Value-Based Payment Fraud: How Healthplan Contract Misrepresentations Become a Conspiracy

A Discussion Paper

In the evolving landscape of healthcare, the shift from fee-for service to measurement and value-based payment contracts is intended to increase care quality. In Oregon, quality means the use of evidence-based services, patient-center care, and improved outcomes and health at an appropriate cost. This is a massive undertaking of which providers are ill-prepared and the integrity of the process is paramount. However, the potential for fraud and misrepresentation in these contracts is a significant concern, especially when Healthplans begin to market the promise of value, and more value than the contract can create by changing how Providers practice.

One Healthplan is, intentionally or not, misrepresenting a contract to Provider practices. Coincidentally, the contract will support the Healthplan’s efforts to retain existing state and federal contracts, increase their market share, obtain contract from commercial purchasers, and the opportunity to participate in legislation funded research.

When a Healthplan misrepresents, misleads or creates ambiguous contract terms and requirements, it can lead to severe consequences, including the diversion of taxpayer funds and the provision of substandard care. When a Healthplan misrepresents the financial stability and value or terms of a contract, and providers knowingly turn a “blind eye” to these activities, the situation can escalate from simple misrepresentation to a conspiracy.

Healthplans have a responsibility to provide clear, accurate information and ensure ethical practices in their contracts. Providers must act on any knowledge of misrepresentation to avoid becoming part of a conspiracy. This article explores the implications of such misrepresentation, the potential for it to turn into a conspiracy, and the critical role of Healthplans in preventing these unethical practices.

Understanding Misrepresentation and Fraud

Misrepresentation in the context of healthcare contracts typically involves providing false or misleading information about the terms, value, or benefits of the contract. This can include inflated claims about compliance with value-based care standards, the scope of services provided, or the financial benefits to providers and patients.

Fraud, on the other hand, involves intentional deception to secure unfair or unlawful gain. In healthcare, this can manifest as submitting false information to obtain funding from state or federal programs, offering misleading contracts to providers, or manipulating performance metrics to enhance financial returns.

The Role of Providers

When providers understand that a healthplan's contract misrepresents its value and potential benefits, they face a critical ethical and legal dilemma. Turning a blind eye to these misrepresentations can have severe consequences. By choosing not to act or report the fraudulent nature of the contract, providers may inadvertently become complicit in the fraudulent scheme.

Willful vs. Unwilful Negligence:

• Willful Negligence: If providers knowingly ignore the fraudulent aspects of a contract, they are engaging in willful negligence. This means they are aware of the deception and choose not to address or report it.

• Unwilful Negligence: If providers are unaware of the fraudulent nature due to a lack of information or understanding, their negligence is unwilful. However, once they become aware, they have a responsibility to act.

Conspiracy to Commit Fraud

When providers turn a blind eye to known fraudulent activities by a healthplan, their inaction can contribute to the fraud's perpetuation. In legal terms, this can be seen as conspiracy to commit fraud. Conspiracy involves an agreement between two or more parties to commit an illegal act. By ignoring the fraud, providers can be seen as tacitly agreeing to the deceptive practices, thus becoming part of the conspiracy.

Healthplan Responsibilities

Healthplans have an affirmative responsibility to ensure transparency and honesty in their contracts. They must provide clear, accurate information about contract terms, value-based care standards, and the scope of services. This responsibility includes:

Transparent Communication: Healthplans must communicate contract terms clearly and accurately, avoiding any form of misrepresentation or deceit.

Providing Comprehensive Information: This includes details about performance metrics, financial incentives, compliance requirements, and potential risks. Providers should have all necessary information to make informed decisions.

Ensuring Compliance: Healthplans must ensure their contracts comply with federal and state regulations, including those related to value-based care.

Ethics and Integrity: Healthplans should cultivate an ethical culture that prioritizes integrity, transparency, and accountability.

Importance of Independent Certified Internal Auditors

Independent Certified Internal Auditors (CIAs) play a critical role in maintaining the integrity of healthcare contracts. Their involvement ensures unbiased assessments, detects potential fraud, and promotes transparency. CIAs provide several key benefits:

Objective Evaluations: CIAs conduct independent assessments of healthplan practices, identifying any discrepancies or fraudulent activities.

Fraud Detection: Through rigorous audits and data analysis, CIAs can detect and prevent fraud, ensuring compliance with legal and ethical standards.

Transparency and Accountability: CIAs help maintain transparency by providing clear reports and recommendations, enhancing trust among stakeholders.

Independent certified internal auditors are essential in detecting and preventing fraud within Healthplans. Their independence, expertise, and adherence to professional standards ensure that Healthplans operate with integrity and transparency. By conducting comprehensive risk assessments, designing robust internal controls, and regularly testing these controls, auditors can identify, report and recommend mitigation potential fraud risks.

Hiring an Independent Certified Internal Auditor (CIA) for health plans contracting with providers of mental and behavioral health services is highly beneficial. It would solve the problems and challenges Healthplan face because Healthplan management is drive by profit, while independent certified internal auditor are driven to provide accurate and useful information which can be used by management to make decisions and take actions, but also to inform stakeholder. Independent CIAs ensure compliance with regulatory requirements and industry standards, such as those from the Centers for Medicare and Medicaid Services (CMS) and the National Commission on Quality Assurance (NCQA), helping to mitigate legal risks and uphold patient confidentiality, accurate billing, and quality care. They promote transparency and accountability, building trust among stakeholders through objective assessments and audits. CIAs facilitate effective communication and collaboration between providers and health plans, identifying areas for improvement and fostering constructive dialogues. They improve financial performance and operational efficiency by identifying inefficiencies and optimizing revenue cycles. Additionally, CIAs support data-driven decision-making by leveraging data analytics to provide valuable insights. Their regular audits foster a culture of continuous improvement and help mitigate risks related to patient safety, data security, and financial integrity, ensuring high ethical standards are maintained in all aspects of healthcare delivery and financial management.

Implementing an Ethics Point Portal

An ethics point portal allows for secure, anonymous reporting of unethical behavior or fraudulent activities. This tool encourages whistleblowing and ensures that issues are addressed promptly and effectively. Key features include:

Anonymous Reporting: Stakeholders can report concerns without fear of retaliation, promoting a culture of transparency.

Issue Tracking: The portal tracks reported issues, ensuring they are addressed in a timely and effective manner.

Compliance Monitoring: Information from the portal informs regular audits and compliance checks, helping to identify and address potential fraud.

Plain Understandable Contracts and Policies

Contracts and policies should be written in clear, understandable language to ensure all parties fully comprehend their terms and implications. This transparency is essential for:

Informed Decision-Making: Providers need clear information to make informed decisions about participating in value-based contracts.

Preventing Misunderstandings: Plain language helps prevent misunderstandings and disputes about contract terms and obligations.

Enhancing Trust: Transparent, understandable contracts build trust between Healthplans and providers, fostering a collaborative environment.

Key Information for Effective Contracts

Effective value-based contracts require several critical components:

Shared Values and Objectives: Healthplans and providers must align on shared values and objectives, ensuring a unified approach to patient care and financial management.

Robust Controls: Effective controls help prevent fraud, ensure compliance, detect deviations from objectives, and maintain the integrity of healthcare delivery.

Key Leading Indicators: Monitoring key indicators of success helps assess the effectiveness of value-based initiatives and identify areas for improvement. In a measurement value based contract, these include screening, progress, alliance, satisfaction and outcome measures.

Rigorous Tests of Design and Effectiveness: Regular testing ensures that controls are properly designed and functioning as intended.

Risk Management Tools: Tools like Risk Impacting Objectives (RIO), Risk Control Matrix (RCM), and residual risk analysis help identify and mitigate potential risks.

Conclusion

Healthplans have a responsibility to provide clear, accurate information and ensure ethical practices in their contracts. Providers must act on any knowledge of misrepresentation to avoid becoming part of a conspiracy. Independent Certified Internal Auditors, ethics point portals, and clear, understandable contracts are essential tools for maintaining transparency, preventing fraud, and fostering trust in the healthcare system. By addressing these issues proactively, healthplans and providers can work together to ensure the success of value-based payment models, ultimately benefiting patients and the broader healthcare community.