Fraud in the Revenue Cycle

Transcription

1 Fraud in the Revenue Cycle 2018 MMGMA Winter Conference March 7, 2018 Depend On Our People Count On Our Advice

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3 Why are we here? Consumer Payments to Providers have increased: 2011 to % 2013 to % Consumers moving to high-deductible health plans (HDHP). 10M plans in 2010 to 75M in 2016 Source: Source:

4 What will we learn today? Identify the revenue fraud schemes Risk areas in medical practices Internal controls to mitigate those risks.

5 Fraud 101 Revenue Fraud Schemes

6 What is Fraud? From the Association of Certified Fraud Examiners ( 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.

7 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.

8 2016 Report to the Nations on Occupational Fraud and Abuse. Copyright 2016 by the Association of Certified Fraud Examiners, Inc.

9 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:

10 2016 Report to the Nations on Occupational Fraud and Abuse. Copyright 2016 by the Association of Certified Fraud Examiners, Inc.

11 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.

12 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.

13 High risk for Medical Practices: Conflicts of Interest 2016 Report to the Nations on Occupational Fraud and Abuse. Copyright 2016 by the Association of Certified Fraud Examiners, Inc.

14 Example This money is not going to be missed by anyone Source:

15 The Fraud Triangle

16 Risk Areas in Medical Practices

17 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

18 Back to Example What Risk Factors Existed?

19 Internal Controls

20 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

21 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

22 Internal Controls IT Access is limited to a those who need access for their job responsibilities.

23 Internal Controls Identify and Address Weaknesses Ongoing Monitoring

24 Back to Example What Internal Controls were Missing?

25 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!

26 Questions? Andrea Addo, MBA, CPA, CFE, CITP Phone: Kelly Salwei, CPA, CMA Phone: