Federal crackdown on fraud puts risk managers in hot seat
Government makes clear its intentions to fight abuses of system
The federal government’s growing crackdown on health care fraud is placing a heavy burden on risk managers, forcing them to act quickly and decisively to ensure their institutions are not caught in the net.
The White House announcement in March that it will introduce tough new legislation to address loopholes and system inadequacies allowing Medicare billing fraud is a formidable reminder of what’s to come from the federal government. Risk managers warn the initiative should not be taken lightly.
"This crackdown on fraud is something the government has pledged they would spend their resources on, so the legislation validates what they’ve been saying for the past year," says Maureen Archambault, RN, MBA, HRM, a risk manager and senior consultant with MMI Companies in Irvine, CA, which provides professional liability insurance along with risk management consulting services. "I think this is a clear sign that risk managers need to take this fraud issue seriously and respond in an appropriate way."
Archambault says the proposed legislation is the next step in the federal government’s effort to cut its own costs. Because Medicare and other health care costs are a major government expenditure, health care fraud makes a highly desirable target when officials want to cut the budget.
Recent experience has shown that the federal government is getting more serious about health care fraud. In 1996, it expelled 1,937 health care providers from Medicare for various offenses. That is double the number expelled in 1993 and four times the number expelled in 1988, according to figures released by the White House. The federal General Accounting Office reports that health care fraud accounts for up to 10% of all Medicare expenditures, or $20 billion of the $200 billion in Medicare expenses for 1996.
Perhaps the most significant investigation involves the nation’s largest health care company, Columbia/HCA Healthcare Corporation, suspected of upcoding and other possible violations of Medicare rules. The government probe was made public in March when federal agents with search warrants raided Columbia/HCA’s El Paso, TX, hospitals and doctors’ offices. The agents trucked away billing and medical records for further scrutiny.
The idea of investigators "raiding" health care organizations is troubling to Jane M. Bryant, MHSA, FASHRM, director of risk management at Greenville (SC) Hospital System. She says all risk managers should be worried about that possibility, whether your organization is large or small.
"It could happen anywhere," she says. "It sounds like the feds are really serious about this, and I’m not sure they’ve necessarily defined their rules yet. They’re defining them as they go, and that puts all of us at risk."
Bryant says she is worried about the uncertainty that accompanies much of the current emphasis on health care fraud. In most of the investigations she has heard about, government investigators were not clear on what the hospital should have done to remain aboveboard, but they were clear on what the hospital did and that it was wrong.
"A lot of this attention is in new frontiers that we’re already struggling with, like the physician/health care entity," she says. "We’re already wondering who owns who and who’s in control, and this makes it even more uncertain."
Risk managers need to address most directly those issues highlighted by the government as special concerns, Archambault says. Most of the government’s efforts have involved physician practices, focusing special attention on the fact that there has been no centralized way to track punitive actions against physicians. That has meant, for instance, that Medicare payments continued to physicians whose licenses had been revoked.
It has become clear that fraud investigators have a special interest in acute care hospitals that own or manage physician practices, partly because of the possibility of kickbacks and referral fraud, Archambault explains. She recommends that risk managers pay special attention to such arrangements, which are becoming more common as hospitals buy other institutions and merge with local physician groups.
"These structures are going to be a red flag for investigators, so you’d be well advised to spend a lot of time looking for problems there," she suggests.
Another area of concern is the medical records department. Much of the activity in medical records is baffling to anyone outside the department, but Archambault urges risk managers to get involved closely enough to know how medical records procedures should be done and how they actually are being done at their facilities. The effort is worthwhile, because there is so much that can go wrong in medical records, amounting to either intentional fraud or careless errors that result in upcoding and improper Medicare or Medicaid reimbursement.
Other areas of concern include providers expelled from Medicare or Medicaid, the criminal records of health care providers, and the creation of a national database that will help the government keep track of individuals and institutions that have run afoul of the regulations. (For more on the proposed legislation, see p. 51.)
Archambault and Bryant agree that the crackdown on fraud is a risk management issue, but they differ somewhat on how to address it. Archambault favors diving right into the day- to-day operations, where investigators are most likely to find problems. Risk managers should make themselves visible within physician practices, she says. In particular, you should become familiar with billing procedures and how physicians refer patients. If the practice was acquired recently, there is always the possibility that billing and referrals are done in a way you might find unacceptable and investigators might consider fraudulent.
"The risk manager usually is the person that the whole institution looks to for an interpretation of guidelines and instructions from the government, so this is a big burden," Archambault notes. "This is just now an emerging issue, and I expect there to be more risks that we didn’t encounter before. Now is the time to get involved."
Bryant says a more pragmatic approach is called for because most risk managers already are stretched thin. "This is a big issue, and my plate is not getting any bigger," she says.
She advises taking the fraud crackdown seriously, but she says most risk managers should not try to take all the responsibility for addressing the issue. Instead, risk managers should alert other managers who are more intimately familiar with the processes that interest investigators and check to be sure those people are monitoring their systems.
Bryant compares the current fraud crackdown to an interest a few years ago in the billing practices of medical residents. She immediately saw the risk management implications, but she did not feel qualified to tackle all the intricacies herself.
"I gathered up all the information I had and took it to the director of medical education and asked if he could please review all this," Bryant recalls. "I said, You know all of this far better than I do, so review all this material and see how we measure up.’"
On the other hand, Bryant points out that many risk managers concentrate almost exclusively on clinical issues such as whether the correct tests were performed, how they were performed, and whether the test results were handled appropriately.
"It’s a rare circumstance that we also go and ask how we’re billing for all these activities," she says. "That’s not good in light of all this federal activity. It will be interesting to see how many people get caught in this crackdown when they didn’t have any intention to commit fraud."
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