Medical Office Fraud

Medical Practice Fraud: How to Spot It

In August of 2015, an office manager of Northampton Internal Medical Associates (NIMA) embezzled over $1.5 million dollars. In April of 2016, an employee at Regional One was arrested for writing fake prescriptions. In the same month, a former employee was accused of stealing $85,000 from Pembroke Pines Dental Office. Medical practice fraud is on the rise. In fact, healthcare practices are thought to lose $25 billion a year to theft and embezzlement.

The sheer number of fraud cases in the news have put all healthcare providers on high alert. If you’re a small practice owner, you may even be wondering what to do. Luckily there are certain checks and balances you can put in place to spot and stop fraud.

The first step is to accept that most medical practice fraud cases involve trusted employees. In high-level positions, there are many ways to fudge some numbers and take excess funds. It’s usually nothing personal. If the practice is doing well, they might feel what they are taking won’t even make a difference.

You can (and should) conduct a background check when hiring. Unfortunately, stealing funds from a healthcare practice can start at any time. Here are some ways you can develop a watchful eye and catch signs of fraud.

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Review All Statements

It’s true, none of us have the time to go over go our bank and credit card statements every month. It’s boring, it’s not fun. Yet, this is the most effective way to spot fraud. It is not a task you can delegate. Pick one day of the month and make this a priority.

Investigate All New Vendors

There have been cases of employees creating fictitious vendors and paying them. The fictitious vendor’s bank account belongs to the employee or an accomplice. So go through all your vendors to make sure they are legit. Then, put a review process in place for each time an employee switches or adds a new vendor to your accounts payable system.

Use Carbon-Copy Receipts

The scam: A patient pays with cash, the employee changes their visit to a “no show” and pockets the money. Avoid this by issuing carbon-copied receipts to cash-paying patients. Tally your receipt copies at the end of each day to make sure they match the collected cash. Remove cash from your front office area at closing time.

Split Financial Tasks

It’s easier for one employee to cheat if they handle most of the finances alone. After all, one word to the wrong accomplice, and they can lose their job. It’s rare for employees to conspire to rob you of your funds. So try to divide financial tasks between several employees.

Don’t Lose Track of Payroll

It’s mighty tempting for someone to give themselves a little boost now and again when they’re in charge of payroll. Be sure to document all the promotions and raises that you give. Then, check everyone’s salaries at least once a year.  Keep an eye out for any unexplained pay increases.

Change Your Passwords

Remember to practice basic security. Make sure all your online accounts and financial software are locked with strong passwords. Implement automatic log out when computers and mobile devices are left unattended. Passwords should use lowercase and capital letters, numbers and special characters for greatest security. Change passwords at least once a year.

Protect Prescription Pads

Prescription fraud is one of the most common types of medical office crimes. Keep Rx pads in your pocket, not on a desk or table where a sheet can disappear unnoticed. Keep computer prescription paper under lock and key at all times. Report any prescription fraud immediately to protect your practice.

Treat All Employees the Same

Don’t trust friends and family members that work for you more than you do other employees. Unfortunately, even the ones closest to you may be tempted to steal if they fall on hard enough times. Treat all your employees with the same level of scrutiny to avoid any problems down the road.

Send Someone on Vacation

If you suspect an employee is stealing but you’re not sure, try sending them on an unplanned vacation. If the discrepancies stop when the person is away, you may have found your culprit. Be wary of an employee who refuses to take time off… that’s not normal. If you have to fire someone suddenly, you can always outsource your accounting and billing to a reputable firm until you hire a replacement.

Medical Practice Fraud: The Takeaway

To prevent medical office fraud, apply the old saying: “An ounce of prevention is worth a pound of cure.” Practice becoming more vigilant until it becomes a habit. Remember that the best way to spot something that’s happening under your nose is to keep your eyes wide open.