Definitions

140.1 – Definitions (Rev. 27, 12-19-03) A. Abuse An abuse is the administrative violation of agency regulations, which impair the effective and efficient execution of the program. Violations may result in Federal monetary losses or in denial or reduction in lawfully authorized benefits to participants. They do not involve fraud. B. Fraud Fraud is obtaining something of value unlawfully, through willful misrepresentation. It embraces theft, embezzlement, false statements, illegal commissions, kickbacks, conspiracies, obtaining contracts through collusive arrangements and similar devices. The following are examples (not all inclusive) of potential fraud or abuse: • Recording of personal expense items as provider costs for patient care. • Arrangements by providers with employees, independent contractors, suppliers and others which appear to be designed primarily to overcharge the program with various devices, e.g., commissions, fee splitting, to siphon off or conceal illegal profits. • A pattern of overutilization of services to inflate charges to increase reimbursement. • Any evidence of payroll entries and disbursements to personnel who provide little or no services to the provider. • Providers' concealment of business activities, which would affect eligibility for, or amount of, program reimbursement, e.g., undisclosed change of ownership or relationship with a supplying organization. • Falsifying provider records in order to appear to meet the conditions of participation. • Charging to the program costs not incurred or which are attributable to nonchargeable services or nonprogram activities. • Billing for supplies or equipment that are clearly unsuitable for the patient's needs or are so lacking in quality or sufficiency as to be virtually worthless. • Duplicate billing which appears to be deliberate. This includes billing Medicare twice or billing both Medicare and the beneficiary for the same services. • Deliberately providing or receiving Medicare payments on the account of other than the proper individual. • Persistently and deliberately billing beneficiaries rather than Medicare for covered services. • Soliciting, offering, or receiving a kickback, bribe, or rebate. • An ineffective board of directors and/or audit committee. • Abuse of internal accounting controls by administrative personnel. • Indications of personal financial problems of administrators. • Significant changes in business practices. • Inadequate working capital or lack of flexibility in debt restrictions such as working capital ratios and limitations on additional borrowing. • A complex corporate structure that does not appear to be warranted by the provider's size. • Frequent changes of legal counsel or of key financial officers such as treasurer or controller. • Premature announcement of profit or loss or of future expectations. • Significant fluctuations in material account balances, financial interrelationships, inventory variances, or inventory turnover rates. • Unusually large payments in relation to services rendered by lawyers, consultants, agents, and others. • Difficulty in obtaining audit evidence with respect to unusual or unexplained entries, incomplete or missing documentation, or alterations in documentation or accounts. • Delays in responses or evasive responses by management to audit inquiries. • Deliberately including cost, without disclosing the fact, in the provider cost report that specifically is nonreimbursable under the regulations. This excludes instances where the provider discloses that the cost report is filed under protest and where the protested issues and their reimbursement effect are disclosed.