Identifying Embezzlement Opportunities in a Medical Practice

Medical practices are in constant chaos with mountains of changes to billing and coding rules as well as updates to payer requirements that impact revenue. Even with the best-trained staff, the plethora of billing guidelines can keep the revenue cycle in a questionable state. The practice “appears” to be operating effectively and functioning efficiently with no evident changes in monthly revenue. However, the actual status is difficult to decipher and may need a check-up to validate what appears to be sound. Every practice is vulnerable to embezzlement, and there are many policy and protocol options that could help to reduce the risk. Begin with conducting regular objective reviews, both internal and external, to measure fraud risks. Reviewing processes that involve cash transactions between patients and practice employees offers an opportunity to close any gaps and optimize revenue in the practice. These are some examples and considerations that may require further evaluation:

• Can the front desk staff “cancel” an appointment after the patient has been registered and arrived in the practice management system without supervisory approval? Any appointment that is voided after the patient has arrived is an opportunity for a cash co-payment to be accepted and pocketed and the visit to be made unbillable. Management should investigate this process to reduce re-occurrence and to safeguard patient satisfaction. The patient is very unlikely to complain because the cancellation of the visit ensures the patient will never receive a bill for any other balance.

• Are paper checks received in the practice from patients and/or insurance companies? If there is no reconciliation of payments and adjustments, there’s an opportunity to adjust off any balance with an electronic deposit of the paper check into a personal account. Being able to take pictures of the front and back of a check for deposit into an individual account is a convenience for the average citizen; however, this capability can be an opportunity to embezzle incoming payments.

• Are your collection agency receipts deposited electronically into the practice account, or are they paid with a paper check every month? Once the balance of the collections is adjusted out of patient accounts receivable to the agency, following receipts on those accounts can be tricky since it typically requires a reversal of the balance back into AR. No one from the practice will be calling the patient, because the bad debt was moved to the agency; so, this money is more like “gravy” that is not expected to be collected.

• Does each person at the front desk have a cash drawer? If not, end-of-day cash drawer variances are hard to isolate to a single staff member who may require additional training and or disciplinary action.

• Low staff turnover of key positions can be a double-edged sword. A flat turnover rate with well-trained and loyal staff is an attribute to any practice if internal processes are reviewed regularly and appropriate checks and balances are in place. Cross-training and shifts in duties protect the staff as well as the practice. If processes and protocols are not consistently monitored, however, longer tenured employees are often the most likely to identify gaps and take advantage.

It’s difficult to perform an objective assessment with so much going on in the day-to-day activities of the practice. When was the last time your revenue cycle internal processes were reviewed to ensure there are no gaping holes in cash collection processes? An assessment of internal processes could expose opportunities for embezzlement as well as identify staff training needs. Additionally, it also helps to ensure the optimization of practice revenue. Contact Coker Group today to see how we can be of assistance to your organization.