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November 21, 2014

How hospitals can prevent fraud (and address fraud allegations)

Daily Briefing

    Lately at the Daily Briefing, we have seen a lot of stories about allegations of fraud. This week alone, we covered a former hospital CFO's decision to plead guilty to falsely attesting to the meaningful use program and a COO's admission of guilt in a $67 million fraud scheme that prosecutors say was "something out of a horror movie." 

    Whether they involve top executives or low-level employees, fraud allegations can bring costly lawsuits and a hit to the reputation of any a health care organization.

    The Daily Briefing's Clare Rizer sat down with attorney Lisa Gingerich of von Briesen & Roper, s.c. to identify ways that hospitals and physician practices can prevent fraudulent acts from occurring in medical settings or how to nip them in the bud before they become a large-scale issue.

    Question: We are seeing more health care fraud cases in the news these days. So I imagine you and your colleagues in the legal industry are handling a fair number of such allegations. Have you seen any trends?

    Lisa Gingerich: The majority of fraud allegations we see stem from a former employee who is or was at one point disgruntled with the provider.

    And, whether the allegations turn out to be true or not, it takes a lot of work for the target to respond to the authorities. Sometimes the allegations turn out to be a misunderstanding or downright false, but it's a very costly process getting there.

    Q: What is the role and responsibility of the hospital in cases where individual providers are being accused of fraud?

    Gingerich: We're handling a couple matters where individual providers are the ones being accused of engaging in fraud. Regardless of where the accusations are directed, it is often the organization that employs or has the target on their medical staff that must respond.

    For the leadership at these organizations, it's not as simple as pointing fingers at an individual doctor and shifting the blame to that person.  Organizations, especially large and sophisticated providers, are expected to have compliance programs and protocols that identify irregularities and fraud.  Further, the organization is usually a beneficiary of the fraud despite its lack of knowledge and desire to be compliant.

    In addition to having an effective compliance program, being proactive and responsive to people—patients/family of patients, employees, vendors, , etc.—who allege fraud or wrongdoing is essential to addressing problems and preventing further problems.  Exit interviews with all employees, whether disgruntled or not, regarding any actual or perceived compliance or fraud concerns  is another important step  to making sure that hospitals are addressing suspected and observed problems promptly.

    Q: What is the best way to deal with frustrated or concerned employees   that could result in allegations of fraud before they become a problem?

    Gingerich:   All allegations should be documented, investigated and addressed.  When an entity is approached by a distressed individual who asserts that the organization is not coding, billing, or the like in accordance with the law, there needs to be a very direct and prompt response to that allegation. Problems tend to arise later if the individual who brought the allegations to the table is or feels ignored or the situation is not investigated farther. 

    When patients or employees are going out the door, one of the questions that absolutely has to make the exit checklist is, "Are you aware of anything were doing inappropriately or something that concerns you?"

    Q: What if an individual has concerns about potential fraud that he or she did not bring up to the hospital and instead brings later to the government?  

    Gingerich: Generally, a whistleblower that tried to address the fraud directly when he or she was in a position to do so has more credibility and presents a better case for prosecution.  An alleged wrongdoer is easier to prosecute if they had the chance to clear their breach and did not do so.  

    Further, if the whistleblower was given multiple opportunities to raise concerns or allegations and does not do so, it diminishes the whistleblower’s credibility latter.   This may not mean that the provider did not make mistakes, but it can mean that their mistakes were not “knowing” mistakes.  This can be an important distinction in a fraud case.

    Q: So let's say that, while investigating an allegation of fraud, you find that a provider did something substantially wrong. How do you address that? Do you immediately move to terminate or is a longer process required?

    Gingerich: If an allegation is substantiated, the most prudent course of action is to conduct an investigation to determine if there is some substance to these allegations.

    You should sit down with the provider or team or practice and address the issue head on. You may  find that the provider stumbled into the fraud while trying to find an easier or more efficient way of doing something. Or he or she may be uneducated on the proper protocol.

    If the person did stumble into it, find the root cause, address where it spread, and fix it.  The provider may need to refund and disclose to make themselves right with the government or private payers, but getting in front of the issue within the allowed time (generally 60 days) is the best course and will be a mitigating factor if there is a prosecution.

    On the other hand, if you discover during the investigation that the actions were intentional and with knowledge of the fraud, that is when termination may be an appropriate remedy. Each organization should apply its policies and have undisputed evidence that there was a conscious, knowing disregard for protocols before termination. 

    Termination versus other discipline for compliance related actions is delicate.  If you start terminating people for mistakes or things they didn't know but should have it can be destructive to a compliance program and it can discourage people from coming forward with questions about proper practice.  

    Q: Are there steps hospitals can take to prevent the types of errors you're discussing? What information should they be telling physicians?

    Gingerich: Providers must be sure to implement robust peer review programs .

    We see horrible stories of physician wrongdoing and fraud that call into question the medical necessity of some procedures and treatments that  patients don't actually need. It's hard to keep things like this from happening if doctors are not held accountable by their colleagues.  Periodic peer review and careful review of providers who are outliers in their testing, diagnosis and treatment patterns are some measures that may assist organizations in identifying individuals that warrant special monitoring and review.  Some organizations regularly engage outside peer review organizations because they recognize the long-term value in identifying physicians that may present compliance and patient safety risk.

    Make sense of the changing fraud and abuse landscape

    The Obama Administration has taken several steps to intensify its enforcement activities, including recent amendments to the False Claims Act and unprecedented coordination between the Department of Justice and the Department of Health and Human Services.

    In this webconference, we help you make sense of the changing fraud and abuse landscape.

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