The Wall Street Journal recently characterized this decade as the golden age of financial fraud. But the wave of phony gold mine investments, Ponzi schemes and high-ticket shell games doesn’t surprise financial historians much.
It is during times of prosperity that people are most likely to attempt to defraud their own employers and outside institutions. According to some historians, good times are rich in scams because people see their friends and colleagues succeeding and either get conned by a swindler, or succumb to the temptation to steal.
Among the most popular targets for fraud are hospitals, clinics and nursing homes. A handful of unscrupulous employees can develop systems for filing for insurance reimbursements for services that were never rendered, tests never performed and equipment never purchased.
But it’s no longer just the embezzler who must worry about being fined and hauled off in handcuffs. The Office of the Inspector General, a federal office that conducts audits and investigations, introduced a fraud prevention program designed to engage the health care community in its efforts to combat fraud and abuse.
The inspector general guidelines are not forgiving. All that needs to be proven is that billing or other errors occurred. Good intentions mean little.
The office suggests that health care agencies implement corporate compliance programs which include a system for reporting suspected fraud. If fraud is discovered at an agency that does not have a corporate compliance program, the inspector general will mandate that one be implemented.
– Agencies Can Draft
Policies About Fraud
With the assistance of an accounting firm that specializes in health care, and legal counsel, agencies can draft policies and procedures that will keep them out of hot water. Additionally, it will prevent private insurance companies and public health insurance agencies like Medicare and Medi-Cal from being defrauded from ever-tightening resources.
To effectively meet the inspector general standards for reasonable measures taken to detect fraud, a corporate compliance program must include six elements:
o Standards and procedures for reducing the prospect of improper conduct.
o High-level officials assigned to the duty of overseeing compliance.
o Monitoring to assure compliance within the program.
o Employee training.
o Consistent enforcement of the program’s requirements.
o Adjustment to the program in response to discovered violations.
The medical centers at UCSD made headlines last summer when they agreed to pay a $4.7 million settlement for reportedly billing Medicare and Tricare improperly for experimental devices, according to Gregory Vega, U.S. attorney for the Southern District of California.
– Maybe An
This very well could have been an honest mistake by a lower-level employee who had no intention of defrauding Medicare and Tricare. Nonetheless, it cost UCSD big-time.
The executive director of a psychiatric facility in Birmingham, Ala., was recently sentenced to nearly six years in prison for her role in a $7 million scheme.
According to Herbert Henry, U.S. attorney for the Northern District of Alabama, the director defrauded both Medicare and Medicaid. The director pleaded guilty to using false credentials, including a fake Ph.D., to obtain a mental health clinic certificate. She reported psychiatric services when no psychiatrist was on the facility, and also admitted to defrauding pharmacies and personnel companies out of $3 million.
These two examples provide both ends of the spectrum, from the possible oversight to the egregious violation. While the Birmingham “doctor” is now serving a prison sentence, UCSD faced a costly and embarrassing settlement.
Some health care organizations may feel that it is too expensive or time-consuming to draft and implement policies and procedures aimed at preventing fraud.
But consider the alternative. The investment in a consultation with both an accounting firm that specializes in health care, and a law firm can help ensure that an organization is able to care for its fiscal health so it may continue serving its patients’ medical needs.
Runge, CPA, specializes in corporate compliance for health care agencies at Calderon, Jaham & Osborn Certified Public Accountants and Consultants in Downtown San Diego.