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What Providers Need to Know to Avoid Medical Billing Fraud

March 3, 2020

Challenges of telemedicineTelemedicine was intended to bring quality medical services to people unable to otherwise access care: the homebound, elderly, as well as rural and underserved communities.  When it works as intended, it’s a great tool in a provider’s toolbox. However, as with many other good intentions, there are always those who criminally seek to exploit the vulnerable as well as payers and the government for their own gain.

Dishonest providers and other organizations who team up to defraud the government at the expense of needy Medicare beneficiaries are robbing everyone: the taxpayers’ funding for Medicare itself, honest and ethical providers whose legitimate prescriptions will be held up for payment due to closer scrutiny, patients who may find their DME and prescription needs denied repeatedly – the list goes on.

Here are some of the more blatant schemes concocted to enrich a handful at the expense of everyone else, as well as what providers can do to reduce fraud and waste, especially with better claims billing and revenue management.

DME fraud steals billions from Medicare for unnecessary equipment

Durable medical equipment has long been considered low-hanging fruit for a number of unscrupulous companies; however, using telemedicine is a newer twist.  Thousands of unknowing beneficiaries have received unnecessary equipment, including shoulder, back, knee and wrist braces,
In April 2019, investigators cracked one of the biggest Medicare fraud schemes in US history: “Operation Brace Yourself” uncovered an elaborate scheme that had defrauded Medicare of over $1.2 billion through using telemedicine  doctors to prescribe unneeded DME. Aided by the FBI and the U.S. Department of Health and Human Services, the DOJ executed over 80 search warrants and subsequently charged 24 people with conspiracy to commit health care fraud among other charges. The culprits included corporate executives of five telemedicine companies as well as three medical professionals, one of whom pled guilty to writing prescriptions from information obtained by telemarketing companies, in exchange for what amounted to bribes and kickbacks.

Prescription Fraud: theft through overcharging markups

Recently, Tennessee law enforcement officials uncovered a $1 billion scheme using a telemedicine company “HealthRight, LLC” based in Florida and Pennsylvania, in league with their own compounding pharmacies in Texas and Florida, to fraudulently solicit insurance coverage and prescription information from healthcare consumers nationwide. The four individuals charged and their companies used that information for prescription pain creams and related products. Physicians who approved the prescriptions had no knowledge that the defendants had sharply increased the prices for those drugs. Private carriers were billed for the marked-up items to the tune of at least $931 million in fraudulent reimbursement claims. More than 100 providers and thousands of patients were directly impacted in Tennessee as well as other parts of the country.

Telemedicine Fraud on the rise

While the number of fee-for-service beneficiaries increased only slightly by five percent from 2013 to 2017, spending on knee, ankle and back braces increased 51 percent over the same period.  There have long been cases of abuse of DME and other common Medicare expenditures; however, the rise of international call centers, the anonymity provided by the Internet and the nature of telemedicine itself, as well as the fact that many patients may see a variety of providers over the course of care make it easier than ever for shady operators to do business.
Currently,  one of the biggest problems facing telemedicine is the need to update the outdated and inadequate regulations surrounding these innovations, to detect and reduce the chances of fraud, abuse and waste while ensuring that honest, legitimate providers are fairly reimbursed.

What steps can providers take to protect themselves and patients?

  • First, take steps to ensure that patient information is kept scrupulously secure: limit the number of persons with access to electronic health records and change passwords frequently. Never give out patient information over the phone to an unknown entity.
  • Second, be aware of the regulations and laws governing CMS and other payers: using analytics, be proactive in detecting billing discrepancies and correct them immediately. Repeated errors, if not eliminated, can be considered by payers as deliberate fraud.
  • Third, take the time to educate patients and families about the importance of using caution when asked for medical and financial information over the phone. If the person on the other end can’t be verified, then hang up.

Finally, using a trusted medical billing service can maintain billing integrity

Due to the uptick in fraudulent DME and related claims, it’s not surprising that Medicare is paying more attention to everything concerning DME, prescription drugs and other commonly-prescribed items. The importance of keeping accurate records, along with having a knowledgeable coding and billing staff, can’t be overstated: in 2016, a psychiatrist from Connecticut was accused of billing Medicare for telephone services provided for patients not in the approved rural health professional shortage areas.  The case was eventually settled but even when due to a provider simply being unaware of telemedicine requirements with no intent to defraud, the burden of legal expenses and potential loss of income, as well as damage to a provider’s reputation can be inestimable as well as financially crippling.

Even without the added complexity of telemedicine, just keeping abreast of laws at local, state and federal levels impacting compliance, care delivery and other priorities can be a challenge to the revenue cycle management of any practice. Enlisting the help of an experienced medical billing service can greatly reduce your chances of unintentionally sending out questionable claims that could result in audits and fines for fraud or other payer problems, as well as disrupting your flow of legitimate revenue. 

Since 2002, M-Scribe has helped practices of all sizes and specialties effectively manage and control their revenue while remaining fully compliant with the latest payer and CMS rulings. Contact us at 770-666-0470 or by email for a complimentary consultation to determine your practice’s needs and goals for growth and revenue cycle management.


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