Health Care Fraud Flashcards
Examples of fraud schemes perpetrated by health care institutions and their employees include all of the following EXCEPT:
A. Billing for experimental procedures
B. Improper contractual relationships
C. Unintentional misrepresentation of the diagnosis
D. DRG creep
C. Unintentional misrepresentation of the diagnosis
Fraud schemes perpetrated by institutions and their employees include those commonly used by doctors and other providers. However, the more common schemes in which hospitals are primarily involved include:
• Filing of false cost reports
• DRG creep
• Billing for experimental procedures
• Improper contractual and other relationships with physicians
• Revenue recovery firms to (knowingly or unknowingly) bill extra charges
In a managed care environment, insured fraud might be reduced, but provider fraud is still very common. T/F
True
In a managed care environment, fraud is not eliminated. Insured fraud might be reduced substantially, but provider fraud is still alive and well. In addition to billing fraudulent services, managed care has an additional incentive for fraud. Because the providers share in the financial risk of a patient, there is the potential to provide fewer services to a patient since a fixed capitation rate allows the patient unlimited visits to the provider.
Which of the following can best be described as fraud perpetrated by medical practitioners, medical suppliers, or medical facilities on patients or health care programs to increase their own income by illicit means?
A. Insured fraud
B. Insurer fraud
C. Provider fraud
D. Uninsured fraud
Provider fraud consists of practices by health care providers (including practitioners, medical suppliers, and medical institutions) that cause unnecessary costs to health care programs or patients through reimbursement for unnecessary or excessive services, or services that do not meet the recognized standards for health care.
Samantha operates a medical lab from a mobile trailer. Her business model is to go to an area, recruit patients for a battery of unnecessary tests, and bill health care programs for those tests. She also typically bills for services never actually performed using the patient data collected. Soon after, she moves the trailer to a new location and starts the process again. Which of the following best describes Samantha’s scheme?
A. Rolling lab
B. DME fraud
C. Front organization
D. Fictitious provider scheme
A rolling lab is a mobile laboratory that solicits health insureds to participate in health screening tests at no cost to the insured. After conducting the tests, however, the lab bills the individual’s insurance provider. Also, the lab might bill additional claims for later service dates even though no more tests are conducted. The lab moves to another location prior to the patient receiving the test results to avoid detection.
DRG creep occurs when staff members at medical institutions intentionally manipulate diagnostic and procedural codes in a pattern to increase claim reimbursement amounts. T/F
A. True CORRECT
Diagnostic-related groupings (DRG) is a reimbursement methodology for the payment of medical institution claims. It is a patient classification scheme that categorizes patients who are medically related with respect to various types of information, such as primary and secondary diagnosis, age, gender, weight, length of stay, and complications. Reimbursements are determined by the DRG. DRG creep occurs when medical staff members manipulate diagnostic and procedural codes to increase reimbursement amounts. When it becomes a pattern and intent is established, it becomes fraud. For example, a hospital might repeatedly and incorrectly code angina (pain or discomfort in the chest due to obstruction of the arteries) as a myocardial infarction (a more serious event known as a heart attack), and thus be reimbursed at a higher level.
Common methods of inflating health care billings include all of the following EXCEPT:
A. Sliding policies
B. Added services
C. Alterations
D. Code manipulation
A. Sliding policies
Health care billings can be inflated by providers as well as the insured. The following are some of the most common fraud schemes encountered by investigators and claims approvers:
• Alterations
• Added services
• Code manipulation
Why is the health care industry concerned about the potential effect of the Electronic Data Interchange (EDI) on fraudulent activity?
A. The tools required to detect EDI fraud are difficult to use
B. The efficiency of EDI allows for more vendors and thus more claims to process
C. Only a few types of health care transactions can be processed by EDI
D. All of the above
The reasons the health care industry is concerned about EDI’s potential to stimulate fraudulent activity include:
• The lack of tools to detect EDI fraud
• The variety of health care services increases the potential for dissimilar frauds
• The efficiency of EDI allows for more vendors and thus more claims to account for
• The swiftness in which transactions take place allows less time to uncover fraud
All of the following are types of medical provider fraud EXCEPT:
A. Smurfing
B. Fictitious providers
C. Rolling labs
D. Phantom billing
A. Smurfing
Phantom billing, rolling labs, and fictitious providers are all types of medical provider fraud.
In a phantom billing scheme, health care providers charge or bill a health care program for services that were not rendered at all. Often, the companies or clinics submit bills for patients they have never seen, but whose private patient information they purchased from someone involved in identity theft or someone who otherwise improperly obtained it.
In a fictitious provider scheme, criminals or corrupt providers fraudulently use a provider billing identifier and purchase lists of patient identifying information. They then start billing Medicaid, Medicare, or other health care programs. This type of fraud can involve criminals who set up fictitious entities using their actual ID information or that of a relative, neighbor, etc.
A rolling lab is a mobile laboratory that solicits health insureds to participate in health screening tests at no cost to the insured. After conducting the tests, however, the lab bills the individual’s insurance provider. Also, the lab might bill additional claims for later service dates even though no more tests are conducted. The lab moves to another location prior to the patient receiving the test results to avoid detection.
Smurfing is a scheme to launder funds through financial institutions.
Michael, a medical provider, performs an appendectomy, a procedure that is supposed to be billed as one code. Instead, he intentionally submits two codes for the same procedure, one for an abdominal incision and one for removal of the appendix. Which of the following best describes Michael’s scheme?
A. Decompressing
B. Procedure compounding
C. Unbundling
D. Phantom billing
C. Unbundling
Because health care procedures often have special reimbursement rates for a group of procedures typically performed together (e.g., blood test panels by clinical laboratories), some providers attempt to increase profits by billing separately for procedures that are actually part of a single procedure. This process is called unbundling or coding fragmentation. Simple unbundling occurs when a provider charges a comprehensive code, as well as one or more component codes.
Lindsey, a medical provider, launched a promotion where she waived the insurance copayment of all new patients. However, her contract with the insurance company requires patients to make copayments. Which of the following best describes Lindsey’s scheme?
A. Deductible forfeiture
B. Insured fraud
C. Phantom billing
D. Kickback
Kickbacks in the health care industry can come from several sources. Examples of kickbacks are:
• Payment for referral of patients
• Waiver of deductible and copayments
• Payment for insurance contracts or health care programs
• Payment for vendor contracts
• Payments to adjusters
Most insurance contracts require patients to pay a deductible and copayment for services rendered. One of the reasons for having copayments is to make insureds take an active part in the financial responsibility for their care. To attract patients, however, providers might improperly pay for or waive the patient’s out-of-pocket expense, hoping to make up for that cost in additional business.
