Consider These Fraud and Abuse Prevention Tactics

Medical practices lose $25 billion annually in theft and embezzlement, but there are strategies you can use to avoid being victimized, noted two experts during OSN New York 2018. 

The problem with most embezzlement cases is that they are not detected for 8 to 24 months, noted Cynthia Matossian, M.D., FACS, ABES, founder and chief executive officer of Matossian Eye Associates in Hopewell, NJ. In fact, research shows that 17% of thefts go undiscovered for 2 or more years.  Why?

• Physicians tend to lack business acumen.
• They may be too trustworthy and do not keep a close eye on the numbers
• Financial authority generally limited to 1 to 2 key people.
• Internal controls–such as reconciliation process, audits, separation of duties–are lacking.

One of the biggest keys to detecting fraud is listening to your employees. Research shows that 4 in every 10 instances of fraud are detected from employee tips. 

There are telltale warning signs, offered Candace S. Simerson, FAOSA, COE, CMPE, of the Minnesota Eye Consultants in Bloomington, MN. Look for employees who: 

• Are living beyond their means.
• Are experiencing financial difficulties.
• Have control issues and unwillingness to share duties.
• Are going through divorce or have family problems. 
• Have know-it-all or “wheeler dealer” attitude.
• Are irritable and/or defensive.
• Have addiction issues.

She suggested these prevention tactics:

• Separate deposit activity from payment posting. 
• Establish an auditor role to reconcile practice management payment postings with bank deposits monthly. 
• Audit write-offs and discounts. 
• Follow up on missing charge entries. 
• Scrutinize invoices and refund requests carefully.
• Conduct employee background checks.
• Monitor cost of goods closely. 
• Lock valuable products and restrict who gets keys.
• Invest in inventory controls and monitoring equipment. 

Matossian C,  Simerson C. Embezzlement: What does it mean for your Practice? Talk presented at: OSN New York 2018; September 28-30, 2018; New York.