The Inside Job: Five Ways to Prevent Medical Practice Fraud
Experts estimate that medical practices lose around 5 percent of total revenue to fraud and abuse each year. With administrative costs rising and countless new economic challenges facing the healthcare industry - 5 percent is just too much. With the attitude that only large practices and hospitals fall victim to fraud, small to mid-size practices end up losing thousands of dollars every year simply because they neglect to employ basic strategies to protect themselves.
In fact, according to a survey conducted by the Association of Certified Fraud Examiners, the majority of fraud occurs in organizations with fewer than 100 employees. The nature of these offices leaves a high volume of medical transactions in the hands of one or two trusted employees, with little in the way of checks and balances. Smaller practices are also working with limited resources and don’t often have a system in place for fraud prevention.
Common types of fraud found in practices are everything from refund checks being distributed to friends or relatives, to falsified adjustments to payroll information, to skimming of cash co-pays, to fabricated expense reports and more.
While many office administrators and physicians are well versed in practicing medicine, they are lacking in the area of fraud prevention.
Here are five tips to help prevent medical practice fraud:
Meticulously screening employees will not eliminate the chances of fraud completely, but it’s a great start. Before office staff even has a chance to be trusted with the practice’s finances they should have background checks conducted and references checked.
Unopened Bank Statements
…Should remain that way until the Physician(s) are able to thoroughly review them. During review they should look for any irregularities. It is suggested they pay close attention to unusual withdrawals, large debits or credits, deposit patterns, wire transfers and check images. Physicians should also be aware of refunds made without corresponding payments as this is almost always an employee refunding their own credit card.
Beware of New Vendors
All new vendors should be scrutinized as closely as new employees before they are authorized as legitimate vendors. This should include reviewing their websites, online reviews and requesting multiple references. It’s also important to pay close attention to vendor invoices. Do they look authentic? Are they customized with vendor information?
Look Into Fidelity Bonds
Fidelity bonds are a form of insurance protection for businesses against fraud committed by an employee. For added protection it is wise to have employees with access to cash and accounting functions bonded. These Bonds are typically available through practice insurance brokers.
Commercial Bank Cards Trump Checks
Check payments aren’t always as easy to track and monitor as credit card payments. This is when using a commercial credit card to pay vendors, as opposed to checks, becomes a more secure method of payment. Not only are these payments tracked quicker through online banking portals, practices are able to employ spending controls for specific users. These cards can also be insured to prevent liability from misuse.
Unfortunately there is no way to create a fool-proof system. With the expansion of technology, fraudsters will develop even more elaborate schemes to commit fraud. But this doesn’t mean physicians shouldn’t do what they can to protect themselves and their practices.
Have you implemented other fraud prevention strategies in your practice? Share with us below!
About the Author - Rachida Essadiq, Director of Marketing at NTC Texas is a successful five year marketing veteran, running events and campaigns for large to small enterprises and non-profits. She specializes in blogging, social media, branding/ identity and search engine optimization, striving to provide NTC Texas customers and fans with entertaining and valuable educational resources to find success in all areas of their businesses.