Healthcare Fraud, Abuse & Waste in Medical Tourism

In my nearly 40 years in the healthcare industry, I’ve seen how fraud and abuse and corruption hurts patients, insurers, and healthcare providers, first hand.

Internationally, the healthcare sector is particularly vulnerable to corruption. There are significant amounts of money involved and the complexities of many healthcare systems, their coding, billing, pricing, and even the verification of credentials and privileging of providers and practitioners is implicated.

…more than 85% of the people in the world [are] highly vulnerable to the risk of healthcare fraud and abuse and corruption…

When we add health tourism to the mix, the typical arrangement of compensation to “facilitators” and advertising agents and marketers is rife with corruption as there are many processes with high risks of bribery and impropriety to capture the highest bounty for patient referrals.

Most patients are not medically trained. Healthcare happens to them.

Validity of billed charges

It is highly unlikely that the patient or their companion will be able to identify that services billed to their account, medications, equipment use, consumables, and other charges incidental to their stay will be identifiable as unnecessary. Only 15% of the world’s population works in healthcare and that’s not the amount that would have that knowledge and training to identify fraud and abuse. That 15% of the population includes people indirectly involved in healthcare including IT folks, dietary staff, and others with no clinical training whatsoever. That makes more than 85% of the people in the world highly vulnerable to the risk of healthcare fraud and abuse and corruption. [See: “abuse” defined below]

Transactional risk

Then there’s the internet transactional risk that is at high risk for fraud and abuse. Many websites for health tourism facilitators are underdeveloped, over-hyped, and rely heavily on stock images that are found on thousands of medical tourism sites. Outcomes are often “astroturfed”, meaning that the statements or organizations’ credibility isn’t transparent and sometimes mires information about the source’s financial connections, political leanings, civil rights, or actual clinical outcomes and patient satisfaction.

Personal security risk

There may also be a risk that the site selling medical tourism services isn’t really a medical tourism seller at all, but someone seeking to collect (and do nefarious things) with people’s personal health information, payment information, and other data collected.

Patient referral kickbacks to facilitators cause prices to be higher than necessary to cover costs and margins because the kickbacks are an element of the costs.

Referral bias

Facilitators who are paid a commission or kickback bounty for referrals are often guilty of referral bias. But they may also be breaking several laws in the USA. 

On October 24, 2018, Congress enacted a new law titled the Eliminating Kickbacks in Recovery Act of 2018 (“EKRA”) as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act of 2018 (“SUPPORT Act”). The SUPPORT Act is a comprehensive law that seeks to combat the opioid epidemic and comprises multiple provisions affecting the health care industry.

EKRA, Section 8122 of the SUPPORT Act, establishes criminal sanctions (up to $200,000 fine and 10 years imprisonment) for kickbacks with respect to services covered by any type of health care benefit program in or affecting interstate or foreign commerce. The statute specifically prohibits kickbacks related to the solicitation or receipt of remuneration for any referrals to recovery homes, clinical treatment facilities or laboratories. EKRA further criminalizes the payment or offer of remuneration to induce a referral to or in exchange for an individual using the services of such providers.

Importantly, EKRA is an all-payor statute directed towards services covered by a “health care benefit program” and therefore applies to services payable by both a federal health care program and a commercial insurer. EKRA also applies to programs in or affecting interstate or foreign commerce.

Another Act that arises is the Travel Act, (International Travel Act of 1961, 18 U.S.C. § 1952, is a Federal criminal statute which forbids the use of the U.S. mail, or interstate or foreign travel, for the purpose of engaging in certain specified criminal acts) enacted nearly 60 years ago to fight racketeering and corruption. It is being used by federal prosecutors to pursue those who aim to commit fraud waste and abuse while dodging federal standing to prosecute offenders. Prosecutors now believe the Act allows for federal prosecution of healthcare crimes when no federal violation has occurred. It creates federal jurisdiction when there is criminal activity that violates state law, rather than federal law, and the activity is directed from, or crosses, state lines. The need for implicating another federal law is not necessary. Recent healthcare enforcement activity has utilized state commercial bribery laws as the basis for prosecution.

A third risk exposure for health tourism agents is the Foreign Corrupt Practices Act, enacted in 1988, as some payments made to steer referred business could be viewed as a bribe. 

A fourth risk could be exposure under  Omnibus Trade and Competitiveness Act of 1988, where Title V is known as the ‘Foreign Corrupt Practices Act Amendments of 1988. It introduced a “knowing” standard in order to find violations of the Act, encompassing “conscious disregard” and “willful blindness.” Other amendments were for “bona fide”, “reasonable” and lawful gifts under the laws of the foreign country.

The second amendment was the International Anti-Bribery Act of 1998 which was designed to implement the OECD Anti-Bribery Convention—i.e., to include certain foreign persons and extending the scope beyond U.S. borders. Clearly this combination of laws and regulations indicates a zero tolerance for touts and kickbacks to vulnerable consumers, insurers and other third-party payers. 

One last tidbit before we leave this topic: The meaning of foreign official is broad. For example, an owner of a bank who is also the minister of finance would count as a foreign official according to the U.S. government. Doctors at government-owned or managed hospitals are also considered to be foreign officials under the FCPA, as is anyone working for a government-owned or managed institution or enterprise (such as a PPP-established  “Cluster” for health tourism). Under the FCPA, because the Act concerns the intent of the bribery rather than the amount, there is no requirement of materiality. Offering anything of value as a bribe, whether cash or non-cash items, is prohibited. So this would include bartering for medical procedures as well as outright cash payments for referrals. I raise this issue of bartering because I’ve had many physicians offer to fix my teeth, my knee, and other medical issues in lieu of cash payments to refer patients. Sorry, in the USA we simply cannot participate in these arrangements no matter how many people you encounter who do indeed violate the laws and regulations. It is only a matter of time before they get caught.

In the UK, the Bribery Act of 2010 (c.23) is even stronger than the FCPA, because it prosecutes those who bribe, accept the bribes, and the failure of a commercial organization to prevent bribery on its behalf. 

The crime of bribery is described in Section 1 as occurring when a person offers, gives or promises to give a “financial or other advantage” to another individual in exchange for “improperly” performing a “relevant function or activity”. 

Section 2 covers the offence of being bribed, which is defined as requesting, accepting or agreeing to accept such an advantage, in exchange for improperly performing such a function or activity. “Financial or other advantage” is not defined in the Act, and could potentially encompass items such as contracts, non-monetary gifts and offers of employment”. 

The “relevant function or activity” element is explained in Section 3—it covers “any function of a public nature; any activity connected with a business, trade or profession; any activity performed in the course of a person’s employment; or any activity performed by or on behalf of a body of persons whether corporate or unincorporated”. This applies to both private and public industry, and encompasses activities performed outside the UK, even activities with no link to the country. The conditions attached are that the person performing the function could be expected to be performing it in good faith or with impartiality, or that an element of trust attaches to that person’s role.

Under Section 4, the activity will be considered to be “improperly” performed when the expectation of good faith or impartiality has been breached, or when the function has been performed in a way not expected of a person in a position of trust. 

Section 5 provides that the standard in deciding what would be expected is what a reasonable person in the UK might expect of a person in such a position. Where the breach has occurred in a jurisdiction outside the UK, local practices or customs should be disregarded when deciding this, unless they form part of the “written law” of the jurisdiction; “written law” is given to mean any constitution, statute or judicial opinion set down in writing. The general offenses also cover situations where the mere acceptance of such an advantage would constitute improperly performing relevant functions or activities.

Facilitators, travel agencies, tour operators, case managers and other marketing agents may be implicated if they refer patients not to the “best” provider for a client’s requirements, but instead to the provider with the highest kickback for steerage. 

This practice and its compliance violation has had me baffled with the leadership of the so-called trade association for medical tourism in the USA recommended  “name and shame” (doxing) at an international level for providers who refused to pay the kickback payments to facilitators. This was allegedly said in a training webinar and has confused many who listened in and had no other comparative input.

If one pays for advocacy and fiduciary representation, there cannot be compensation for referral steerage to a provider in the form of cash or in kind products or services for the value of the referral stream. Kickbacks cause prices to be higher than necessary to cover costs and margins because the kickbacks are an element of the costs.

If one is an advocate of the patient, then the patient should be able to see and pay an above-the-line charge for the professional assistance required and delivered. No more; no less. If all that is required is to make an appointment, an action entailing a few minutes, then all the patient should pay is the time to make the appointment at a cost+margin amount. On the other hand, if inspections, software, travel costs and other component costs are incurred to research a provider, a destination, and establish systems to coordinate care – then the professional services charge at a higher rate is justified. This is the policy we follow at our health tourism brand, Mercury Health Travel. We charge hourly in 6-minute increments for what we do and the charge for the patient advocacy is paid by the client.

But where we also differ is that we don’t coordinate travel for individual consumers who pay cash for services rendered. Instead, their employer or health insurer pays us for a defined set of services and to serve only one master. We don’t accept bribes or kickback payments in cash or in kind for our professional services. We don’t “select” providers or “steer referrals”, either. Our client specifies with whom they wish to transact business, where, and the contract terms and conditions are negotiated directly with the health plan in question (although most often we/I personally assist the client in the contract negotiations). We have taken steps to eliminate as many exposures for impropriety and work under a microscope of transparency in our work, documentation, and accountability.

When time permits, in the course of my visits to foreign and domestic locations where I work as a consultant, I may schedule a site visit to pre-inspect or pre-qualify a provider or destination, but I have no reason to negotiate or execute contracts with providers on behalf of Mercury Health Travel. If a healthcare supplier asserts they have a contract with Mercury Health Travel you should be suspicious because there aren’t any such contracts with suppliers; only group health purchasing clients.

Insurance fraud, abuse, and waste

Fraud

Fraud occurs when someone knowingly and intentionally misrepresents something to obtain a benefit or advantage to which they are not otherwise entitled. These are criminal acts in some jurisdictions. The act and the intention to misrepresent must come together. One without the other is not a crime. Actual loss is not necessary as long as the perpetrator(s) committed an act and had the intent to commit the crime. No money necessarily has to be lost by a victim or an insurer or another party. A prosecutor must prove that the person involved knowingly committed an act to defraud.

Abuse

On the other hand, abuse is payment for items or services when there is no legal entitlement to that payment and the individual or entity has not knowingly and/or intentionally misrepresented facts to obtain payment.

Waste

Waste is overutilization of services or other practices that, directly or indirectly, result in unnecessary costs to the healthcare system or patients. It is not generally considered to be caused by criminally negligent actions, but by the misuse of resources at inappropriate levels of care, frequency of services, intensity of services that are greater than that which is necessary, or causing bills to be higher because of hospital-acquired infections, fall risks, or other avoidable situations.

Medical tourism training and education

Most of the conferences, events and training to develop skills and education for the health and wellness tourism industry fail to address fraud, abuse and waste prevention.

When I inspect facilities for possible health tourism services, I ask about billings, charges, and care plans because all three are involved in fraud, abuse and waste. I tend to dig deep into how the facility has developed and implemented training on combating fraud, waste and abuse to meet that educational requirement.

I also attempt to track the training by educational design, frequency, refresher training courses, and learning activities. These include standards of conduct for healthcare services and other business partners that I’ll review such as compliance policies and procedures, reporting and whistleblower mechanisms in place, internal audit policies to ensure that the suppliers conduct business ethically, with integrity, and in compliance with applicable laws, regulations and requirements, and finally social proof in the form of social media feedback comments.

Signs and symptoms of a problem or fraud, abuse or waste risk

In many countries, the providers have withheld this information or “acted as if” what I requested was unconscionable. No matter. My notes will reflect “Inspection abruptly concluded” and the provider or facility is assigned a failing grade. There’s no need to waste more time or effort on a provider that is unprepared or otherwise unwilling to be forthcoming on this.

Another place where signs and symptoms are clearly noticeable is in social feedback when people complain about billing accuracy, suspicious and unexplained charges and charge policies, unresponsiveness of billing and collections team members, and complaints about higher charges to foreigners than to local customers for identical services and procedures and supplies. Typically, where there’s smoke, there’s fire – unless you are dealing with magnesium … [Sorry, nerd humor…]

But what about vague and ambiguous quotes and package prices that are underdetailed? Is that also a sign and symptom of fraud? I believe that it is. When a healthcare supplier intentionally misrepresents an advertised price for a service, diagnostic test, procedure, or supply and then trails on the back end with bait and switch or additional charges that were not previously disclosed such that the patient or his/her advocate could truly compare prices and value, that is, in my book, intentional misrepresentation.

So if one medical tourism price quote is a fully-inclusive “wheels down to wheels up“™, quote and it seems higher than a competitors surgery-only price without hotel, ground support, implants, and follow up, and my price includes malpractice insurance and covers cost of remediation in the event of a malpractice complication and the surgery only price only covers economic damages, that’s a huge price-to-value discrepancy. That’s where many health services supplier quotes fall short. Either they don’t know how to prepare such a quote or they have nefarious intentions. There’s really no other explanation) or defense, for that matter) for lack of detail and transparency in pricing – especially when transacting over the internet. Hotels, car rental agencies and airlines also practice this “surprise” charges system. Only recently have some traveler bills of rights been implemented in some jurisdictions.

Since most health tourism services are paid directly by patients, we may need more consumer protections in place to protect our clients, our reputations, and demonstrate fair dealings and integrity. If we don’t, we should not expect to grow or for insurers and other third-party payers to take us seriously.