#1 Let’s think about the fraud triangle and the three most prevalent reasons for fraud. They are opportunity, pressure, and rationalization.
In health care we hear often about fraudulent billing practices. The Medicare prospective payment system that was implemented in 1999 came about as a result of companies such as therapy companies taking advantage of the “old” cost based system that health care operated under up until that point in time. Under the old cost based system, health care entities got reimbursement based upon their costs (payments were made based on the previous year’s cost report that more or less rewarded companies for spending more money in their Medicare units). There were such uneven distribution of Medicare dollars from company to company, and there were those who took advantage and charged Medicare way too much money. Today we see fraud in improper billing practices such as upcoding in order to get more money when the medical record does not support the data.
In health care it is very important to make sure that documentation appropriately reflects patients’ medically necessary needs. In this way correct dollars are received for care given. Billing practices for maximum revenue are areas that could be subject to the fraud triangle, and because of this it’s important that documentation is continually audited and that staff gets good training.
Class: What are some processes you would have in place, or what have you encountered, to be sure that documentation is accurate so that appropriate revenue will be gained? Please discuss. 150 words.
#2 The Human Resources (HR) Department plays a big role in ensuring internal controls are in place. Segregation of duties is imperative to effective controls, and it’s up to HR to have policies in place to ensure employees are performing responsibly.
A company must have a sufficient amount of employees so that monitoring of accounting practices occur as scheduled, and delegation of responsibilities can happen as directed (Choi, Choi, Hogan, & Lee, 2013). When companies issue layoffs that effect staff vital to internal controls, then the likelihood is strong that the company’s control strength is weakened as the prospect of fraud rises. Not having enough employees and poor delineation of duties are the main staffing issues that affect internal controls.
Class: Since we know that adequate numbers of staff are required for effective internal controls, what are some things you might do in the event that your business experienced high staff turnover and for a period of time you worked with short staffing? Think about how you would keep your staff motivated when working through times of staff shortages. Please begin a discussion. 150 words