11 Ways to Manage Employer, Provider, and Employee Fraud in Workers’ Compensation

Workers’ compensation fraud by workers gets the most publicity. But additional fraud is committed by staffing companies, professional employer organizations, medical and ancillary service providers, and brokers.

Sometimes multiple parties are involved, as in the case in California involving an alleged $40 million medical billing and kickback operation that involved more than two dozen physicians, pharmacists, and business owners.

Here are also some simple preventive measures that could potentially save companies mega dollars.

11 Ways to Manage Employer, Provider, and Employee Fraud

1. Educate the workforce. Explain to employees that workers’ compensation fraud hurts the whole company, and the loss of revenue may threaten upcoming pay raises or even their jobs. They must also be informed that fraud is a serious crime with penalties. They should have a way to report suspected fraud anonymously.
2. Teach the higher-ups. Managers and supervisors should understand that every reported injury should be treated as legitimate; however, they should also be taught to recognize some of the red flags that may indicate a fraudulent claim and have a procedure for reporting them. They also need to know how to take statements about an injury — from the worker and any witnesses.
3. Work with the insurer. Report all suspicious claims immediately.
4. Investigate ASAP. Make sure all reported injuries and illnesses are immediately and thoroughly investigated.
5. Pay careful attention throughout the claims process to see if any information about the injury changes or doesn’t make sense. Also, note whether the injured employee was disgruntled before the injury.
6. Drug tests. Require drug testing as a condition of employment. Drug users are statistically more likely to file fraudulent workers’ compensation claims than non-users.
7. Implement a zero-tolerance policy for fraud and take every action possible to expose and prosecute it
8. Make examples of cheaters. Whether it is a worker, provider, or someone else involved in the process, all participants should see that you will take all steps necessary to fight fraud.
9. Evidence-Based Medicine (EBM). Ensure all treatment follows evidence-based treatment guidelines and do not allow claims handlers to authorize treatment unless trained in EBM.
10. Clean the provider network. Vet providers before allowing them into the medical network. Verify their physical location and try to determine if they own the clinic. Where possible, remove from your network any provider who has been accused of fraud.
11. Involve workers. Regularly send out notices to injured workers with the dates and types of treatment that has been billed and ask them to report discrepancies.
12. Conclusion

Fraud costs companies billions of dollars. The money lost is passed on — in the form of higher premiums, increased prices for services, or lower money available to pay employees or expand the business.

Instead of turning a blind eye to the situation, organizations should adopt a zero-tolerance policy for fraud, educate all involved and enforce rules and regulations to expose the guilty parties and deter it from happening again.

See also: Be Aware of Employer, Provider, and Employee Fraud in Workers’ Compensation.

Michael Stack, CEO of Amaxx LLC, is an expert in workers’ compensation cost containment systems and provides education, training, and consulting to help employers reduce their workers’ compensation costs by 20% to 50%. He is co-author of the #1 selling comprehensive training guide “Your Ultimate Guide to Mastering Workers’ Comp Costs: Reduce Costs 20% to 50%.” Stack is the creator of Injury Management Results (IMR) software and founder of Amaxx Workers’ Comp Training Center. WC Mastery Training teaching injury management best practices such as return to work, communication, claims best practices, medical management, and working with vendors. IMR software simplifies the implementation of these best practices for employers and ties results to a Critical Metrics Dashboard.

Contact: mstack@reduceyourworkerscomp.com.

Workers’ Comp Roundup Blog: http://blog.reduceyourworkerscomp.com/

Injury Management Results (IMR) Software: https://imrsoftware.com/

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.