Value-Based Payment Fraud: How Heathplan Misrepresentations can 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 is defined by the Oregon Health Authority as evidence-based services, patient-centered care, and increased quality and improved health at an appropriate cost. This shift is a massive undertaking for which providers are ill-prepared and in which the integrity of the process is paramount. However, the potential for fraud and misrepresentation in these contracts is of significant concern, especially when Healthplans begin to market the promise of value, and greater value than their contract can create by changing how Providers practice. Accountability is also paramount.
One Healthplan is, intentionally or not, misrepresenting a contract to Provider practices. Coincidentally, presenting the contract as measurement and value-based will support the Healthplan’s efforts to retain existing state and federal contracts, increase their market share, obtain contracts from commercial purchasers, and create opportunity to participate in legislation-funded research. The upside risk for the Healthplan is high and the downside risk is low. The upside risk and benefit to the public is low and the downside risk is high; to the detriment of public health and safety. Furthermore, the Healthplan’s representation to Provider practices demonstrates bad faith and unfair dealings. Thus, tricking Provider practices into doing more work with greater risk, no share in the benefit to the Healthplan, and being paid unfairly.
Misleading contracts offered to Providers can lead Provider practices to bill government programs based on false premises, validating and perpetuating fraudulent contracts. Providers, as proxies for a Healthplan, may unknowingly submit claims under terms that are not accurate, lawful or ethical, resulting in improper allocation of taxpayer funds which divert money from legitimate healthcare services to Healthplans based on fraudulent schemes. There are many consequences. The stress and frustration of the Healthplan’s schemes will almost certainly lead to provider disengagement, or “gaming” the contract.
The reimbursement rate is not the issue in the discussion document. Mental and behavioral health professional cannot participate in a scheme that is potentially fraudulent. Both Healthplans and Provider practices have a responsibility of “due diligence” to ensure a contract is intentionally or unintentionally committing fraud.
Due diligence refers to the investigation, audit, or review performed to confirm facts or details of a matter under consideration. It involves a thorough examination of financial records, legal obligations, and other relevant factors to assess risks and opportunities. Due diligence is commonly conducted before major transactions, such as mergers and acquisitions, investments, or entering into contracts.
Commercial Due Diligence involved assessing the market position, competitive landscape, customer base, and overall market conditions to gauge the commercial viability of a contract.
Financial Due Diligence requires reviewing the financial projections necessary to understand the financial risk and performance capability of contract.
Legal Due Diligence: Examining contracts, property rights, litigation history, regulatory compliance, and any potential legal issues that might affect the transaction.
Ill-defined and poorly designed value-based contracts and polices, which have no controls, and are not accountable, will almost almost certainly be to the detriment of purchasers, employers, taxpayers, patients and public health. When a Healthplan misrepresents, misleads, withhold critical information, or creates ambiguous contract terms and requirements, that behavior can lead to severe consequences, including in this case example, the diversion of taxpayer funds and provision of substandard care. 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 unethical practices.
Healthplan Responsibilities: Ensuring Ethical Contracting
Healthplans have a profound responsibility to provide accurate, comprehensive, and transparent information to demonstrate good faith and to prevent stakeholders from turning a blind eye to potential issues. This responsibility includes several key areas:
Transparent Information: Healthplans must deliver clear, accurate, and complete information about contract terms, requirements, and expectations. This includes detailed explanations of value-based care standards, performance metrics, reimbursement rates, and compliance obligations.
Ethical Proposals: Proposals should be honest and realistic, avoiding any form of misrepresentation. Healthplans should not inflate claims about compliance with care standards or the scope of services provided.
Education and Training: Healthplans should offer education and training to providers and purchasers about the terms and conditions of contracts. Such education and training ensures that all parties understand their roles, responsibilities, and the implications of the contract.
Compliance Support: Providing resources and support to help providers meet required standards and compliance obligations is crucial. Support includes sharing best practices, offering technical assistance, and providing access to necessary tools and data.
Independent Audits: Engaging independent Certified Internal Auditors to regularly review and assess compliance and performance of contracts helps identify and address potential issues proactively.
Ethics Point Portal: Implementing an ethics point portal where stakeholders can report concerns or unethical behavior anonymously and securely promotes accountability and helps prevent fraudulent activities.
Plain Language Contracts: Drafting contracts and policies in clear, understandable language ensures that all parties fully comprehend their rights, responsibilities, and the contract terms, reducing the risk of misunderstandings and disputes. This allows stakeholders to participate.
Creating Key Information: Providing key information such as transparent shared values, objectives, controls, key leading indicators, rigorous tests of design (TOD) and tests of effectiveness (TOE), a risk-impact analysis (RIO), a risk control matrix (RCM), and an inherent risk analysis is essential.
How does misrepresentation become a conspiracy?
A Healthplan’s misrepresentation of contract terms and submittal of false information to obtain funding from state or federal programs can lead to severe consequences. Misrepresentation includes inflated claims about compliance with value-based care standards, the scope of services provided, and the value of the contract to purchasers and Provider practices. Additionally, misleading contracts that are offered to Providers can cause Providers to bill government programs based on false premises, further perpetuating and extending the fraudulent activity. Providers will intentionally or unintentionally submit claims for services under terms that are not accurate or ethical, exacerbating and perpetuating the fraud.
Misrepresentation by a Healthplan can escalate to conspiracy to commit fraud when providers knowingly participate or ignore the fraudulent activities. This involves an agreement, intent to deceive, and overt acts to further the conspiracy. Both Healthplans and providers must uphold ethical standards, ensure transparency, and actively prevent and report fraudulent practices to maintain the integrity of healthcare contracting and avoid severe legal and ethical repercussions.
Provider practices are ethically required to take action if they are paid by Healthplan to participate in contract that is fraudulent or was obtained through fraudulent means. It is not enough to drop the contract if the Provider has been paid. Providers can be held legally responsible if they fail to take actions, i.e., “blow the whistle”. An additional legal avenue can include filing a Qui Tam action with state, and or federal government.
What is willful vs. unwilful negligence?
Willful Negligence occurs when a party intentionally disregards the terms and conditions of a contract, knowingly providing false or misleading information. In the context of Healthplans’ behavior, willful negligence might involve deliberately misrepresenting compliance with care standards, manipulating data, or withholding necessary information to secure higher reimbursements.
Unwilful Negligence involves a failure to act with the proper care or attention due to oversight or lack of knowledge. In healthcare contracting, unwilful negligence is almost certain if a Healthplan inadvertently misrepresents contract terms due to poor internal controls, unwillingness to hear concerns expressed by Provider practices, or its inadequate understanding of industry guidance and regulatory requirements.
What is turning a “blind eye”?
"Turning a blind eye" is an idiom commonly attributed to an incident involving British Admiral Horatio Nelson . Nelson, who was blind in one eye. When he signaled to retreat by his superior, Nelson held his telescope to his blind eye and claimed he did not see the signal, thereby continuing the attack and securing victory.
In this example, turning a blind eye means to deliberately ignore or pretend not to notice something that one knows would be wrong or improper. It involves choosing to overlook certain actions or situations, often to avoid taking responsibility or to prevent conflict.
Turning a blind eye refers to failing due-diligence when issues of unethical or illegal activities are raised, which can be particularly damaging in healthcare contracting. Healthplans have the affirmative responsibility to ensure that purchasers and providers are equipped with the information necessary to make an informed decisions. This includes requirements to provide comprehensive details about contract terms, performance metrics, compliance requirements, and the implications of these elements for patient care and financial management. Turning a blind eye is willful if a even one Provider expresses a concerns about fraud.
An example of implementing a “blind eye” process would be to ignore an industry practice of refusing to implement an ethics point portal.
What is the role of independent certified internal auditor?
Independent Certified Internal Auditors provide essential service 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) by Healthplans that contract with providers of mental and behavioral health services is highly beneficial. It can solve the problems and challenges Healthplans face because Healthplan management is driven by profit, while Independent Certified Internal Auditors are driven to provide accurate and useful information which can be used by management to make decisions and take actions, and to inform stakeholders. Independent CIAs ensure compliance with regulatory requirements and industry standards, such as those which govern the Centers for Medicare and Medicaid Services (CMS) and the National Commission on Quality Assurance (NCQA), helping to mitigate legal risks as well as 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.
Refusing to retain the service of an independent certified internal auditor, or using the services of auditor who report to management is an example of turning a blind eye to concerns expressed by the public and provider practices.
Best Ways to Compel Healthplans to Eliminate Fraud
To effectively compel Healthplans to eliminate fraud within their organizations, a multi-faceted approach is necessary:
Strengthen Regulatory Oversight: Ensuring robust regulatory frameworks and strict enforcement can deter Healthplans from engaging in fraudulent activities. Regular audits, stringent compliance checks, and severe penalties for violations can reinforce this.
Implement Independent Certified Internal Auditors: Having independent certified internal auditors within Healthplans can provide an unbiased assessment of the organization’s practices. These auditors can identify and address potential fraud, ensuring compliance with regulations and ethical standards.
Establish Clear Ethical Guidelines: Healthplans should develop and enforce clear ethical guidelines that outline the consequences of engaging in fraudulent activities. These guidelines should be communicated effectively to all stakeholders.
Promote Transparency: Healthplans should adopt transparent practices in their operations, including clear communication of contract terms, performance metrics, and compliance requirements. Transparency helps build trust and accountability.
Utilize Technology: Advanced data analytics and monitoring systems can help detect anomalies and patterns indicative of fraud. Healthplans should invest in technology that enables real-time monitoring and detection of suspicious activities.
Encourage Whistleblowing: Creating a secure and anonymous whistleblowing system, such as an ethics point portal, allows employees and providers to report fraudulent activities without fear of retaliation. This can help uncover and address fraud promptly.
Provide Education and Training: Regular education and training programs for employees and providers can raise awareness about fraud risks, compliance requirements, and ethical practices. Well-informed stakeholders are more likely to adhere to ethical standards and report suspicious activities.
Foster a Culture of Integrity: Healthplans should cultivate a culture that prioritizes integrity and ethical behavior. Leadership should model these values, and ethical practices should be integrated into the organization’s core mission and operations.
Healthplans have a critical responsibility to provide transparent, accurate, and comprehensive information and proposals to Provider practices. This responsibility helps prevent stakeholders from turning a blind eye to potential issues, promotes ethical practices, and ensures the success of value-based care models. Providers must act on any knowledge of misrepresentation to avoid becoming part of a conspiracy. By fulfilling this responsibility and utilizing tools such as independent certified internal auditors and ethics point portals, Healthplans can build trust, ensure compliance, and ultimately enhance the quality of care provided to patients. This proactive approach is essential for creating a sustainable and ethical healthcare system that benefits providers, purchasers, and patients alike.
Eliminating fraud within Healthplans requires a comprehensive approach that includes strengthening regulatory oversight, implementing independent internal audits, promoting transparency, and fostering a culture of integrity. By taking these steps, healthplans can ensure that they operate ethically and maintain the trust of providers, patients, and regulators. This proactive approach not only prevents fraud but also enhances the overall quality and efficiency of healthcare delivery.
DISCLAIMER and PURPOSE: This discussion document is intended for training, educational, and or research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.