Beware your staff whistle-blower
Steep incentives add fuel to fire
If someone on your staff tries to catch your ear and tell you about some inappropriate situation, you’d best listen no matter how busy you are. History shows that if concerns about potentially fraudulent activities aren’t dealt with immediately, and to the satisfaction of sharp-eyed staffers, they can lead to big headaches. (See Paula Swain’s Compliance Observer column on fraud and abuse, p. 182.)
Fraud lawsuits instigated by informants on hospital staffs have jumped from 14 filed in 1992 to 200 in 1996. Half of the $274 million the government recovered from health fraud cases during the past two years are attributed to whistle-blower suits. Even larger recoveries are expected for this year.
Any citizen with knowledge and evidence of fraud against the government has the right to file a sealed civil complaint in federal court. If the government recovers money, the informant gets a share of the spoils, up to 25%. Some whistle-blowers have won multimillion dollar rewards; the median is $183,000, according to the Justice Department.
One case alone resulted in a settlement with Laboratory Corporation of America in Lumberton, NC, yielding $182 million. The whistle-blower, a dermatologist, was rewarded $9 million for his efforts. The physician noticed the lab was running extra tests on patients’ blood samples, and Medicare was being billed as much as $120 each for them. During his investigation, he also noticed a two-tiered billing system. When he called the Medicare fraud hot line, he was told they were overloaded. It was then he filed suit.
The move toward managed care has erected barriers to some kinds of health care fraud, but has created new opportunities as well. Capitated programs, for example, give a provider the chance to declare encounter rates that are falsely high, or to overcharge patients for copayments. Other types of fraudulent behavior involve falsifying reports or credentials in order to be admitted to a managed care network, and paying or accepting kickbacks for patient referrals.
The type of health care fraud cases most frequently reported on a recent survey of Health Insurers’ Anti-Fraud Programs was billing for services not rendered. Providers may bill under false procedure codes to raise the level of payment, or billings may come from two or more providers for the same service to the same patient on the same day. Fraudulent diagnoses or dates of service rank second. Providers may alter the diagnosis to accommodate coverage provisions of insurance programs or change dates of service to fall within coverage requirements.
Companies responding to a survey by the Health Insurance Association of America in Washington, DC, reported an average net savings per company following fraud prosecutions of $2.3 million during 1995. Combined total savings equaled $260 million. The total number of suspected fraud cases investigated in 1995 was 42,950, 78% of which were the result of provider actions.
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