How to Detect and Prevent Healthcare Fraud and Abuse

Providers should execute extensive compliance programs and improve medical billing processes to detect and prevent fraud and abuse in healthcare. The industry costs billions of dollars a year for health fraud and abuse. Healthcare providers could face an investigation, which may cost them their reputation and income, without processes that detect and prevent fraudulent activities.

HIPAA defines fraud in the fields of healthcare as being knowingly and willingly implementing or trying to execute schemes to betray all program health benefits or get any of the money or property owned by any healthcare benefits scheme using false or fraudulent claims, representations or promises. Providers should understand essential healthcare fraud laws, develop compliance programs and improve health billing and business transaction processes to prevent an organization from participating in healthcare fraud and abuse activities.

Healthcare Fraud and Abuse Laws and Regulations

Many definitions and regulations concern inappropriate billing offenses by providers. Providers should know about the variation between fraud and abuse and the details of the False Claims Act, Anti-Kickback Statutes, and the law on the referral of medical workers.

What is included in Healthcare Frauds according to CMS?

According to the CMS, health fraud includes:

  • Submit or make misrepresentations in order knowingly to acquire reimbursements from payers for which there is no entitlement.
  • Request, receive, offer and pay remuneration intentionally for the promotion or compensation of referrals for items or services repayable by payers.
  • Provision of prohibited references to relevant health facilities.

3 Primary Laws to Control Health Fraud and Abuse

In addition to establishing a status of fraud for criminal health care, the lawmakers created the following three primary laws to control health fraud and abuse cases:

1. Federal False Claims Act

It imposes civil responsibility on any person who intentionally submits or triggers a submission of false or fraudulent claims to the federal government.

2. Anti-Kickback Statutes

Aims at persons who compensate, solicit, give or accept remuneration, whether intentionally or willingly, for services referred to or reimbursed by federal health programs.

3. Physician Self-Referral Law

Providers forbids referral to an entity in which the provider has ownership, an investment interest, or a reimbursement arrangement, otherwise known as Stark Law, for certain health services reimbursed by federal healthcare programs. Providers who violate medical fraud laws may face exclusion and civil monetary penalties from federal healthcare services.

Tips to Prevent Healthcare Fraud and Abuse


Strong compliance program is essential to prevent fraud and abuse in healthcare

The HHS Office of the Inspector General (OIG) stated in official compliance that the strong compliance program is intended to establish a culture within a hospital that promotes prevention, detection and resolution of conduct that does not comply with federal and national regulations and the requirements of the Federal, State and private payer healthcare programs, as well as hospital ethic or business policies.

OIG Recommendations for providers

The OIG also recommended the following components for providers!

Creation and distribution of written guidance and policies supporting the hospitals’ adherence to enforcement and combating suspected fraud, such as claims processing and financial ties with others (i.e., including compliance with provisions in staff assessments)

  • Designation of a Chief Compliance Officer and other Organizational and Monitoring Compliance Personnel and report to the governing body of the hospital.
  • Maintenance of a medical fraud reporting and complaints procedure, such as a hotline, and development of anonymity protection measures.
  • Setting up a framework for responding to health fraud and abuse charges and practical disciplinary steps against employees who breach compliance policies and laws.
  • The implementation of audits and reviews to track enforcement and to minimize problems.
  • Systemic issue investigation and remediation and policy implementation when workers involved are retained or terminated.

Concluding Remarks

Providers must also obey the guidance of the compliance guidelines of the Office of Inspector General. It applies to health personnel, medical equipment suppliers and billers from third parties. Both reporting, tracking, and billing consistency can improve the credibility and value of the provider. Ensure that any inconsistencies in coding and billing are detected as soon as possible. Please take a look at the accounting documents and compare them with the rivals and related providers.