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All payers are hunting down fraud

May 11, 2015
by Julie Miller, Editor in Chief
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Medicare has often been compared to a poorly maintained vending machine: Kick it, and the money just falls right out. Less-than-honest providers and a surprising number of organized crime cells have taken advantage of the weakness, walking away with billions.

 In recent years, however, federal officials have allocated more resources to tighten up Medicare’s administrative system against fraud, and all providers need to take note. Fraud can amount to anything from unintentional errors to deliberate upcoding to blatant criminal offenses.

For example, just a few days ago, 16 hospitals agreed to collectively pay $15.69 million in a Medicare fraud settlement involving intensive outpatient  psychotherapy services. The providers allegedly missed the mark on diagnoses, follow-up requirements and the billable nature of the clinical interventions.  While they didn’t admit to any wrongdoing, providers probably spent as much defending themselves and cooperating with officials as they did for the settlement. A fraud allegation—true or not—is something few providers can afford.

There are plenty of settlements in the books that illustrate the government’s emphasis on combating fraud. The Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which involves public-private cooperation, has helped the Justice Department recover more than $24 billion, and they feel like they’re just getting started.

Much of the effort is still described as “pay and chase,” meaning, auditors identify varying degrees of fraud and then go back to the provider, mandating the funds be returned. But there are new, more effective strategies emerging to use historic claims data to identify potentially fraudulent patterns  delivering a pre-emptive strike before claims are paid.

Teams are also expanding into Medicaid, which is considered equally vulnerable to fraud. Managed care payers have clear incentives to cooperate and coordinate with public programs to zero in on fraud, so they’re becoming just as vigilant.

Of the 16 hospitals that are now coughing up millions in the recent settlement, 14 are or were owned by Health Management Associates, a huge organization that has resources to document and defend itself. Obviously, HEAT wants every settlement and takedown to be a lesson to other providers who might be tempted to kick the vending machine.

Fraud allegations can happen to any provider. It’s in your best interest to not only be aware of what’s billable and what’s not, but to back up your operations with proof that you’re doing the right thing. 


Julie Miller

Editor in Chief

Julie Miller


Julie Miller has more than 14 years of experience observing, analyzing and reporting on various...

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