Your RX for health care fraud

Imagine visiting a clinic for a work-related injury and being treated by a foreign medical student who is not authorized to practice medicine in the United States. That’s what happened to patients at Rose’s Houston Healthcare Clinic.

Rosemary Phelan, the clinic’s owner, pleaded guilty to insurance fraud-related charges in the wake of a joint investigation between Texas Mutual Insurance Company and the Texas Department of Insurance.

“Fraudulent behavior not only harms the individual company but also places an unnecessary financial burden on all participants in the workers’ compensation system.” Tim Riley, vice president of special investigation at Texas Mutual

Phelan was sentenced to seven years’ deferred adjudication and ordered to pay $88,000 in restitution. But the fallout from fraud can be far-reaching and far more serious than any penalty levied by a court.

Most importantly, Phelan jeopardized patients’ health by staffing her clinic with unlicensed physicians. And then there are the monetary costs of fraud, which affect everyone in the form of higher premiums.

State regulators and insurance carriers are working hard to stop health care fraud. In fact, Texas Mutual maintains a team of investigators who specialize in protecting our policyholders’ premium dollars from the trickle down effects of health care fraud. You can do the same for your business if you learn what to look for and how to respond.

Common schemes
The National Health Care Anti-Fraud Association estimates the financial losses due to health care fraud are in the tens of billions of dollars each year. Here are some common fraud schemes Texas Mutual investigators have seen:

  • Up-coding involves submitting bills for more serious or expensive diagnoses or procedures than were actually performed.
  • Unbundling means marketing or charging for items or services separately rather than as a package.
  • Prescription drug diversion is increasingly common in the midst of America’s opioid epidemic. Diversion means abusing or illegally distributing prescription drugs, or using them for purposes not intended by the prescriber.
  • Unnecessary treatment, supplies and tests, also known as overuse, is particularly egregious because it also affects patients’ health. The Lowe Institute estimates overuse accounts for between 10-30 percent of U.S. health care spending.

Red flags
Employers can help fight fraud if they know what to look for. Here are some common red flags for health care fraud:

  • The employer receives a notice that a claimant has changed his/her treating doctor and is then taken off work after receiving a release to return to modified or full duty. Usually, the claimant also seeks attorney representation.

    Employers who commit premium fraud get an unfair advantage over honest competitors.

    The Coalition Against Insurance Fraud estimates health care fraud steals tens of billions across all lines of insurance annually.

  • The treating doctor extends off-work status without treating the claimant for an extended time. For example, the doctor documents that the claimant should remain off work until the next office visit, which is scheduled one to two months after the date of service.
  • The health care provider uses templated documentation, which means using the same language on medical reports for all patients. You may notice that the report does not have the claimants’ correct name or that the gender references do not match. This is a red flag because it could signal that the physician is not truly evaluating patients or spending the amount of time they billed for.
  • The health care provider uses rubber-stamped signatures on DWC-73/office visit reports. This indicator could point to a provider billing for services he/she did not actually perform.
  • The claimant complains about the health care provider’s services or the treatment facility’s conditions. For example, the claimant might report that the office clerk performed the treatment or the clinic was dirty and did not have the appropriate therapy equipment.
  • Claimants complain that they are ready to return to work, but the doctor keeps them in an off-work status and continues to order treatment such as physical therapy.

Reporting suspected fraud
Investigators acknowledge three types of workers’ compensation fraud: claimant fraud, premium fraud and health care fraud. All steal money from the workers’ comp system and honest stakeholders. If you suspect fraud in a claim, contact your insurance carrier and/or the Texas Department of Insurance fraud unit.

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