In an effort to cut down on health care costs, many families have begun to move away from putting loved ones into nursing homes and assisted living facilities. Many Americans now receive in-home care, thus making home care one of the fastest-growing areas in health care plans. This fundamental shift has also led to a rise in home care fraud. To make matters even worse, there is minimal information available for those seeking in-home care. This is a scary prospect in an industry that has few regulations, high fraud rates, low wages, minimal or no training and very high worker turnover.
Home health agencies have become one of the fastest-growing industries in the United States. The Bureau of Labor Statistics (BLS) projects that the demand for home health aides will increase by 48 percent between 2012 and 2022. While some companies employ nurses to provide care for patients with more serious conditions, such as Alzheimer’s disease, cerebral palsy and diabetes, many lower-trained or untrained personnel can be paid for these services, too. These jobs have an exceedingly high turnover rate, and aides make very low wages. According to the BLS, home care aides make an average median income of $20,820 per year. In some Medicare programs, a family member or friend can be appointed as the health care provider and will be paid for his or her services.
Issues arise when health care providers receive bills in which patient conditions are exaggerated, billed for unnecessary services or for services the patient never received. While many public and private health care providers have made changes to their policies and claims management processes, it is still too easy for criminals to defraud the system.
Examples of Home Care Fraud
There are many ways in which home care fraud is committed, which adds to the difficulty of deciphering which claims are true and which are false. The following are some of the most common examples of this type of fraud:
- Billing and Claims Fraud: This type of fraud involves billing for inflated care or care that was never received. For example, in Medway, Massachusetts, a husband and wife acting as personal care attendants were charged with fraudulently billing MassHealth. They allegedly made a profit of more than $1 million from the sale of medical products obtained by filing false health care claims, according to the Milford Daily News. Both husband and wife allegedly submitted falsified time sheets for themselves and workers for uncompleted visits and claims for unnecessary services.
- Abuse of Elderly and At-Risk People: According to KPCC, a homeless California woman persuaded her mother to leave a nursing home facility to receive home health care. When her mother moved out, the daughter began to collect her mother’s Social Security checks to pay for an apartment. Reports indicate the daughter was unwilling to follow the appointed home care associate instructions and only took her mother to the doctor once in two years. She then applied and was accepted as the official in-home caretaker for her mother. This provided the daughter with $900 a month under California’s in-home care program for low-income individuals. By the end of that year, her mother died from a severe bedsore infection and neglect. The daughter pleaded guilty to abuse and is currently serving 11 years in prison.
- Company Compliance and Regulatory Fraud: This type of fraud involves signing up individuals who were not in need of home care services. For example, in Los Angeles, a man was found guilty of opening a phony medical assessment center and recruiting homeless people with Medicare and Medi-Cal beneficiaries to be referred to three hospitals. According to the IRS, the owner of the assessment center and his employees would recruit homeless beneficiaries for in-patient hospital admissions regardless of whether such hospitalizations were medically necessary.
- Background Check Fraud: This type of fraud involves falsifying or not conducting criminal background checks for home health care aides. Though every state has rules and regulations around background checks for home health care workers, Medicare does require background checks for its federal health insurance program. Agencies dealing with private health insurance companies or families paying a home health care facility directly are not subject to the same rules. According to the Office of Inspector General, “Not every conviction bars someone from work as a home health aide; states’ rules vary for that, too.”
- Fraudulent Billing and Accounting: According to Minnesota Public Radio, two brothers and a mayor in Minnesota were charged with fraud after the mayor, a friend of the brothers, allegedly assisted them in concealing tax liabilities for their home health care company. The two brothers were living lavish lifestyles while deducting and collecting payroll taxes from their employees. The brothers pleaded guilty to fraud by false representation, and the mayor was charged with fraudulent accounting.
- Paying for Recruitment of Patients: In Louisiana, a home care medical company paid kickbacks to individuals who would scout New Orleans neighborhoods for those on Medicare, according to the FBI. The recruiters would seek out Medicare beneficiary numbers that the company would then use to bill for unnecessary or unprovided medical care and services. This is an example of two types of fraud: First, recruitment fee payments for patients receiving care paid for by the federal government are not allowed; second, it is unlawful to bill for unnecessary or unprovided services.
- Health Care and Doctor Conspirators: In Miami, a home care agency and multiple doctors’ offices and clinics were in cahoots to execute a large fraud scheme. According to the Department of Justice, the home health care facility provided bribes and kickbacks to doctors’ offices and clinics in “exchange for home health and therapy prescriptions, medical certifications and other documentation. The agency’s owner and his co-conspirators used these prescriptions, medical certifications and other documentation to fraudulently bill the Medicare program.”
The United States loses billions of dollars a year in health care fraud, which is one of the fastest-growing threats to our nation. Fraud contributes directly to the rising cost of health care premiums. The country has taken steps in the right direction with the creation of claims systems that can identify fraudulent claims in real time. Additionally, there have been new health care laws, harsher punishments for fraudsters, government health care fraud joint task forces, public-private information-sharing partnerships and investigative partnerships with federal, state and local agencies.
The regulations of laws and the enforcement of stricter consequences for violations are improving through the coordination of laws and fraud abuse investigative programs. Those found guilty of health care and insurance fraud are receiving hefty fines and federal prison terms. Additionally, Medicare and Medicaid see a substantial amount of fraud and abuse. The schemes health care organizations, companies and individuals create to defraud the system are always on the rise.
Through public-private partnerships and government agency joint task forces, there has been a heightened focus on identifying fraudulent practices and systemic gaps exploited by fraudsters. The government has also taken further steps to stop fraud on Medicare and Medicaid by enacting the Health Care Fraud Prevention and Enforcement Action Team and the Medicare Fraud Strike Force. According to Healthcare Business & Technology, these programs, led by members of the FBI, Department of Justice and Department of Health and Human Services, have already found more than 600 individuals guilty of health insurance fraud.
Health care companies will significantly benefit from the latest advances in fraud and abuse detection capabilities. In 2014, the nation saw many corporate breaches to which the health care and insurance industries were not insulated from risks. The combination of analytic, technology-based tools and human expertise will help companies protect themselves and prevent fraudulent claims and abusive practices.
Financial Crime Prevention Strategist, IBM Security
Brooke Satti Charles is a Financial Crime Prevention Strategist within IBM Security. Her career has been focused on research and reporting of fraud, money la...