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May 31, 2018

The most common “accidental” frauds seen in smaller programs.

As someone that has consulted with programs for many years I am still amazed by the amount of misinformation that can be found in existing and new programs especially when it comes to issues surrounding billing, particularly billing when  insurance companies are involved. Larger programs are not exempt from “accidental” fraud but due to their size and typical oversight that is in place it is typically either prevented or addressed in short order; at least in my experience.

Even the most dedicated practitioner can make a large error without any criminal intent. Most times it comes from either not knowing what is the correct way of doing things or in consulting with the wrong folks in an attempt to get information. Online groups be they list serves, social media or whatever offer a relatively easy way to gather information. At their best they can be a streamlined way to get answers that can help your practice get to the next level. At their worst they can be a repository of misinformation that can lead to sloppy practices or worse. In some cases what you learn and implement can lead to a late night visit from authorities armed with search warrants and the authority to leave with everything electronic and paper based in your practice. This may be the start or part of a painful criminal and civil audit process that could possibly cost you your freedom and life’s work. There are many ways that you can help prevent this extreme situation however.

What follows is a short discussion on some of the more common issues. State laws may vary as do contracts with insurance companies so be sure to check your specific area and contracts. This is not meant as legal advice or guidance.

  • Billing under someone else’s name or number

    One of the most common issues I find is having a clinician that hires other clinicians to do services under their number, meaning that all bills to insurance carriers are entered as if the original clinician did the work. This is not how the process works. Each clinician that works with an insurance company will have a unique NPI, CAQH number assigned to them. Though the number may be under an agency’s umbrella, there needs to be a contract with and a way to differentiate who actually did the work. While some hospital and clinic contracts may allow for unlicensed folks working under a licensed person, most contracts for non-clinic setting do NOT allow for unlicensed workers (clinics and hospitals have their own set of rules in which to follow).  Some states laws MAY differ however so it is best to check with each insurance company and discuss your particular contract should there be any question. You just may find that your particular state will allow billing for unlicensed folks under certain parameters. If that is the case be sure to get it in writing and follow the contract to the letter.

  • Claiming credentials that you do not have

    One of the more common issues that I find when consulting with a smaller program is the tendency to “exaggerate” or simply invent credentials that you do not have. This is unethical at best and possibly criminal in some instances. Follow the ethics codes and never claim credentials that you do not have. Many years ago I consulted with a company and when the director handed me her card it had a very long and impressive collection of letters after her name, few of which I had ever seen before. I asked her what some of them were as I was not familiar with them and she reluctantly told me that they indicated that she was a member of those groups and wanted folks to know. As a proud member of the ACA one would not put “ACA” after their names lest it confuse potential clients. Other examples include when Social Workers promote themselves as Licensed Professional Counselors, Counselors promote themselves as psychologists, psychologists promote themselves as counselors etc. You have worked hard for credentials, show them off but keep them accurate.

  • Hiring independent contractors that should be employees.

    A recent trend is to hire more and more clinical professionals as independent contractors as a way to lower costs related to benefits, taxes and other financial liabilities. While it may look good on paper and many folks are indeed getting away with it at least for now, there are many inherent traps in this practice. In the past few years the IRS has taken a keen interest in this practice and more and more programs are being reviewed/ investigated. The penalties can be large and have a huge impact on a program, some of which end up closing permanently. The lure can be nice to be sure. By not having hired them as employees you can afford to pay them a hirer per session or hourly wage as you are not paying the government the proper employment taxes but you are also risking an unfriendly audit.  If you cannot offer a great deal of benefits, you can still hire someone as a part time no benefits employee provided they do not work full time hours.  You will need to take out taxes and pay the appropriate taxes and unemployment insurance fees to the state (as applicable) but you will be doing so legally. More information can be found at this link.                 

  • Improper billing codes

Another common issue found is when a client is provided one type of service that is not covered by insurance but that service is billed as something entirely different. While there are indeed times when someone is unsure of the proper code and does their best guess which may or may not be correct, there is a big difference when a provider knowingly fabricates the types of services being provided in order to get a claim paid. Know your codes, know what is allowed and do everything in your power to work within the parameters or find a different way to bill, perhaps billing the client directly out of pocket.

Obviously, there are many other issues commonly found in smaller programs but these are among the most commonly found.  Do your best to make a difference but do not risk your program, livelihood and reputation doing so.                     

*They may not be seen as fraud from a legal standpoint as most things are subjective but all bring about at least ethical concerns.


"Doc Warren" Corson III is a counselor and the clinical & executive director of Community Counseling of Central CT Inc. and Pillwillop Therapeutic Farm (

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