Health Net, a large California insurer, is investigating several residential and outpatient treatment centers for potential fraud. Among other things, the investigators are examining referral practices; medical necessity of services; and whether the providers failed to collect necessary out-of-pocket payments from patients.

In some cases, Health Net is suspending the providers’ reimbursements until documentation is evaluated. Experts say the investigation is aggressive and unusually broad, striking more than a dozen providers with the operations of perhaps hundreds of others potentially being questioned.

Patient payments

There are right and wrong ways to handle patient payment obligations. Experts recommend being above board when collecting copayments or deductibles and maintaining good documentation of the collection practices. There is no law in California that obligates providers to collect such payment from patients up front, and most providers typically bill after the services are delivered. Providers also can forgive unpaid bills in situations of financial distress, for example.

“We don’t agree that Health Net is right when it makes sweeping allegations that ignore providers’ right to discount patient share of costs, such as when patients are genuinely unable to pay,” says Harry Nelson, founding partner at Nelson Hardiman LLP, a Los Angeles-based healthcare law firm that represents substance use disorder facilities.

Did You Know?

Health care fraud is contributing to the rising cost of health insurance.
Health care fraud reduces the amount of funds available to pay honest providers.
Health care fraud increases premiums to employers and members.
Health Net will investigate allegations of fraud, waste and abuse – and reports of non-compliance on any level.
Health Net’s Special Investigations Unit is available as a resource to Health Net employees, members and providers, as well as to Health Net’s delegates – first tier, downstream, and related entities.
See below for examples of fraud and more.

How to Report
Health Net’s Fraud hotline and Integrity hotline are available 24/7, and callers may choose to remain anonymous.
Health Net Fraud Hotline: 1-800-977-3565
Health Net Integrity Hotline: 1-888-866-1366

What to include in your report:
Unless you choose to remain anonymous, please provide your name, telephone number, address, and email address. If you are submitting your report anonymously, please take care to withhold personally identifiable information.
Explain the nature, scope and time frame of the activity in question.
Explain how you are aware of the alleged activity.
Specify if you know of any potential witnesses to the activity.
Provide any documents or other physical evidence in your possession.
For more information, please reference Health Net’s Code of Conduct (pdf).

Fraud Awareness Tips
The following links explain common fraud schemes that could impact members.
Open Enrollment Identity Theft (pdf)
Before You Change Coverage (pdf)
Email Scams (pdf)
Prescription Drug Abuse and Misuse (pdf)
Discount Prescription Drug Card Scams (pdf)
Telemarketing Scams (pdf)
Risks Associated with Online Pharmacies (pdf)
Home Health Fraud (pdf)
Medical Transportation Fraud (pdf)
Health Insurance Marketplace Fraud (pdf)
Questioning Free Medical Supplies (pdf) English | Spanish
Services Not Provided (pdf) English | Spanish
Identify Theft Prevention Tips (pdf) English | Spanish
Other Fraud Considerations (pdf) English | Spanish
The following link addresses the appropriate method of disposing of prescription drugs and why this issue is so important.
How to Dispose of Medicine Properly (pdf)

Examples of Fraud and Non-Compliance
Some examples of consumer health care fraud: Some examples of
provider health care fraud:
filing claims for services or medications not received
forging or altering bills or receipts
using someone else’s coverage or insurance card
billing for services not actually performed
falsifying a patient’s diagnosis to justify tests, surgeries or other procedures that aren’t medically necessary
upcoding – billing for a more costly service than the one actually performed
Some examples of non-compliance:
theft or unauthorized removal of company/business documents from the premises
falsifying or tampering with company documents or records
violations of Health Net’s Code of Conduct
insubordination, dishonesty, gross carelessness/negligence of duties
Five counties with high incidences of fraud, waste and abuse:*
Broward County, Florida | Harris County, Texas | Kings County, New York
Los Angeles County, California | Miami-Dade County, Florida.