I was talking to another consultant about a physician’s group he’d done a review for. All of the physicians were really busy, but the group wasn’t making the kind of money it should have been making. One of the things he realized was that one of the physician’s wasn’t showing any revenue for inpatient rounds, whereas the others had significant revenue. When he started asking questions he learned this particular physician, for whatever reason, had stopped giving his activity slips to the office manager almost a year earlier, saying he was too busy to be bothered with it.

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My friend decided to have a conversation with this physician, independent from the other physicians. The physician reiterated that he was too busy to do the paperwork, but acknowledged that he knew he should be filling out the forms, and that the other doctors had said something to him about it.

The doctor was told that not only did he need to find a way to do these slips, but that it was imperative for him to do them for another reason. If ever audited, and those activity slips couldn’t be produced, the physician could be accused of a form of fraud, that being accepting kickbacks from the hospital, because the assumption would be that the physician was giving up money on one end, so he had to be accepting it from another end.

One of those odd things about health care is that it’s expected that a provider of services is going to charge for services provided. The physician thought this was odd, but understood what he was being told and said he’d have a talk with the office manager to figure out a way to make sure his slips got completed in a timely manner.

The topic of fraud can be a very dicey one in any type of business, but when it comes to health care most people think of fraud only as billing for services that weren’t really provided. That’s considered the most serious example of fraud but it’s not the only type.

Kickbacks are a type of fraud, and I remembers a news story a few years ago about a hospital in New Jersey that supposedly devised a system of paying cardiologists for referrals to its struggling cardiac surgery program. When it was discovered by an interim chief executive officer and others, the hospital made a decision to try to cover it up rather than disclose it, which is another violation of federal law. The fines were enormous.

Many years ago, I wondered why a physician under my watch had low or almost no Medicare revenue or cash coming in than expected. When I talked to him he said that whenever he saw Medicare patients he didn’t feel right billing them because he knew many Medicare patients didn’t have much money, so he just wrote off all charges for them unless he knew their secondary insurance would fully cover the claims.

I had to tell him that was against the law because he was giving a benefit to Medicare patients that he wasn’t giving to everyone, and that it could be considered fraudulent; Medicare rules are pretty strict. He didn’t fully agree, but said he would go along with the process that was taking place with all the other patients.

The examination of fraud by the government in America has become a business of its own, especially in health care. When the Office of Inspector General first took on fraud back in the late 90’s, it was with little expectations and not all that large a staff, considering what they were going after. By 2005, it had become such a big enterprise that recommendations have been made for each state to establish its own OIG (Office of Inspector General) departments to do coordinated efforts with Medicare and Medicaid.

There are some entities which say that yearly fraud efforts could result in fines totaling in the trillions; that hasn’t quite come true except in total, but what the government has recovered is staggering, and it’s not always because someone intentionally tried to cheat. Almost none of these cases are ever argued against or fought in court because of the treble damages rule; how many hospitals could actually afford treble damage judgments in today’s world?

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If you think I’m kidding, who remembers the Deficit Reduction Act of 2005? Basically, this was an act that is meant to reduce the federal deficit by something like $55 billion dollars over a five year period, and contains massive cuts in many federal programs, including Medicare and Medicaid. What it also called for was an increase of spending around $528 million dollars over five years and $1.2 billion over 10 years to promote Medicaid program integrity, which supposedly means verifying proper Medicaid payments.

It also appropriated $5 million in 2006, $50 million in both 2007 and 2008, and $75 million annually after that for the Secretary of HHS to improve the accuracy of payments in the Medicaid program, along with $25 million annually between 2006 and 2010 for Medicaid-related activities by the OIG. The act also encouraged states to enact false claims acts, mandate that certain employers conduct education campaigns for employees about false claims acts, prohibits states from billing Medicaid twice for prescription drugs, and require recipients to document their U.S. citizenship. This created multiple businesses and side businesses that to this day keeps a lot of people working because the dollars can be drastically high.

In simpler words, the government isn’t playing around. Fraud is serious stuff, and they can come at you from any direction. All it takes is for one employee to be doing something wrong, or one physician to be doing something wrong, intentional or not, to bring attention to organizational policies and procedures. It could even involve following directions from someone in a higher position telling you to do something that you know is wrong, and you doing it; the laws are absolute.

I remember one consulting assignment where a senior vice president of finance told me he wanted to code a particular service with an invalid revenue (departmental code to those not in health care), even though the hospital had a clinic for those particular types of service already and this area wasn’t anywhere near this department. I asked him why, and he said because he knew he would get paid, and what he’d get paid, for the service if the hospital billed it out as a clinic.

I immediately said it wasn’t legal, was fraud, and if he wanted that I would bring him an official letter that he would have to sign, absolving me of all responsibility while noting that, after the first claims went out, I would be sending a letter to the OIG as an official whistleblower, because just being absolved and doing nothing doesn’t get you off the hook, and hey, I could have used the extra 33% from the fine that would have been imposed. He backed down, and I lost my money, but made a very important impression; I hope.

You never know where it’s going to come from, or in what form. As health care managers, you don’t get to act as if you’re ignorant of such things. You’ll be fined and possibly go to jail even if your only crime was following directions.

By the way, this happens outside of health care also. Think about how many managers of former thief and convicted Ponzi scheme planner Bernard Madoff’s company have either been convicted or have plead guilty to one crime after another, even though some say they didn’t know what was happening, because it was determined that they should have known based on the job they were doing. It gives pause to just how close someone can be to going to jail just because they decided to turn their head the other way.

One of the things about being a leader is that you now have to be one, no matter the immediate consequences. Sometimes it’s hard, because no one wants to lose their job. Trust me; jail is worse.

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