Healthcare Fraud: Auditing and Detection Guide, 2nd Edition

Accounts Receivable Pipelines Overview: Implications for Prevention, Detection, and Investigation

As discussed earlier in the chapter, reimbursement models are typically negotiated within three general methodologies. Understanding reimbursement models is the cornerstone to successful healthcare fraud investigation. The rules behind reimbursements drive the creativity of the ethically challenged. The goal of the fraudster is to manipulate information, divert funds, and execute various fraud schemes without getting caught. The goal of the auditor or investigator is to understand all the rules so the manipulations can be caught.

The prospective payment system has a specific set of rules. The prospective payment system is a predetermined rate that is calculated for inpatient and outpatient care. A sample prospective payment system includes the current Medicare inpatient model of DRGs. It is not unusual for private payers to negotiate the use of this model for reimbursement of hospitalized care. This model involves listing the diagnosis determined after study, along with the procedures provided to the patient while he or she was hospitalized, in order to determine the appropriate DRG group for billing purposes. Each provider receives a weighted predetermined amount for patients who fall into a particular group. The theory behind a prospective system is that it promotes the provider’s effective utilization of services to a patient. Therefore, the motivation for profit is “less is more.” ...