depend on our people fraud in the revenue cycle count on ... · fraud in the revenue cycle 2018...
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Depend On Count On
Our People
Our
Advice
Fraud in the Revenue Cycle
2018 MMGMA Winter Conference
March 7, 2018
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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/
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What will we learn today?
Identify the revenue fraud schemes
Risk areas in medical practices
Internal controls to mitigate those risks.
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Fraud 101 – Revenue Fraud Schemes
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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.
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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.
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“2016 Report to the Nations on Occupational Fraud and Abuse. Copyright 2016 by the Association of Certified Fraud Examiners, Inc.”
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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
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“2016 Report to the Nations on Occupational Fraud and Abuse. Copyright 2016 by the Association of Certified Fraud Examiners, Inc.”
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“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
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“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
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“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
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Example
“This money is not going to be missed by anyone”
Source: http://medicaleconomics.modernmedicine.com/node/441015
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The Fraud Triangle
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Risk Areas in Medical Practices
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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
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Back to Example – What Risk Factors Existed?
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Internal Controls
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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
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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
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Internal Controls – IT
• Access is limited to a those who need access for their job responsibilities.
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Internal Controls
• Identify and Address Weaknesses
• Ongoing Monitoring
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Back to Example – What Internal Controls were Missing?
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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!
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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