5 Potential Sources of COVID-19-Related Fraud, Waste & Abuse

October 2, 2020

Although we are far from out of the COVID-19 woods, we are in a place to better manage the virus based on what we’ve learned since its sudden onset in early 2020. Over the last several months, we have been closely following the unprecedented changes to the healthcare system and working with states and healthcare organizations to mitigate the economic effects of the pandemic. Here are some of the key areas we are seeing as potential sources of fraud, waste and abuse as well as pointed strategies for containing healthcare costs during this critical period.

1. Overutilization & Billing Errors: DRG, Inpatient & Laboratory CPT Codes

Amid widespread confusion and staffing challenges — and factoring in higher COVID-19 reimbursement rates — government payers and commercial health plans may be especially vulnerable to coding and billing errors in the following areas: 

  • COVID-19 ICD-10 codes. The introduction of new COVID-19 ICD-10 diagnosis codes warrants a review of claims against medical records to identify billing errors and prevent or recover improper payments. Automated and artificial intelligence-driven solutions target claims most likely to have errors, ensuring medical records are only requested as needed and cutting down on administrative burden at both the payer and the provider level.
  • Inpatient hospital stays. Entering a COVID-19 ICD-10 code on an inpatient diagnosis-related group (DRG) claim increases the reimbursement rate. A place of service clinical claim review can assess whether the level of care delivered was appropriate for an inpatient admission as billed, or whether it could have been provided in an outpatient or observation-level setting at a lower cost.
  • Laboratory CPT codes & provider enrollment. Under normal circumstances, the release of a new medical code can heighten the risk of coding and billing errors. In today’s environment, this risk is even more pronounced, given the introduction of new COVID-19 laboratory testing CPT codes, the anticipated volume of claims and the enrollment of new providers responsible for rendering these tests. Implementing COVID-19-specific laboratory testing audits can provide a safety net to verify these claims have been billed and paid correctly. 

2. Relaxed Telehealth Regulations

The recent expansion of telehealth has been profound in facilitating access to care while reducing the spread of COVID-19. As the Centers for Medicare & Medicaid Services (CMS) looks to make some telehealth changes permanent, states and healthcare organizations must optimize their program integrity operations for this new environment. At the same time, implementing a look-back process is key to recovering improper payments that may have been made during the public health emergency. Additionally, because telehealth often affords quicker access to care than the traditional healthcare setting, coordinating benefits at the point of enrollment or prior to the point of service can be a highly effective cost avoidance measure. 

3. Skilled Nursing & Inpatient Rehabilitation Facility Transfers

COVID-19 has taken a devastating toll on nursing homes and skilled nursing facilities (SNFs). As CMS inspections and program integrity audits resume, healthcare organizations and their third-party audit partners must verify that services were billed as rendered, while also being sensitive to the demands SNF providers face. Specialty post-service reviews of SNF and inpatient rehabilitation facility (IRF) claims can validate coding and billing accuracy as well as regulatory and programmatic compliance. In this realm especially, flexibility and a data-driven approach is key to maintaining, yet balancing, program integrity amid today’s unprecedented and ongoing crisis.   

4. Sepsis Upcoding

The urgent nature of recognizing and treating sepsis, combined with changing CMS guidelines, has created an environment ripe for coding errors and, specifically, upcoding. Often, patients may be treated for sepsis out of an abundance of caution, when it is later discovered that they did not in fact have sepsis. Considering the added stress of COVID-19, instances of sepsis upcoding are only likely to increase, making it critical to ensure claim reimbursements reflect the actual diagnosis, based on the current standard definition of sepsis.   

5. Pharmacy Audit Waivers

Ensuring safe and uninterrupted access to lifesaving and life-sustaining medications has been an urgent priority during the COVID-19 emergency period. To help facilitate access and alleviate the anticipated burden on pharmacists, some pharmacy audits and authorizations have been suspended. Conducting retrospective reviews of pharmacy claims can validate that claims were billed accurately amid the declared emergency period.

Without question, COVID-19 has upended our nation’s healthcare system and continues to have a far-reaching economic impact. HMS is committed to supporting government and commercial health plans through the pandemic, while advocating for policies and programmatic actions that benefit all of the system’s stakeholders.

For more practical strategies to contain costs amid COVID-19 and beyond, see our full healthcare cost containment series at hms.com/health-ideas.


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