According to the National Library of Medicine, managed care refers to a healthcare insurance approach that integrates the financing of care and related services to keep the costs to the purchaser at a minimum while delivering what is appropriate for beneficiaries.

The government has designed this delivery system to organize and manage healthcare between Medicaid and Medicare agencies and the managed care organizations (MCOs) that accept a set payment for these services.

Unfortunately, corrupt agents often plague this healthcare sector with fraud that places a heavy burden on taxpayers and diminishes the level of care administered to the individuals in those healthcare programs.

In this article, we list some of the most common managed care fraud practices to look out for in 2023, how to identify them, and what to do if you suspect fraud in your organization.

What is Managed Care Fraud?

While managed care programs have Special Investigative Units (SIUs) to search for and prevent potential fraud, waste, and abuse, managed care fraud still occurs. Fraud occurs when Managed Care Organizations (MCOs) attempt to cheat the system through actions like double-billing, kickbacks for providers, falsifying patient records, and miscoding or upcoding patient diagnoses to charge a higher amount to managed care insurance.

When MCOs illegally manipulate the healthcare system, they effectively steal billions of taxpayer dollars designated to fund these healthcare programs. Not to mention, the patients who use these programs suffer from care that is not adequate or accurate to what their provider may bill.

Most Common Trends in Managed Care Fraud

When it comes to managed care, fraud can occur in several unique and specific ways. Let’s look at some of the most common trends in 2023 and how the government defines these schemes as fraudulent.

  • Medical Loss Ratio (MLR) Fraud occurs when healthcare plans knowingly file false reports to skew the perception of funds spent on patient care and quality improvement measures instead of administrative expenses and profits. The MLR rule, implemented by the Patient Protection and Affordable Care Act (ACA), mandates that funds are spent primarily on healthcare, significantly limiting the ratio of funds allocated to the insurance company’s profit.
  • Adverse Selection occurs when “an insurance company extends insurance coverage to an applicant whose actual risk is substantially higher than the risk known by the insurance company.” But in the case of managed care, some organizations will choose their insureds based on previously known information and, in turn, discriminate against individuals that fall out of their desired group.
  • Enrollment Fraud occurs when MCOs enlist enrollment practices where healthy patients are “recruited” to join certain MCOs in a practice known as “cherry picking.” These patients are used to skew the data and are often illegally compensated for participating in the program.
  • Healthcare Effectiveness Data & Information Set (HEDIS) Fraud happens when MCOs falsify their quality and effectiveness data to give the impression that they are more highly rated than they truly are. Doing so allows them to qualify for more ACA incentives and bonus programs that they then illegally pay out to administrators and providers in the form of kickbacks.
  • Risk Adjustment Fraud is similar to adverse selection and enrollment fraud. However, risk adjustment fraud occurs when MCOs seek to scam the healthcare system by inflating the risk profile of patients. This can involve a physician, or a third-party medical coding company contracted to the MCO. Because risk adjustment payments are calculated based on members’ diagnoses, plans have developed many schemes aimed at “upcoding” or exaggerating the severity of members’ diagnoses or medical conditions to cause the government to pay out more risk adjustment reimbursement than is warranted.

What to Do if You Suspect Fraud

If you believe that any of these actions are occurring in your organization, rest assured that you are not alone. Managed care fraud occurs daily, stealing money from American taxpayers and disrupting service for the millions relying on government programs for healthcare. For this reason, whistleblowers play an important role in the fight against fraud.

If you are considering blowing the whistle, we encourage you to reach out to our team of professionals. We can help develop a plan to gain information, build a case, and fight for justice. Our experienced team of attorneys can help answer your questions and guide you through the process to protect your privacy and earn you the monetary reward you deserve for your bravery.

If you suspect fraud in your organization, please contact us. DJO is comprised of a highly experienced team of whistleblower experts, lawyers, and even former whistleblowers, who strive to deliver the highest monetary reward for brave individuals who have valuable information that can expose fraud. If a whistleblower’s lawsuit is successful, the reward can be up to 25% of the funds recovered. The False Claims Act also offers whistleblowers protection against job retaliation or wrongful termination.

Do you have valuable information that can help bring fraud to light? Speak to our experts today.

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