Dental health-care fraud and abuse

Dec. 19, 2013
Like all health-care practitioners, dentists are now being watched ever more closely by government agencies, insurance companies, and other regulatory bodies.

Like all health-care practitioners, dentists are now being watched ever more closely by government agencies, insurance companies, and other regulatory bodies. Doctors must demonstrate their compliance with data security and integrity requirements, and standards will soon progress beyond the basic adoption phase.

Practice data such as financial transactions cannot just be accurate; the data must be reported accurately and consistently, and (of course) comply with HIPAA requirements that protect patient privacy. Regulatory scrutiny on practice fraud is likely to become more detailed as legislators work to nationalize data standards.

Most dentists are professional, caring, ethical, and honest. The majority of practicing dentists would never knowingly perpetrate any type of dental fraud, abuse, or scam. Dentists have worked too long and too hard to allow fraud and abuse to jeopardize success.

Unfortunately, like any business, there are a troubling number of dentists and staff that are dishonest. It can be difficult to determine the source of the fraudulent activity. But the picture being painted is growing disturbingly clear as legal cases of fraud, negligence, and unethical treatment become increasingly common.

The critical question is, "How can doctors prevent employee negligence that compromises practice reporting?"

As doctors and business owners, we are liable for all information recorded in our names. We risk our reputations and livelihoods when we allow data (and possibly mistakes or fraud) to aggregate without regular audits. For their own protection, dental professionals must be vigilant and aware of dental fraud and abuse tactics.

In one recent case, an employee was committing insurance fraud by submitting false claims and having the remittance sent to the employee's address. Although the practitioner did not commit the fraud, he was forced to refund the monies falsely remitted, and is under investigation by state authorities.

We as dental professionals must realize that any claims submitted by our offices are our responsibility, whether or not we have direct knowledge of each claim..

More articles about dental fraud

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When it happens to you: An overview of what to expect when the suspicion of employee fraud enters your office 

What constitutes dental fraud and abuse?

By definition, dental fraud is any act of intentional deception or misrepresentation of treatment facts made for the purpose of gaining unauthorized benefits. Acts of dental fraud contain three defining features: intent, deception, and unlawful gain.

These scams can include, but are not limited to:

  • Billing for services not rendered
  • Misrepresenting dates of service
  • Waiving of deductibles and/or copayments
  • Misrepresentation of services
  • Unbundling services charges
  • Overcharging or upcoding routine services
  • Diagnosing unnecessary or incorrect treatment

Let's examine each scam. All of these could result in criminal charges if discovered.

1. Billing for services not rendered. Billing for services not provided is a common type of fraud (in every profession). It happens when (for example) a dentist who merely examined the patient bills for more expensive dental services, including fluoride and sealants.

2. Misrepresenting dates of service. The date of service and the date of claim signature should be the same. Misrepresenting the date of service is fraudulent; this matters to insurance companies as there may be a waiting period prior to benefits being available. Sometimes the date of service is changed to take advantage of any early deductible requirement.

3. Waiving of coinsurance or copayments. Dentists who are not reducing their fees when they do not collect patient payments are essentially inflating fees to the insurance company. This is illegal overbilling and is fraudulent.

Most government health-care plans and insurance companies do not allow providers to waive patients' deductibles or copayments. Providers may rationalize waiving deductibles by saying that they do not profit; they are just helping patients who cannot afford the balance. It's illegal because when a coinsurance or copayment is waived, the insurance company pays expenses they would not otherwise pay. This drives up premium costs for policyholders.

4. Misrepresentation of services. Diagnosing or coding procedures incorrectly is fraudulent and can entail liability. Changing the code to increase the amount of the claim reimbursement decreases the patient's maximum benefit and increases the patient's out-of-pocket expense.

In one case, a provider was performing routine dental extractions and using the procedure code for impacted teeth. The insurance company noticed that the same radiograph was being provided for each patient with the name being changed.

5. Unbundling of procedures. The American Dental Association defines unbundling of procedures as "the separating of a dental procedure into component parts with each part having a charge, so that the cumulative charge of the components is greater than the total charge to patients who are not beneficiaries of a dental benefit plan for the same procedure."

This scenario happened with a dentist who was charging not just for the extraction, but also for elevating the flap, curetting out the periapical tissue, incision, and drainage that was in conjunction with the extraction. He even charged for suturing the socket site. These procedures are all part of the global fee for extraction of the tooth and were fraudulently unbundled.

6. Upcoding. Defined by the ADA as "reporting a more complex and/or higher cost procedure than was actually performed," upcoding bypasses insurance company reimbursement limitations (and thereby increases practice income).

Beware of incentivizing staff for certain procedure codes. In one case, the staff of an office coded services higher to increase the practice's revenue, so that the staff's incentive compensation would increase as well. This went on without the knowledge of the dentist. Based on an anonymous tip, an investigation was started by one of the large insurance carriers, which resulted in the ongoing monitoring of the claims submitted by the practice.

Upcoding legislation changes

HIPAA Section 231 expands the prior civil money penalties laws for fraud and abuse violations. These violations are not criminal, so jail time is not included in the range of sanctions, but enormous fines, penalties, and exclusion from certain health-care programs are not uncommon.

Also, CMPL penalty amounts have significantly increased from $2,000 to $10,000 per violation. Further, the penalties apply for each claims form line item or prohibited practice. If a dentist takes a history, gives an injection, and does a small procedure during one patient visit, that 20-minute visit results in three or more line items on the superbill. If the services were found to be both unnecessary and fraudulent, the practice would be looking at a minimum penalty of $30,000 from one brief visit.

7. Performing unnecessary procedures. Performance and billing for treatments not needed, or providing additional services or procedures beyond what was required, to increase billings and claims amounts.

Fraud: It's not all about the Benjamins

Not all schemes involve financial assets. One practitioner's office personnel had good intentions, but altered certification documents that enabled the practitioner to be accepted into a large organization as an authorized provider. When investigated by the authorities, the practitioner suffered significant damage to his personal and practice reputation. The staff were fired, and charged by state officials for filing false credential applications.

Solutions for fraud detection

Despite running small businesses and often employing friends and family, we live in an unscrupulous world. We must protect our assets and reputations. Although most dentists are not formally schooled in business management, we need to arm ourselves with the resources to protect our employees and livelihoods.

There are quick, cost-effective ways to get started. You can:

  • Get educated on how to spot "red flags" in your financial operations. You will be surprised at the ease and breadth of applications that monitor transactions in your accounts.
  • Pay attention to employees. Know when they face family problems, financial challenges, etc.
  • Use the reports your current management systems provide. Find alerts and trends you can use to understand your business in more detail.
  • If you suspect fraud, obtain qualified certified public accountants, lawyers, trainers, and advisors to provide detailed analysis.
  • Run background checks on all employees prior to hire.

Donald P. Lewis Jr., DDS, CFE, is an oral and maxillofacial surgeon in private practice in Cleveland, Ohio. As a certified fraud examiner, he is a sought-after speaker on white-collar crime. Reach Dr. Lewis by email at [email protected].

George P. Farragher CPA, CFE, CFF, has more than 30 years of forensic accounting and investigation experience. He is a former agent of the U.S. Internal Revenue Service and the Defense Contract Audit Agency of the Department of Defense. He is also regent emeritus of the Association of Certified Fraud Examiners.

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