Healthcare Fraud and Abuse

As part of our commitment to fulfill our fiduciary obligation to protect our members and their assets, the 1199SEIU Benefit Funds established a Fraud and Abuse Department to investigate instances of possible fraud, waste, abuse or misuse of benefits. While the vast majority of our healthcare providers work ethically, provide quality patient care and submit proper claims, a few providers have committed abusive and fraudulent acts. Therefore, our goal is to identify, detect and deter fraudulent and abusive healthcare practices.

What Is Healthcare Fraud?

The 1199SEIU Benefit Funds define healthcare fraud as an intentional deception or misrepresentation that an individual knows to be false, or that could knowingly result in some unauthorized benefit to that individual or another person. It includes any act that constitutes fraud under pertinent federal or state law.

The most common kind of fraud involves a false statement or misrepresentation made in order to take advantage of Benefit Funds benefits. The violator may be a healthcare provider, an employee of a medical provider, a beneficiary or some other person or business entity.

Examples of fraud include, but are not limited to, knowingly:

  • Billing for services and supplies that were not performed or provided
  • Misrepresenting a patient’s diagnosis to justify the services or equipment furnished or in a preauthorization request
  • Altering claim forms or electronic claims to obtain a higher payment amount
  • Misrepresenting the name of the rendering service provider
  • Allowing the usage of medical benefits by an unauthorized individual
  • Prescribing drugs without a legitimate medical need
  • Prescribing drugs when there does not exist an established physician–patient relationship with clinical records as documentation of the medical encounter
  • Misrepresenting place of service codes
  • Soliciting, receiving, offering and/or paying remuneration (e.g., kickbacks, bribes or rebates) to induce or reward referrals for items or services
  • Willfully participating in, executing or attempting to execute a scheme or artifice to defraud any healthcare benefit program or to obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program; this may include, but is not limited to, collusion between a provider and a beneficiary or between a supplier and a provider that results in higher costs or charges to the Benefit Funds or its affiliates

What Is Healthcare Waste?

The 1199SEIU Benefit Funds define waste as the over-utilization of services or other practices that, directly or indirectly, result in unnecessary costs to the Benefit Funds. It is not generally considered to be caused by criminally negligent actions, but by the misuse of resources.

Examples of waste include, but are not limited to, the following:

  • Requesting payment for items and services when there is no legal entitlement to payment
  • Spending on services that lack evidence of producing better health outcomes compared to less-expensive alternatives

What Is Healthcare Abuse?

The 1199SEIU Benefit Funds define healthcare abuse as payment for items or services when there is no legal entitlement to that payment and the individual or entity has not knowingly and/or intentionally misrepresented facts to obtain payment or caused an improper payment to have been made. Abuse directly or indirectly results in higher costs to the Benefit Funds through improper payments for treatments or in reimbursement for services that are not medically necessary or that fail to meet professionally recognized standards for healthcare. Abuse also includes beneficiary practices that result in unnecessary cost to the Benefit Funds.

Common examples of abuse include, but are not limited to, the following:

  • Billing of medically unnecessary services or procedures
  • Writing prescriptions for brand name drugs even through a generic is stated in the plan formulary
  • A healthcare provider not providing enough care or delaying needed care in order to maximize reimbursement
  • Failure to document medical records adequately and in accordance with the Benefit Funds’ guidelines
  • Providing treatment that fails to meet professionally recognized standards
  • Steering patients to specific pharmacies without their consent
  • Use of unlicensed staff
  • Misusing codes or modifiers on a claim, such as upcoding or unbundling codes (upcoding is when a provider assigns an inaccurate billing code for a medical procedure or treatment to increase reimbursement)
  • Failure to comply with a participation agreement

The Differences Between Fraud, Waste and Abuse

There are differences between what constitutes fraud, waste and abuse. The primary differences lie in both intent and knowledge. Fraud requires an individual to have both intent to obtain payment and knowledge that their actions are wrong. Waste and abuse may involve obtaining an improper payment, but do not require the same intent and knowledge.

Preventing Fraud, Waste and Abuse

To prevent healthcare fraud, waste and abuse by individuals, providers can:

  • Log into NaviNet or call the Interactive Voice Response System (IVR) at (888) 819-1199 to verify a member’s eligibility to receive benefits
  • Request a second form of identification if you are suspicious of a member’s identity
  • Call the 1199SEIU Benefit Funds’ Fraud and Abuse Hotline at (646) 473-6148 if you suspect fraudulent activities by a member or another provider
  • Email us: [email protected]
  • Write to us:
    1199SEIU Benefit Funds
    Fraud and Abuse Department
    PO Box 866
    New York, NY 10108-0866

All information will be held in confidence.

If Fraud, Waste or Abuse of Benefits Is Suspected

If the 1199SEIU Benefit Funds Fraud and Abuse Department suspects potential fraud or abuse because of evidence such as reimbursement data, information from law enforcement or fraud organizations or complaints from members, providers, provider employees, vendors or Benefit Funds staff, the Benefit Funds will review the claim(s) in question and assign an investigator.

This investigation may include any of the following:

  • Pre/post-payment claims review
  • Medical record request and review
  • Data analysis
  • Verification of services (surveying patients, auditing charts)
  • Interviewing internal and external stakeholders
  • Onsite field audit request
  • Provider monitoring

When conducting investigations or audits of claims and/or medical records, the Fraud and Abuse Department may select a statistically valid random sample (SVRS). This gives an estimate of the proportion of claims that the Benefit Funds paid in error. The Benefit Funds may then use the estimated proportion, or error rate, to project across all claims, or extrapolate, to determine the total overpayment. The Benefit Funds will extrapolate across all claims when it finds a sustained or high level of payment errors.

The Benefit Funds may also enter into arrangements with outside auditing and consulting firms to perform medical record reviews, onsite inspections of a provider’s place of business or other fraud and abuse functions as necessary.

Provider notification

The Fraud and Abuse Department will notify providers of any investigations or audits that may adversely affect payment.

Providers have the right to challenge fraud and abuse determinations

Providers have the right to challenge the Benefit Funds’ initial fraud and abuse determinations. The provider may request a second review by the Fraud and Abuse Committee. Decisions made in a court or by settlement may not be appealed to the Benefit Funds.

If the appeal is unsuccessful, the Benefit Funds will begin to recover lost monies by negotiating a settlement with the provider or by taking other actions necessary to recover lost monies, such as suspending future payments. Unsuccessful recovery efforts will ultimately result in removal from the Benefit Funds’ network of participating providers; in some cases, the Benefit Funds may refer the provider to law enforcement and/or licensing boards.

Corrective action plans

When the Fraud and Abuse Department identifies a provider’s process that is not in compliance with Benefit Funds rules, the provider may be requested to submit a corrective action plan (CAP) to address the deficiency. This request could be in conjunction with the recovery of overpayments or separate and apart from any administrative action. If a CAP is requested, the Benefit Funds will give the provider a copy of its guidelines on how to submit a CAP.