Home > Property & Casualty > Rise in healthcare regulatory scrutiny means providers must be extra cautious

Rise in healthcare regulatory scrutiny means providers must be extra cautious

Healthcare providers who submit claims to Medicare and Medicaid are exposed to greater financial risk than ever before. Enhanced anti-fraud legislation coupled with a massive increase in government resources aimed at recouping billing errors and fraud will ultimately take millions of dollars away from healthcare providers and cost substantial sums to refute or defend in legal expenses and forensic reviews. The Centers for Medicare and Medicaid Services(CMS) through its aggressive Recovery Audit Contractor(RAC) program initiated in 2006, whereby federally hired contractors are paid on a contingency basis retaining a percentage of recovery payments, had recouped almost a billion dollars as of 2008, that did not meet coding or necessity policies.

These and other changes brought on by the Patient Protection and Affordable Care Act (PPACA) are already having a sweeping impact on all entities in the healthcare industry. For example, PPACA significantly increased the effects of the federal Anti-Kickback Statute (AKS). Any claim for services relating to a violation of AKS is now considered a fraudulent claim under the False Claims Act (FCA), and the FCA allows for recovery of treble damages, civil penalties and recovery of litigation costs. Furthermore the government can now prove an AKS violation without having to show intent of violation.

Further to these reforms, the government has also created specialized fraud teams to seek out and crack down on perpetrators. One of these task forces, Health Care Fraud Prevention and Enforcement Action Team (HEAT) has recouped a massive amount of funds related to fraud activity. The success of HEAT’s efforts to fight healthcare fraud, coupled with the government’s additional funding to support the organization, should serve as a clear indication to providers that these types of crackdowns will continue.

This increase in anti-fraud measures, along with more routine claim and billing audits that can lead to huge recoveries with no proof of fraud, present a substantial risk of liability and defense costs to healthcare providers. Providers should review their insurance policies, particularly errors and omissions coverage, to manage this exposure. There has been a recent development of new insurance products to help mitigate these risks that are not substantially covered by traditional insurance policies. Billing E&O is one option that covers defense costs and fines and penalties for billing errors. It can also cover HIPAA, EMTALS and stark proceedings. It’s critical that healthcare providers pay close attention to federal and state enforcement actions taking place throughout the healthcare industry. This means having a clear understanding of anti-fraud legislation, as well as establishing best practices for employees and staff members who handle claim processing and reimbursement submittals. To learn more, contact your WGA representative about obtaining the best coverage for your entity.

WGA will be at the American Society for Healthcare and Risk Management (ASHRM) Annual Conference and Exhibition,  October 26-29 in Anaheim, California. Click here to learn more about about the event.


About the Author

Matthew Paris is a Senior Vice President at William Gallagher Associates (WGA) in the Property and Casualty Group. He focuses on risk management and insurance services within the healthcare industry, and has worked with a range of clients in the sector, including hospitals, physician groups, long-term care facilities, managed care organizations and several large New England academic medical centers.

617.646.0226| MParis@wgains.com | Connect with Matt on LinkedIn.

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