Tales you might never expect from the frontlines of fraud

Emily Mongan
Emily Mongan

The healthcare world currently ranks as the fourth most victimized industry when it comes to fraud, falling prey to roughly 6.6% of all fraud incidents. In the long-term care sector, experts recently shared, one area gets hit harder than others: resident trust funds.

But that shouldn't really come as a surprise to you if you keep up with McKnight's. We've seen stories of administrators, owners, social workers and receptionists stealing from these funds, just to name a few.

A staggering 87% of those who commit these crimes have no criminal history, so while healthcare background checks are good, they shouldn't be a facility's only form of fraud prevention, shared Angela Morelock, a forensic accountant and partner at BKD. Morelock presented her “lessons from the trenches” during a session at the recent American College of Health Care Administrators convocation in Philadelphia.

Morelock also honed in on therapy manipulation cases, where therapy minutes are exaggerated or not provided. Those cases are “ugly,” Morelock warned, and can result in “difficult and expensive” investigations that leave providers responsible for huge settlement amounts.

The damages to providers after any type of fraud occurs go far beyond monetary losses (which Morelock notes are recovered in less than 50% of all fraud cases). What gets hurt? Reputation, loss of public confidence, donor and volunteer relationships, staff moral and more. Furthermore, they all become a distraction from the facility's mission.

So what's a savvy provider to do? Morelock had these tips for healthcare providers to beef up their fraud protection efforts:

• Establish fraud awareness training for employees and managers. “At a minimum, staff members should be educated regarding what actions constitute fraud, how fraud harms everyone in the organization and how to report questionable activity.”  

• Maintain good HR practices, including conducting strong initial background checks, updating background checks every few years, and running credit checks.

• Create a fraud tip hotline, operated by a third party, which can help cut fraud schemes short that would otherwise continue for years. More than 40% of all fraudulent acts are detected by tips.

• Utilize a “treasure trove” of data, including vendor, maintenance and payroll/employee files to search for unusual patterns. Good data practices have been linked to a 50% reduction in fraud losses

• Set a good example, and follow your gut. “Gray areas can quickly turn black.”

Heed Morelock's warnings and you may be able to make your facility less vulnerable to fraud — and less likely to show up in the headlines for the wrong reason.

Follow McKnight's Staff Writer Emily Mongan @emmongan.


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McKnight's Daily Editors' Notes features commentary on the latest in long-term care news and issues. Entries are written by Editorial Director John O'Connor, Editor James M. Berklan, Senior Editor Elizabeth Newman and Staff Writer Emily Mongan.

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