Healthcare Fraud Case: Where, Exactly, is the Hospital?

Healthcare fraud is a continuing threat. Whether perpetrated by providers, patients or insurance carriers, fraudsters will often go to any lengths necessary to try to accomplish their schemes. I’m reminded of a recent case in which CRI Group was engaged by a client to verify some hospital bills that had been presented for reimbursement. The client felt that something was amiss, and indeed it was.

When we conducted our investigation, we learned that the address on the bills was not current – the hospital had closed that location nearly two years prior due to a dispute among doctors. The hospital had since reopened, but its new location was nearly 10 km away from the previous address. Obviously, there was no business reason for the hospital to send out its bills listing the old address.

Our investigation continued. Further inquiries found that there was no record for the invoice or the patient in hospital records at all. The bills were fake. They were forged, with a fake stamp and a phony patient name. When given this information, our client was saved from paying out fraudulent bills with money that most likely would have never been recovered.

Cases such as this happen around the world on a constant basis. Fraudulent claims get paid out when a company is too busy, or perhaps too trusting, to perform proper due diligence and take the steps needed to verify every piece of information presented to them. Even within the industry, legitimate healthcare providers are sometimes caught red-handed perpetrating schemes like upcoding and unbundling, services not rendered, kickbacks and self-referrals, and – quite disturbingly – performing medically unnecessary procedures. Experts are trained to look for red flags in healthcare billing and investigate further when they suspect something might be fraudulent.

In our case, there were some good lessons for any accounts payable personnel to heed:

  • Always beware of red flags in the billing process
  • Verify payment and billing information
  • Check all documents for authenticity

Healthcare fraud will continue to claim victims and raise the cost of healthcare for people everywhere. A few months ago, we discussed in this space whether digital payments will help reduce it. Whatever the case, it is clear that companies need to take a proactive approach to preventing healthcare fraud. Some schemes are very complex, and traditional methods will not uncover them. Business leaders should ensure that they have the resources and expertise to effectively catch fraudulent schemes before they are paid out.