Accounting Controls and Healthcare Fraud

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Healthcare fraud occurs in a variety of areas of the US healthcare system. It can include anything from unintentional accounting errors to expensive reimbursement for false claims. According to research by University of Alabama at Birmingham Collat School of Business Professor James (Jim) Byrd, accounting fraud in healthcare can be avoided through ensuring patient involvement and paying attention at every level of the billing process.

Fraud in Healthcare is Costly

Healthcare fraud accounts for an estimated 3-5% of total costs, with billing errors as high as 21%. The healthcare industry as a whole spends approximately 12% of its revenue on billing and collection costs.
Where do these problems come from? Billing errors and false claim schemes, corruption and expense reimbursement are all contributing factors. A lack of internal controls and an absence of regular management evaluations and appraisals are also critical weaknesses in the healthcare system.

Basic Fraud Scenarios

There are several basic fraud scenarios that include:

  • Providers overbilling for services not performed.
  • A number of separate invoices for one person is often confusing for patients.
  • Double billing.
  • Changing codes from a lower cost service to a higher one by altering code in billing.

The Management Accountant Can Reduce Costs Due to Fraud and Error

For those pursuing a Master’s Degree in Accounting, it’s important to understand the role the advanced accountant could play in solving this fraud crisis. Accounting managers are in a unique position to recognize cost levels and trends. They have the skills needed to leverage this information in organizational decision-making as the healthcare system evolves and progresses.
Learn more about the skills and knowledge accountants need to help avoid healthcare fraud in the below infographic by UAB Collat School of Business:

An infographic about accounting controls that reduce healthcare fraud by UAB Collat School of Business.

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