Fraud, Waste
and Abuse
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Carolina. Any unauthorized use, reproduction or transfer of these materials is strictly
prohibited. Copyright 2009 by BlueCross BlueShield of South Carolina. All rights reserved.
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Fraud, Waste and Abuse
Introduction
Welcome to our course on Fraud, Waste and Abuse.
We designed this course to help you help BlueCross detect, correct and prevent fraud, waste and abuse
of Medicare and BlueCross resources within the Medicare Advantage and the Medicare Prescription Drug
programs.
When you complete this course, you will:
Know the definition of fraud, waste and abuse and other relevant terms
Understand how fraud, waste and abuse affects the company and you
Understand the importance of preventing/controlling fraud and abuse
Be able to identify/report potential instances or cases that are suspect
First, let’s review a few compliance lessons.
Compliance Review
Ethics and Integrity
What are ethics and integrity? We all may define these terms based on our own
personal beliefs and the various situations in which we find ourselves.
Generally speaking, however, ethics deal with human conduct as it relates to what is
morally good or bad, right or wrong. Integrity is the level to which one adheres to his
or her ethics.
In addition to our own personal ethical standards, we must be aware of our
company’s expectations when dealing with our day-to-day job responsibilities.
Compliance Review
Laws That Apply To Us
The Group and Individual division is the division within BlueCross that administers the
Medicare Advantage and Prescription Drug programs for the Centers for Medicare
and Medicaid Services (CMS). To do this, we contract with CMS.
A provider or other entity that contracts with the government directly, or indirectly
through BlueCross, is held to a very high standard of ethical integrity. We are required
to know and understand values and requirements as they relate more specifically to
government programs and contracts.
Compliance Review
Government Investigations
There are a number of government agencies that oversee fraud, waste and abuse
claims related to Medicare Advantage and the Prescription Drug programs. These
agencies include:
- Office of Inspector General
- Defense Criminal Investigative Services
- Department of Justice
- Federal Bureau of Investigations
- United States Attorney’s Office
These agencies focus primarily on fraud and abuse matters that involve reviewing
providers’ and beneficiaries’ claims to ensure there is no intentional misrepresentation
of information.
Compliance Review
Information Security
Thanks to laws and regulations such as The Privacy Act and Health Insurance
Portability and Accountability Act (HIPAA), we all know how important it is to protect
the privacy of our beneficiaries’ medical and personal information. We must also
understand the significance of safeguarding confidential company and business
information.
You should take all necessary steps to protect confidential information. For example:
-Always keep confidential data in a secure location.
-Do not discuss confidential information in public areas such as elevators,
restaurants, or taxicabs.
Compliance Review
Your Responsibility
You are expected to question and/or challenge situations in which you suspect
something improper, unethical or illegal is going on. You also have an obligation to
promptly report any suspected misconduct. Being aware of suspected misconduct
and not reporting it could result in disciplinary action against you.
If you do not report misconduct, you have an obligation to cooperate in the
investigation of the matter. BlueCross will make every effort to investigate each issue,
once it has been sufficiently substantiated.
Section 1: The BASICS
Fraud, Waste and Abuse
Section 1: The BASICS
Traditionally, we think of fraud, waste and abuse being committed against a company. But, it does occur
within companies by their own employees.
Because of this, it is extremely important that we understand and recognize the many different ways —
external and internal — in which fraud and abuse can and does occur.
But first, let’s make sure we know and understand the terms …
Fraud, Waste and Abuse
Section 1: The BASICS
Fraud
Intentional misuse of information in order to persuade another to part with something of value or to
surrender a legal right. It could also be an act of planned deception or misrepresentation.
Example 1:
A doctor provides a beneficiary with a service that is clearly non-covered. When he files the
claim, he submits the procedure code for a covered
service.
Example 2:
An employee operates a sideline business
instructing beneficiaries on how to “get more
money on their claims.”
Fraud, Waste and Abuse
Section 1: The BASICS
Abuse
Providing information or documentation for a health care claim in a manner that improperly uses program
resources for personal gain or benefit, yet without sufficient evidence to prove criminal intent.
Example 1:
A provider submits a claim for a comprehensive examination lasting one hour when
in fact, the patient received a limited examination lasting 15 minutes. The provider is
not legally entitled to the higher reimbursement the comprehensive examination
would pay.
Example 2:
An employee uses company e-mail to send her
husband's e-catalog of sports collectibles to everyone
she knows.
Fraud, Waste and Abuse
Section 1: The BASICS
Waste
To use, consume, spend or expend thoughtlessly or carelessly.
Example 1:
A physician (unaware of the generic alternative) consistently prescribes a high
priced medication for his patients instead
of the less expensive drug available in the
formulary.
Example 2:
Sending hardcopy work to a distribution list
that could be handled electronically. Time
wasted in unnecessary printing, copying,
sorting, etc.
Fraud, Waste and Abuse
Section 1: The BASICS
Error
An unintentional inaccuracy. An honest mistake.
Example
When entering information on a claim, an employee transposes digits on an HICN (Health
Insurance Claim Numbers) and submits a claim containing erroneous information.
Section 2: The REALITIES
Fraud, Waste and Abuse
Section 2: The REALITIES
Fraud, waste and abuse is against the law. It is
illegal. There are laws designed to prevent and/or
handle fraud and abuse cases.
Before we discuss the laws, let’s take a look at the
realities of this problem.
Seniors and other taxpayers pay up to $1 billion a year in inflated drug prices due to potential
fraud and loopholes in Medicare. The overpayments represented 1/5 of Medicare spending in
2000. Government Accounting Office (2001)
WASHINGTON, D.C. – United Healthcare Insurance Company has agreed to pay the United States
$3.5 million to settle allegations that the company defrauded the Medicare program, the Justice
Department announced today. The government alleges that beginning in or about 1996 and continuing
through 2000, United Healthcare’s telephone response unit knowingly mishandled certain phone
inquiries received from Medicare beneficiaries and providers and then falsely reported its performance
information to the Centers for Medicare and Medicaid Services (CMS) concerning the company’s
handling of those calls. CMS is the federal agency charged with administering the Medicare program.
Dated Monday, December 13, 2004.
Federal convictions for health fraud, waste and abuse rose 57 percent between 1998 and 1999.
U.S. Department of Health and Human Services (2000)
The FBI secured 560 convictions for health care fraud in 2001, a four-fold increase from 1992. The
bureau also racked up 741 indictments in 2000, up from 615 in 1999. FBI (2001)
Medicare lost $11.9 billion to waste, fraud and mistakes in 2000, half of what was lost five years
ago from improper payments to doctors and hospitals. U.S. Department of Health and Human
Services (2001)
Fraud, Waste and Abuse
Section 2: The REALITIES
Did those numbers surprise you? Can you imagine how these cases affect you?
You are affected as both a provider of services and as a consumer of health insurance.
The effects of fraud and abuse:
Increased health care costs due to costs of uncovered fraudulent expenses and costs of
additional personnel
Increased internal costs
Increased burdens on federal, state and local tax funds
If something goes up, something must come down …
Reduction in level of service available to beneficiaries due to increased levels of audit
and security
Is it easier to see how fraud, waste and abuse affects you?
Fraud, Waste and Abuse
Section 2: The REALITIES
So who handles fraud, waste and abuse cases? Here are the departments and organizations you
need to know:
Your Organization’s Compliance Office
BlueCross’s Medicare Advantage Compliance Officer
Responsible for monitoring all corporate departments and subsidiaries to ensure
compliance with all federal and state regulations governing business operations and
adherence to our contracts and corporate values
Centers for Medicare and Medicaid Services (CMS)
This is the plan sponsor who sets guidelines and oversees all Medicare Advantage and
Prescription Drug activities
Medicare Drug Integrity Contractors
Contracted by CMS to provide analysis of all data submitted by sponsors to investigate
fraud complaints and audit plan sponsor operations
Section 3: The LAWS
Fraud, Waste and Abuse
Section 3: The LAWS
The laws outlined on the next few pages are
designed to help us deal with and control this
issue. The law, however, is not enough.
We cannot claim ignorance. As with any law,
ignorance is no excuse. In order to participate in
government contracts, we are obligated to learn
the laws and regulations that apply to our
business.
We all have an obligation to the Medicare
Advantage program to help fight fraud and abuse.
Fraud, Waste and Abuse
Section 3: The LAWS
Freedom of Information Act (FOIA)
The Freedom of Information Act makes information collected
by government agencies available to the public. Most FOIA
provisions affect how and when CMS is required to or restricted
from releasing information.
Anti-Kickback Statute
The Anti-Kickback Statute provides penalties for individuals or entities that knowingly and willfully offer,
pay, solicit, or receive remuneration in order to induce or reward business payable (or reimbursable)
under the Medicare or other federal health care programs.
In addition to applicable criminal sanctions, an individual or entity may be excluded from participation
in the Medicare and other federal health care programs and subject to civil monetary penalties.
Fraud, Waste and Abuse
Section 3: The LAWS
Health Insurance Portability and Accountability Act (HIPAA)
The Health Insurance Portability and Accountability Act protects the privacy of an individual's
identity and medical records. As employees, it's our responsibility to follow procedures dealing
with security of information, minimum necessary disclosure and the security of our systems that
store vast amounts of private data.
False Claims Act
The False Claims Act prohibits knowingly presenting (or causing to be
presented) to the federal government a false or fraudulent claim for
payment or approval.
It also prohibits knowingly or using (or causing to be used) a false record
or statement to get a false or fraudulent claim paid or approved by the
federal government or its agents.
NOTE:
The False Claims Act protects individuals from retaliation (demotion, dismissal, suspension,
harassment, etc.) for reporting suspected fraud, waste and abuse.
Fraud, Waste and Abuse
Section 3: The LAWS
What are the consequences?
According to the laws we just discussed, violators may face penalties including, but not
limited, to:
Fines ranging from $10,000 to $250,000 (per occurrence)
Fines up to three times the dollar amount the government lost (per occurrence)
Additional civil and criminal charges
Revocation of all licenses (insurance, business or contract)
Exclusion from participation in all federally funded health care programs
Fraud, Waste and Abuse
Section 3: The LAWS
Who is subject to regulation?
Any participating provider
Any beneficiary
Any person or business receiving payment from a government-sponsored
health care program (including contractor and subcontractor employees)
As a representative of a government contractor, you are also subject to regulations
and penalties.
Fraud, Waste and Abuse
Section 3: The LAWS
What are your responsibilities?
It is your responsibility to report any suspected or known violation on the part of a
provider, beneficiary or another employee.
If you want to report a suspected violation, you can contact your Compliance officer
who will begin an investigation. If your location does not have a Compliance officer, you
should contact the BlueCross Compliance officer at 888-263-2077.
Section 4: The CASES
Fraud, Waste and Abuse
Section 4: The CASES
Now that you know the terms and understand the laws, let’s look at some examples of
the types of fraud, waste and abuse you need to be able to recognize.
As an employee, you have a responsibility to your employer to report suspected fraud,
waste and abuse by anyone.
On the next few pages, you will find the types of fraud and abuse committed by
sponsors, providers and beneficiaries.
There are, however, many other entities affiliated with the Medicare Advantage program
that are subject to or capable of committing fraud and abuse. They include wholesalers,
manufacturers and prescribers.
Fraud, Waste and Abuse
Section 4: The CASES
Fraud – Example
An agent erroneously lists the county of residence of the potential enrollee to allow him
or her a lower premium.
Fraud, Waste and Abuse
Section 4: The CASES
Examples* of Sponsor/Plan Fraud
Failure to provide medically necessary services
Sponsor fails to provide medically necessary items or services
that the organization is required to provide to a plan enrollee and
that failure adversely affects the enrollee.
Payments for excluded drugs
Sponsors must ensure they only provide coverage for drugs
in their approved formularies.
False information
Plan misrepresents or falsifies information it furnishes to CMS or
to an individual.
*This list is not all-inclusive. Please refer to the Part D Manual for a more comprehensive list.
Fraud, Waste and Abuse
Section 4: The CASES
Examples* of Sponsor/Plan Fraud, continued
Duplicate premiums
Failure to refund duplicative copayments or premiums from beneficiaries.
Appeals process handled incorrectly
Medicare beneficiary denied his or her right to appeal or denied a timely
appeal.
Delinquent reimbursements
Beneficiary is not reimbursed by the plan following retroactive low income
subsidy determination.
*This list is not all-inclusive. Please refer to the Part D Manual for a more comprehensive list.
Fraud, Waste and Abuse
Section 4: The CASES
Examples* of Provider/Pharmacy Fraud
Inappropriate billing practices
Inappropriate billing practices include, but are not limited, to:
Billing for non-existent prescriptions
Billing multiple payers for the same prescriptions
Billing for brand name when generics are dispensed
Billing for non-covered prescriptions as covered items
Billing for prescriptions that are never picked up
Prescription splitting to receive additional dispensing fees
Incorrectly billing for secondary payers to receive increased
reimbursement
*This list is not all-inclusive. Please refer to the Part D Manual for a more comprehensive list.
Fraud, Waste and Abuse
Section 4: The CASES
Examples* of Provider/Pharmacy Fraud, continued
Dispensing expired or adulterated prescription drugs
Pharmacies dispense drugs that are expired or have not been stored or
handled in accordance with manufacturer and FDA requirements.
Bait and switch pricing
Bait and switch pricing occurs when a beneficiary is led to believe that a
drug will cost one price, but at the point of sale the beneficiary is charged
a higher amount.
Failure to offer negotiated prices
Occurs when a pharmacy does not offer a beneficiary the negotiated price
of a Part D drug.
*This list is not all-inclusive. Please refer to the Part D Manual for a more comprehensive list.
Fraud, Waste and Abuse
Section 4: The CASES
Examples* of Beneficiary Fraud
Identity theft
Perpetrator uses another person’s Medicare card to get prescriptions.
Misrepresentation of status
Beneficiary misrepresents personal information (identity, eligibility) to
illegally receive benefit.
Resale of drugs
Beneficiary falsely reports loss or theft of drugs or fakes illness to get
drugs for resale on black market.
*This list is not all-inclusive. Please refer to the Part D Manual for a more comprehensive list.
Fraud, Waste and Abuse
Section 4: The CASES
As you can see, fraud, waste and abuse occur in many different ways. They are a very serious, very
expensive problem.
It is important that we all exercise diligence in the workplace to understand and prevent fraud from
affecting our jobs, our lives and the well-being of our customers.
Congratulations!
You have completed the Fraud, Waste and Abuse training course for
providers and other entities who contract with BlueCross BlueShield of
South Carolina.
If you would like to review the material, feel free to do so.
If you choose not to review, you can now exit the course.