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Depend On Count On
Our People
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Fraud in the Revenue Cycle
2018 MMGMA Winter Conference
March 7, 2018
Why are we here? • Consumer Payments to Providers have
increased: • 2011 to 2014 - 193%
• 2013 to 2016 - 58%
• Consumers moving to high-deductible health plans (HDHP). • 10M plans in 2010 to 75M in 2016
Source: https://www.beckershospitalreview.com/finance/10-things-to-know-about-2016-healthcare-consumer-payment-trends.html Source: https://www.instamed.com/blog/trends-in-consumer-healthcare-payments/
What will we learn today?
Identify the revenue fraud schemes
Risk areas in medical practices
Internal controls to mitigate those risks.
Fraud 101 – Revenue Fraud Schemes
What is Fraud?
From the Association of Certified Fraud Examiners (www.acfe.com)
• In the broadest sense, fraud can encompass any crime for gain that uses deception as its principal modus operandus. More specifically, fraud is defined by Black’s Law Dictionary as: • A knowing misrepresentation of the truth or concealment of a material fact to induce
another to act to his or her detriment.
• Consequently, fraud includes any intentional or deliberate act to deprive another of property or money by guile, deception, or other unfair means.
Is this Fraud?
• An employee needs cash and writes a personal check to cover for cash taken from patient co-pays.
• An employee writes off a patient balance based on sympathy for patient.
• Management approves a write off of a patient account due to facts and circumstances of that patient.
“2016 Report to the Nations on Occupational Fraud and Abuse. Copyright 2016 by the Association of Certified Fraud Examiners, Inc.”
Example
“A check for $8,000 had arrived in the mail from an insurance provider – a settlement from an old claim that had already been written off and was never entered into their new practice management system”
Could this be diverted for personal gain?
Source: http://medicaleconomics.modernmedicine.com/node/441015
“2016 Report to the Nations on Occupational Fraud and Abuse. Copyright 2016 by the Association of Certified Fraud Examiners, Inc.”
“2016 Report to the Nations on Occupational Fraud and Abuse. Copyright 2016 by the Association of Certified Fraud Examiners, Inc.”
Theft of Cash Schemes
High risk for Medical Practices:
• Write off Schemes
• Lapping Schemes
• Understated Sales
“2016 Report to the Nations on Occupational Fraud and Abuse. Copyright 2016 by the Association of Certified Fraud Examiners, Inc.”
High risk for Medical Practices:
• Timing Differences
• Understated Revenues
“2016 Report to the Nations on Occupational Fraud and Abuse. Copyright 2016 by the Association of Certified Fraud Examiners, Inc.”
High risk for Medical Practices:
• Conflicts of Interest
Example
“This money is not going to be missed by anyone”
Source: http://medicaleconomics.modernmedicine.com/node/441015
The Fraud Triangle
Risk Areas in Medical Practices
What puts medical practices at risk?
• Skimming: • High volume of adjustments and allowances expected
• Multiple payors
• Small practices that lack segregation of duties
• Significant trust placed in one person
• Financial Statement Fraud: • Compensation Structures / Bonuses
• Budget vs Actual
Back to Example – What Risk Factors Existed?
Internal Controls
Internal Controls – Organizational Level
• Tone at the Top – Integrity and Ethical Values
• Clear organizational structure, roles, responsibilities and authority
• Commitment to competence
• Accountability
• Risk Assessment
• Communication
• Monitoring
Internal Controls – Functional Level
• Segregation of Duties
• Approval of allowances, adjustments
• Review of aging reports and subsidiary ledgers
• Physical safeguards on cash
• Activity is posted in proper period to proper accounts
Internal Controls – IT
• Access is limited to a those who need access for their job responsibilities.
Internal Controls
• Identify and Address Weaknesses
• Ongoing Monitoring
Back to Example – What Internal Controls were Missing?
Key Take-Away’s
• Perform regular risk assessments
• Clearly communicate roles, responsibilities
• Clearly communicate levels of authorization
• Segregate duties to extent possible and add other mitigating reviews or processes if unable to segregate duties appropriately.
• Trust but verify!
Questions?
Andrea Addo, MBA, CPA, CFE, CITP
Email: [email protected]
Phone: 952-829-3425
Kelly Salwei, CPA, CMA
Email: [email protected]
Phone: 952-829-3400