Hospitals are reimbursed by Medicare and Medicaid based on the care that they provide to patients. These programs use complex payment tables that consider factors such as the type of care provided and whether the care was outpatient or inpatient.
An outpatient receives medical care and is then sent home, while an inpatient is admitted to the hospital for monitoring and more advanced treatments. Outpatient services are generally reimbursed at a much lower rate than inpatient services. Fraud involving outpatients frequently involves schemes to maximize these rates.
What follows are some common examples of hospital fraud that involve inpatients, outpatients, and other facilities.
Duplicate Billing Fraud: This common form of fraud takes place when the patient (or patient’s insurance) is charged for a service that was already charged to a public medical program. The hospital accepts two payments for a single service.
Upcoding Fraud: The American Medical Association provides a series of codes that apply to each hospital procedure, and negotiates on behalf of the medical industry to determine how much Medicare and Medicaid should reimburse. When hospitals provide codes for more expensive services than they provided, it is considered upcoding fraud.
Improper DRG Claims Fraud: The DRG (Diagnosis Related Group) system is a patient classification system designed to standardize payments to hospitals. When records are altered to make patients appear to fall under a different and more lucrative classification, it can be considered a fraudulent claim.
Unbundling Fraud: Many treatments involve a series of different procedures. Some of these procedures are bundled together and reimbursed at the treatment of a single condition. However, individual procedures that are charged separately may be reimbursed at a higher rate. It is considered a type of fraud to unbundle services to make more claims.
Cost Report Fraud: This type of fraud occurs when hospitals improperly inflate the costs of care provided to inpatients or outpatients. When nurses provide care, but that care is reported as being provided by a doctor, it may be considered cost report fraud.
Stark’s Law Violations: Hospitals often have long-term relationships with nursing homes, dialysis centers, and hospice facilities. However, they are not permitted to have a financial relationship. Any referrals to facilities that make payments to the hospital may be considered improper.