Sources:

1. Coustasse A, Layton W, Nelson L, Walker V. UPCODING MEDICARE: IS HEALTHCARE FRAUD AND ABUSE INCREASING? Perspect Health Inf Manag. 2021 Oct 1;18(4):1f. PMID: 34975355; PMCID: PMC8649706.
2. Sullivan & Hull. (2019). Preserving life and health by preventing fraud in healthcare. J Business and Behavioral Sciences, 31(1), 48-58.