Identify and explain at least 3 accounting frauds that are commonly perpetrated by health care providers.
Explain the financial and nonfinancial cost of the types of fraud that you identified above.
Show how health care organizations can use the fraud triangle (situational pressures, opportunity, and rationalization) to prevent financial statement fraud.
Accounting Frauds that are commonly perpetrated by Healthcare providers:
The U.S. government, employers and consumes spend over $2.3 trillion on healthcare provision annually, or $7,681 per person according to the National Health Expenditure Accounts. According to the national Healthcare Anti-Fraud Association (NHCAA), at least 3% of this amount, that is over $60 billion annually, is fraudulent. According to NHCAA the most common types of accounting frauds perpetrated by healthcare providers are billing for services not rendered, up-coding and unbundling (Theim, 2010; Lopez, 1997).
Billing for services not rendered: this fraud involves billing for medical services or procedures, pharmaceuticals, medical devices or diagnostic tests that were never provided to the healthcare insurers. It may involve using the actual information of a patient with or without their knowledge and consent and then fabricating or adding on legitimate claims for services never rendered and charging them to the health insurance providers (False Claims Act Resource Centre, 2011; Theim, 2010).
Up-coding services: this accounting fraud involves billing health insurers or Medicare for more expensive medical services or procedures that were actually provided. Usually various medical services provided are usually identified by codes, and a dollar amount that will be paid for each of the procedure codes are usually assigned by government healthcare programs. Therefore submitting claims foe medical services which represent a more expensive and serious procedure than that which was performed involves up-coding the claims ...
This solution discusses accounting frauds that are commonly perpetrated by health care providers. It also explains the financial and nonfinancial cost of the types of these frauds. Finally, it shows how health care organizations can apply the fraud triangle to prevent financial statement fraud.