Factors Affecting Fraud in Activity Based Funding in Medicare - Case Study Example

FACTORS AFFECTING FRAUD IN ACTIVITY BASED FUNDING Student’s Name Course code and name Instructor’s name Learning Institution City, State Date of submission 1. Introduction Most governments have implemented activity based Funding methods to fund their contribution to the health sector. The funding has been channeled to areas such as monitoring, management and administration of hospital functions of various governments. However, there has been concern regarding the level of fraud in the use of these funds based on the amount of use of the funds in comparison to the actual amounts of funds set aside by governments for the purposes of facilitating health care service activities (Independent Hospital Pricing Authority, 2011). One contributing factor to this situation has been fraud. According to the estimates from the national health care Anti-Fraud Association, an estimated $60 billion is lost every year through fraud. This has been in the forms such as reimbursements to providers, payments to medical suppliers and Medicaid vendors which are not the exact amount paid (Bovens, 2007a). Improper payments in Medicaid are estimated to be 10.5% of federal funds. Payments to improper purposes has been a major problem for the federal government but it has not been possible to appropriate funds which can be used for investigation of causes of fraud in health sector (Romzek and Dubnick, 1987). In addition, there are limited academic studies done to establish factors contributing to health care fraud (Shapiro, 1994). The main areas that are considered to have the capability to reduce fraud in health care include addition of professionals who can assist in investigating fraud activities in health care services, the application of fingerprint technology to determine involving in Medicare fraud, checking of licensure, visiting sites and conducting inquiries in state databases (Cheng, Gilchrist, Robinson & Paul, 2009). These among other methods have been suggested to assist in controlling fraud in Medicare. However, there is the need to understand the contributing factors to fraud, and current interventions that have been implemented to control fraud in ABF and changes in policies and practice that need to be made so that fraud in the use of medical funds is minimized or eliminated (Self, 2000). 2. Scope of the Problem This paper focuses on the contributing factors to fraud in allocations of government in the Activity based funding with the aim of finding solutions to these causes. It also investigates current methods used to identify health care fraud with the focus of finding areas of weakness in application of these methods. This is followed by identifying solutions that can contribute to control of fraud when activity based Funds are used to finance activities in the health sector. It also provides recommendations that need to be made regarding the control of fraud in health care service and proposes areas where future studies need to be conducted so that better solutions are found for controlling health care fraud during the use of ABF. 3. Literature Review 3.1. Related Risk Contributing factors There are a number of factors that contribute to fraud in the use of Activity based funds in organizations (Bovens, 2007b). The main factors that contribute to vulnerability of the health sector include uncertainty with regards to demand for services in the health services such as dispersion of regulators, payers, consumers where interaction among these actors is not well organized while information is asymmetric among different actors (Ettelt, Thomson, Nolte & Mays, 2006). As a result, it has been difficult to manage diverging interests. High costs of constructing hospitals and costs of equipment or risks of bribery and conflict of interests have been contributing factors to fraud in the health care sector. The use of discretion of the government to license and accredit health facilities, products and services subject the funds set aside for activities in hospital at risk of being misused (Lancaster, 2014). The main areas of corruption have been inappropriate ordering of tests and procedures for the purpose of gaining income, payments made for absent employees and use of government facilities for private purposes (Sinclair, 1995). For instance, under the factor of monopoly, it has been possible to engage in fraud in provision of medical funds because citizens have little choice on who should provide the medical services (Moher, Liberati, Tetzlaff & Altman, 2009). When the government is the sole provider of these services, patients are forced to pay bribes so that they can benefit from these services. Another contribution factor to increased fraud in the use of medical funds is discretion. This is observed in the case where government officials have the autonomy to make decisions that include hiring of staff and determining the kinds of medicines required and in the quantities determined by government officials’ concerned (Nocera, 2010). In some cases, clinical officers may have discretion over the types of health services to be provided to patients. These conditions create opportunities for corruption (Thompson, 1980). This has been observed in procurement processes where procurement officers have procured expensive facilities in large quantities so that they can benefit from kickbacks (Bovens, Citrin and t’Hart, 2010). Another contributing factor to fraud in health care centers is lack of accountability. This is a state where government is not obliged to demonstrate effectiveness in allocation of funds for use in the health sector (O'Reilly, Busse, Häkkinen, Street & Wiley, 2012). The main components of accountability that have been neglected include lack of measurements of goals, lack of explanation of results and lack of subjecting the results to external monitors or punishing those implicated in fraud. In addition, most health care centers do not allow citizens voice to be heard in accounting for the use of funds in the process (Boston, Martin, Pallot & Walsh, 1996). For instance, these health care centers do not allow citizens to contribute during budgeting for health care services and activities, patients are not surveyed concerning the use of funds by the health care facilities and there are no complaint offices where unethical or corrupt activities can be reported. Lack of transparency has also been considered as a contributing factor to fraud in the use of funds set aside for activities in health care institutions (Busse et al. 2011). Most governments do not allow disclosure of information in most of their departments and a similar situation has been observed in the health care service provision. As a result professionals in health care service sector have been involved in fraud because the i9nformation cannot be disclosed. 3.2. Existing interventions for identification of health care Fraud in ABF In an effort to identify fraud in the use of health care funds, various methods have been used. One such method is the use of Health care Billing Monitor System. This is where a preexisting database of medical specialty claims is used to enable identification of claims such as anesthesia claims, and creation of profiles of behaviors of medical specialists (Christensen and Peters, 1999). It ascertains whether the claims made by the providers fall within the accepted guidelines and standards in the health sector (Christensen, 2005). The software can identify false claims by health providers through comparison of the claims with previous claims in the database and time accumulated data originating from hospitals and the professionals in medical fields. A profile of the billing behavior is created by the system and compared with that of the peers (Van Thiel and Leeuw, 2002). Trigger filters are used to alert the insurance carrier about lack of conformity of the billing to the predetermined form. This system has mainly been used to detect fraud in anesthesia (Christensen and Lægreid, 2001). This is because; anesthesia is the only unit that is billed based o time units. In order to measure fraud, time units are broken down into 15 minutes intervals so that 15 minutes represent one unit (Christensen, Lægreid and Stigen, 2006). The software has the capability to hold the anesthesiologist accountable for involvement in fraud by comparing the claim made by the anesthesiologist and previous submissions in the database (DiMaggio, 1988). For instance, it can involve a comparison of time taken by other anesthesiologists to cure similar problem in another patient. Any variations in time greater than the pre-selected values contribute to generation of an alert about fraudulent activity and the need for investigation of fraudulent payments. Health care Billing Monitor System also serves the purpose of unbundling medical events bills have been inflated by doctors. This is where a single medical procedure that can be billed under one code results into a number of procedures which result into multiple codes which are billed separately (Ellis, 1998). This results into higher revenue to the doctor who performs this operation. This software has unbundled trigger that can alert the user of the software if the patient has had more than a single procedure on him/her in a single day (Cots et al. 2011). Furthermore, Health care Billing Monitor System has been used effectively in outpatient units where health care services are conducted outside hospital premises, thus creating opportunities for fraud and billing irregularities (Gregory, 1998). The anesthesiologist can render services to a number of patients within a short duration of time while billing hours for each case. The database of Health care Billing Monitor System contributes towards detection of this billing irregularity and raises an alert for investigation. In addition, there are other methods that have been used to detect fraud in health care facilities. These include the services of whistle blowers where a person with a high integrity is employed to assess the expected earnings of medical practitioners and reports any irregularity encountered. Another method that has been effective in controlling fraud is the service of internal auditor (Dubnick & Frederickson, 2011). This is where a person with accounting skills is employed by the anti-corruption body to determine any irregular payments and billings in the activities of medical professionals. However, these methods are less effective in comparison with the use of Health care Billing Monitor System (Lægreid, Roness and K. Rubecksen, 2006). This is because the people involved do not have medical backgrounds and during the process of evaluating claims, none of them is aware of how to read the anesthesia chart which is a blue print of the bill submitted by the anesthesiologist. 3.3 How fraud in ABF can be prevented The strategies that can result into prevention of fraud cases in hospitals includes those aimed at controlling monopoly, discretion, accountability and ensuring the citizen’s voice is heard (Wallis and Gregory, 2009). For instance, a practice such as monopoly can be reduced by creating health reforms that separate payers from providers and ensuring there are a large number of agents supplying a particular product (Ensor & Duran-Moreno, 2002). Most hospitals should also seek alternative services apart from government services to ensure informal payments are avoided. In order to reduce discretion that contributes to high possibility of participating in fraud, task should be divided between individuals so that checks and balances can be created, clarification of decision-making process through implementation of standard policies and procedures. Accountability can be a significant factor in controlling fraud in hospitals and health care services. This can be achieved by coming up with systems that can measure inputs in comparison with output, watch dog organizations and performance incentives that reward good performance and punish poor performance (Gawande, 2009). Furthermore, fraud I during ABF can be controlled by allowing voice of the citizens to be heard such as in the use of health boards where citizens are able to contribute into the budgeting and planning activities, conducting patient surveys to determine the levels of accountability and satisfaction with the use of funds and the implementation of control offices which enable citizens report unethical or corrupt activities (Light, 2006). In order to achieve this, civic education needs to be performed so that citizens are made aware of the need to participate in civic and political environment and being able to explain their problems. Finally, corruption in the use of funds for the health sector can be prevented by increasing the level of transparency in the use of funds for health sector activities (Greve, 2003). In order to improve transparency, it is necessary for governments to disclose information or involve external agents in the publicizing the information such as the media or civil society. The use of ‘public service ‘scorecard’ can also be significant in disclosure of the manner in which funds are used in the health sector (Magnussen, 1995). 4. Recommendations for policy, practice and research There are particular recommendations that could lead to the right direction in an effort to control fraud in Activity based Funding. For example, there is the need for rigorous screening of health care providers who want to participate in Medicare (Meyer and Gupta, 1994). This can be achieved through submission of fingerprints, understanding whether the applicant has any previous criminal activity involvement, checking whether the applicant is licensed to provide the service and visiting sites where medical procedures are taking place. This will ensure the billings provided by the health practitioner does not exceed the right bill based on the time spent in the field. It is also recommended that funds should be increased for antifraud activities by creating departments in hospitals where fraud case can be reported and the public can be given the opportunity to report any case of fraud and the level of satisfaction with the activities of the hospitals (Miller, 1992). These offices should be responsible for setting up punishment measures for individuals involved in fraud. Furthermore, policies should be formulated that ensures greater disclosure of payments made to physicians. Furthermore, policies should be formulated that ensures whistleblower protection. This is because; people who report fraud in Medicaid are likely to be subjected to retaliation by the affected parties (Modell, 2004). Governments should come up with measures that ensure these people are protected so that other people are not intimidated to report fraud in health care service provision. In addition, various recommendations pertaining to prevention of imposter nurses should be implemented (Kaufmann &Vicente, 2011). The hiring process should be standardized and include evaluation of the credentials of the individual create barriers for potential imposters. It is necessary to ensure the knowledge and abilities of the applicant are evaluated so that they can meet their professional expectations and standards (Romzek, 2000). It is also important to ensure educational qualification and licensures are investigated before a nurse is recruited. It is also necessary to review inconsistencies in application processes so that possibility of using counterfeit documents during application can be recognized (Lægreid, Opedal and Stigen, 2005). Health professionals involved in inflating the bills and imposter nurses should be subjected to adequate punitive measures that ensure they do not repeat similar incidents or act as warning to other professionals not to commit a similar offence. For instance, when a nurse is found to be an imposter, such a person should be investigated and taken to a nearby police station for criminal investigation (Pollitt and Bouckaert, 2011). There is also the need for regular agency surveys to establish licensure, accreditation of nurses and effectiveness of health records to assist in identifying cases of fraud. The payment system for health practitioners also need to be revised so that the possibility of inflating the bills can be minimized. This can be achieved by providing payments based on the type of medical work performed rather than the number of hours spent treating a patient (Lonti and Gregory, 2004). Thus, doctors who perform their activities outside the facilities of the hospital will be paid based on the nature of the disease they treat rather than the duration of time taken during treatment. There is also the need to conduct studies in the future in the area of databases management so that the current Health care Billing Monitor System is improved so that it can measure the use of resources in provision of health care services such as comparison of the amount of money allocated for the purchase of a particular facility and the actual amount used to purchase the facility (Mikkola, Keskimäki and Häkkinen, 2002). Additional funds should also be set aside for programs aimed at controlling fraud activities in Medicaid. There is also the need to provide medical practitioners with training on integrity matters and performance of duties with professionalism and accountability (Powell, Packalen and Whitington, 2012). Policies should also be formulated about methods of dealing with fraud cases in Medicaid and pleasures such as punishment procedures for individuals involved in fraud in the use of Medicaid funds. 5. Conclusion This paper shows that fraud in the use of Activity based Funds is a problem that has affected the operations of most health facilities while governments have spent a large amount of revenues in financing medical activities that are not actualized. It shows that there are major problems in the current medical system which contributes to cost to the patient, the insurer and the taxpayer. This paper shows that the main contributing factors to this practice are the opportunities created by working conditions and the positions under which health professionals’ work. For instance, the factors of discretion, monopoly, accountability and transparency are some of the contributing factors to fraud in medical activities. In addition, this paper shows that the existence of imposter nurses has created additional number of professionals in the practice of nursing, thus putting pressure on governments to allocate more funds for the reimbursement of these professionals who do not contribute to the nursing profession. It is also found that despite increase in fraud in health sector, most governments have been reluctant to set aside funds aimed at controlling fraud and prosecution of those implicated in fraudulent activities in health sector. Another observation made in this paper is that despite high cases of fraud in medical practice, there has not been any effort from the governments to allocate funds for the control of fraud. This result into the need to allocate additional funds that can assist in control of fraud in the use of activity Based Funds. This paper also shows that despite the existence of a number of technologies such as the use of Health care Billing Monitor System for detecting fraud, most governments have not implemented this idea but have relied in the services of whistle blowers to report cases of involvement in fraud during the use of activity based funds. This has resulted into the recommendation that stringent measures should be taken against those involved in fraud in the use of ABF, the use of current technologies such as Health care Billing Monitor System should be enhanced and future studies should be focused on methods of preventing fraud through the use of current technologies. It is also recommended that during recruitment of nurses into medical practice, various considerations should be made such as ascertaining educational qualifications, professional and training qualifications and the skills required to perform a nursing duty before the applicant is accepted as a health practitioner. 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