How does fraud impact on healthcare

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Reference no: EM13318134

Question 1

1. Name the Classification system responsible for capturing the non-acute and sub-acute areas of care (e.g. Palliative, Rehabilitation, Psychogeriatric, Maintenance care types). Why would a different system be needed for non-acute and sub-acute care types as opposed to using the acute classification (AR-DRGs)?

DRG is take care about diagnosis whereas AN-SNAP is more specified about quality of care and length of stay.

Acute care is given to the patients who are suffering from short term problems for severe injuries whereas non acute care is for those patients who are having long term problems. For classification of sub acute and non acute areas of care these factors are considered.

• Case type: - Here characteristics of the person and the goal of the treatment are considered.
• Impairment:- Here rehabilitation of the person is considered,
• Psychogeriatric: - Here according to the Behavior of the person areas of care is decided.
• Palliative: - As per the problem severity, areas of care is decided.

This classification is based on the AN-SNAP. But he AR-DRGs gives the different classification. The main limitation in the AR-DRGS classification is that it treats every patient with the same level of care but this system is not practically possible.

"Casemix funding for acute hospital care in Victoria, Australia Julie brophy, costing policy and analysis funding and information policy,2011, published by branch hospital and health service performance division, department of health(Victoria)".

Question 2

Define the term 'product costing'?

1. Product cost is the process of determining the cost of health care services providing to clients. A product is meaning or refers to costing standpoint services. And the product could include the Commonwealth Medical Benefits Schedule (CMBS) of table elements and Diagnosis Related Groups (DRGs), stages of palliative care and several others depending on casemix also, the purpose of the study costs. The product costing purpose is to connect Clinical with Financial Activity.

2. Moreover, the product costing means the accounting cost and expenses are classified in total. The ultimate cost is then allocates directly and distributed according to the uniform method of apportionment and transformed into the unit cost. The unit cost is calculated by dividing the total cost by the consistently defined and generally accepted unit of service. The total cost incurred in the providing the clinical services are related to the workload generated by the patients. For example: - Total time taken by a worker to provide a service is influenced by the nature of the work to be performed.

3. "Casemix funding for acute hospital care in Victoria, Australia".

Question 3

Provide a brief overview of the following funding models:

o Cost Based Funding
o Needs Based Funding
o Population Based Funding

COST BASED FUNDING or Historical Funding

Health services institution provides the service collect and receives funding based on the amount of what has been spent in the preceding year.

In cost based funding hospitals are required to prepare a report of cost for all state funding activities. For a good hospital and management practice they need to maintain the costing system. They need to maintain the health cost data for both the admitted and non admitted activities that vary from health care settings. There are different methods of computing the cost for the hospitals. Two famous and important method of computing the cost of the hospitals activities are:-

• Patient costing:- Here costs are allocated directly to individual patient's episode using service volume.
• Cost modelling: here costs are directly allocated to the DRGs by using prescribed formulas.
The main advantage of cost based funding is : Easy to manage and provides certitude of funding

"Casemix funding for acute hospital care in Victoria, Australia".


In need based funding some objectives are followed. Due to the following objectives need based funding are done:-
• Need based funding are done by analyzing the patient health needs.
• Patient with greatest needs are treated preferentially so their needs are also considerd accordingly.
• In the need based funding the main motive is to provide the appropriate treatment at the appropriate time to the right person within the budget.

"Phillip battista, funding models, Casemix for beginners, 2011, published by health system performance department of health."


Population based funding are based on the measures of the expected health needs. Examples are standardized mortality ratio, socio- economic disadvantage, age/ sex population etc. It aim is to distribute the fund equitably based on the population need. Also, the objective of Population-based funding models is to allocate funds commensurate with the health needs of different geographic areas.
The main advantage of population based funding is that it is easy to implement and understand, budget allocation and expenditure are predicable here.

The main disadvantage of population based funding is the selection and measurement of the right population is little bit difficult. It is not suitable for the funding specialist and state wide services. It may not result in the equitable access due to service configuration and efficiency.

"Phillip battista, funding models, Casemix for beginners, 2011, published by health system performance department of health".

Question 4

What are the benefits of Activity Based Funding?

The main objective of the activity-based funding is to provide safe care of the highest quality at the right time, for the citizens and customers who need it, at an agreed price.

• Can adjust the price in the medium level or rate of efficiency.
• It also provides a technique to test the scenario of demand managing and strategies of clinical.
• It provides mechanisms for the implementation of remuneration / dis remuneration and / or bonuses / penalties for service workers.
• Allows the implementation to ensure the safety and quality of funding and controlling framework.
• Provides translucence to key shareholders.
• Precise and accurate costing of services, products and distribution channels.
• Understanding better of institution expenditure.
• Easier for worker to understand.
• Uses the unit cost instead of the total cost of all.
• Amalgamate completely with Six Sigma.
• Enables costing of operations, value streams.

Question 1

Describe the role of the following three 'bodies' in National Health Reform and the implementation of Activity Based Funding on a National level in Australia:

1. Council of Australian Governments (COAG) Reform Council
2. Independent Hospital Pricing Authority
3. Australian Commission on Safety and Quality in Health Care

Describe the role of the following four 'bodies' in National Health Reform:

1. Council of Australian Governments (COAG) Reform Council

The Council of Australian Governments established the COAG Reform Council as part of the arrangement for federal and financial relation in order to help in the reform agenda. "Assist COAG to drive its reform agenda by strengthening public accountability of the performance of governments through independent and evidence based monitoring, assessment and reporting" this is the main mission of COAG Reform Council (About us, 2010).
Objectives (About us, 2010).

- Make stronger responsibility in areas referred by COAG through objective and credible monitoring, assessment and reporting of the performance of governments.
- Improve the public's skill to assess and make performance in the COAG reform agenda.
- To deliver and develop COAG's reform agenda, should proactively improve its capacity.
- On cross-jurisdictional performance monitoring, assessment and reporting should be centre of excellence and creativity.

2. Independent Pricing Authority

One of the Independent Hospital Pricing Authority (IHPA) roles is to set well-organized price for public hospital services and decide the quantum of the Commonwealth's funding to the states and state-based funding authorities. There are two at least who will have regional and rural knowledge, they have been appointed by CPAG and these two are Deputy Chairperson and the Chairperson. Moreover, the need to ensure access to public hospital services, clinical safety and quality, efficiency and effectiveness and financial sustainability of the public hospital system must be take into account by IHPA (The New National Health and Hospitals Network COAG Agreement, 2010).

3. National Health Performance Authority

The main objective of the National Health Performance Authority is to monitor, supervise and report the performance of the heath care provider. The authority will report on performance of local hospital network, public and private hospital, primary health care and other bodies or organization that provide health care services. Furthermore, it prepare performance indicators, collect, analyses, interpret information, support, promote, conduct and evaluate research for the need to be well-matched with the performance of any functions of Performance Authority (National Health Performance Authority, 2011).

4. Australian Commission on Safety and Quality in Health Care

Safety and quality is central to the delivery of health care. The role of Australian Commission on Safety and Quality in Health Care is to describe the key safety and quality challenges in Australian health care and to support concerted and coordinated national action to improve the health system over the next five years. This includes (our work, 2007)
- The safety and quality related to health care must be organized and directly improve.
- Report the performance against national standards in term of safety and quality.
- For safety and quality improvement in health must be establish an agreed standard.
- In order to drive quality improvement must provide advice on best practice.

Our Work. 2007. Australian Commission on Safety and Quality in Health Care (accessed 12 September 2011).

The New National Health and Hospitals Network COAG Agreement. 2010. Australian Medical Association (accessed 12 September 2011).

Question 1

Discuss five (5) ways a health insurer can detect potential loss


Health insurers can detect potential loss through the following Common Wealth Fund. (n.d.)-

1. Strengthening the Internal controls within the organization so that early detection of potential loss is possible.

2. Whistle blower policy within the organization

3. Conducting of Internal Audit on a regular basis. Internal Audit will help insurer track the internal controls and its robustness. Auditors can highlight the weaknesses of the internal controls so that it can be strengthened. Internal audit can also be helpful in early detection of fraud.

4. Leveraging technology by using to implement continuous fraud prevention programs helps organization from the risk of fraud and reduces the time it takes to uncover fraudulent activity. This helps both catch if faster and reduce the impact it can have on organization.

5. Use of analytical techniques like calculating statistical parameters - averages, standard deviations, high/lows values to detect the outliers that can detect any potential loss, finding patterns among data, identify duplicate transaction such as payments, claims or expense report items, identify missing values in sequential data where there should be none, validating entry data etc.

Question 2

Discuss 5 causes of Financial Loss to Health Funds

Health Funds are created for the benefit of the members who join the health funds. The contribution from members is utilized to benefit members who need funds in case of health issues.EFP Rotenberg LLP: What's New - Articles and Publications.
There can be financial loss to the health funds due to following reasons -

1. Members after joining do not make the payments of their members regularly. This disturbs the cash flows of the health fund and sometimes even they are bound to borrow which entails interest cost.
2. Health care fraud can cause the financial loss to health funds.
3. Premium collected is insufficient to meet the benefits given to members. If the premium collected is wrongfully calculated and without any actuarial calculation, the fund can incur financial loss.
4. Number of members is not sufficient enough to operate the fund profitably. Health fund or any insurance fund runs on the principal of large population and the probability of the occurrence of health requirement. If insufficient members join the fund it may even cause the health fund to go bankrupt.
5. Inefficient management of fund. If the management running the fund is inefficient this may cause the financial loss to the health fund.Harvard School of Public Health » The Obesity Prevention Source » Economic Costs. (n.d.)

Question 3

What is Healthcare Fraud and how is fraud different from Healthcare Abuse?

Healthcare Fraud and Abuse are both malign to the Healthcare industry but theydiffer with each other.

Health care fraud on one hand refers to the intentional deception or misrepresentation of facts which will favor with the outcome of illegal or unauthorized benefits or payments pertaining to the same. Examples of health Care Fraud are submission of false claims against which there is no services provided, false claims or the medical records, misrepresentation of facts pertaining to the duration, description or frequency of the services rendered, billing of services at higher rates, and other such false representation. What Is Fraud and Abuse? (n.d.)
On the other hand, Health Care Abuse implies to actions in the health care industry that are improper, inappropriate, and outside the ambit of standards of professional conduct or medically inappropriate. Such examples are failure of maintaining adequate records of medical or financial, pattern of claims for services not required in the medical term, refusal of submission of medical records, improper billing practices or disregard in the services so provided.What Is Fraud and Abuse? (n.d.)

Question 4

How does fraud impact on Healthcare?

Frauds have a major impact on the healthcare. Fraudulent claims put pressure on the available funds and the genuine cases are impacted. Further the healthcare costs also go up. The healthcare insurance companies have to charge high premium to compensate for the loss due to fraud. The quality of healthcare also deteriorates. The regulatory authorities have to spend valuable resources to check the frauds and frequent audits have to be conducted to unearth the frauds. In total, the fraud on healthcare disturbs the goodwill and images of the other possible candidates performing within the healthcare industry. The healthcare industry should be based on unbiased and proper terms and the fraud can impact pretty severely on the healthcare as it would lead to numerous problems impacting many and others in the healthcare.FBI - Health Care Fraud. (n.d.)

Reference no: EM13318134


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