Provider Manual

Chapter 36: Fraud and Abuse

This chapter includes information on identifying and preventing fraudulent claims.


Unscrupulous medical professionals, small-time criminals and even members of organized crime siphon as much as $100 billion a year from the nation's health care system. Although fewer than five percent of practitioners in the U.S. commit such violations, health care fraud remains a powerful contributor to the skyrocketing cost of medical care. Federal lawmakers have passed numerous important acts, including The Balanced Budget Act of 1997 and the Health Insurance Portability and Accountability Act of 1996, to address issues of fraud and abuse.


EmblemHealth's Special Investigations Unit (SIU) was established to meet regulatory requirements while addressing concerns about the cost of fraud and abuse to members and practitioners. The SIU monitors, reviews and investigates potential cases involving fraud, abuse or improper billing. Additionally, the SIU ensures proper payment has been requested and reimbursed. Our SIU respects the partnership we have with our network providers and works with our providers to curb fraud and abuse.


We ask each of our medical professionals to be a part of our fraud fighting team by working together to prevent and identify inappropriate and potentially fraudulent billings through the following procedures:

  • Monitoring of claims submitted for compliance with billing and CPT coding guidelines
  • Adherence by providers and facilities to Standard Medical Record Guidelines
  • Education of all staff members responsible for dealing with medical records and/or billings
  • Referral of suspected fraud and abuse cases to EmblemHealth's Special Investigations Unit


The SIU conducts audits by any of the following methods:

  • Data analysis of filed claims
  • Review of medical records and filed claims
  • On-site visits


If improper or fraudulent billings are identified, the SIU will send written documentation to the provider outlining its findings. If and when necessary, the SIU will hold meetings to address providers' concerns and arrange repayment of amounts paid on identified fraudulent claims.


Fraud is defined as obtaining, or attempting to obtain, services or payments by dishonest means with knowledge, willingness or intent. The Federal False Claims Act (accessed at widens the definition to also include reckless conduct, "deliberate ignorance" of the truth or falsification of information, and "reckless disregard" of the truth or falsity of the information.


Examples of Fraud

  • False or fabricated filings of claims.
  • Billing for goods and services that were never delivered or rendered. This includes billing for no shows or cancelled appointments.
  • Billing for more services than were actually provided. This includes, but is not limited to, billing for new or premium durable medical equipment, prosthetics/orthotics or supplies while substituting substandard or inexpensive DME.
  • Billing at doctor rates for work that was actually conducted by a nurse, resident intern or physician assistant (i.e., up-coding), unless permitted by your contract agreement, state laws and regulations, and/or CMS guidelines.
  • Billing for services performed by a lesser-qualified person, unless permitted by your contract agreement, state laws and regulations, and/or CMS guidelines.
  • Billing for services under a provider's name for services actually rendered by another provider.
  • Misrepresentation of services rendered (CPT codes), diagnosis, place of services, date of services and/or providers of services in order to justify reimbursement.
  • Billing for non-covered services as covered services.
  • Medical documentation that does not support, or is inconsistent with, the service being billed.
  • Falsifying certificates of medical necessity, plans of treatment and medical records to justify payment. This includes fabrication and recreation of medical records to justify the billing and payment.
  • Double billing in an attempt to gain duplicate payment (i.e., billing multiple claims to EmblemHealth and/or another insurer without proper disclosure of any COB or payment information, or EOB from another carrier).
  • Altering of claim form to obtain higher payment amount.
  • Billing separately for a panel of tests when a single panel test was requested (i.e., unbundling).
  • Billing procedures over a period of days or weeks when the actual treatment occurred during a single visit (i.e., split billing).
  • Improper coding practices (misuse of CPT codes).
  • The acceptance of, or failure to return, monies paid on claims known to be false, fabricated or received in error.
  • Kickbacks or participating in schemes that involve collusion between a provider and a member.
  • Members providing false information for potential gain.
  • Billing a planned hospital admission service as if it were an emergency admission and/or urgent care admission.


Abuse or improper billing is defined as any provider or member practice that is inconsistent with sound or established fiscal, business, insurance or medical practices and results in an unnecessary cost to any EmblemHealth benefit program, including, but not limited to, reimbursement for services that are not medically necessary or treatments that fail to meet professionally recognized standards. Each incident need not be intentional to be considered abuse. Consistent patterns of abuse may be indicative of fraud.


Examples of Abuse or Improper Billing

  • Inappropriate balance billing
  • Inadequate resolution of overpayment
  • Failure to collect deductibles, coinsurances and copays
  • High utilization of procedures or tests that are not medically necessary
  • Providing services that are experimental or services that do not meet professionally recognized standards
  • Coding a service at a higher level than warranted (i.e., up-coding)
  • Inappropriate documentation of services rendered
  • Unbundling of services or charges
  • Requesting prior approval under a network location and billing under an out-of-network location


An entity performing such acts may include a provider, a hospital, an agency, an organization, another institutional provider, an employee or employees of a provider or group of providers, a billing service, a member or any person in a position to file a claim for health benefits.


To report suspicious activity, please contact EmblemHealth's Special Investigations Unit in one of the following ways:

  • E-mail:
  • Toll-free hotline: 1-888-4KO-FRAUD (1-888-456-3728)
  • Mail:
    Attention: Special Investigations Unit
    441 Ninth Avenue
    New York, NY 10001


A trained investigator will discuss the nature of the concern. The informant may remain anonymous.



The Deficit Reduction Act of 2005 requires health care entities to educate contractors and agents, including providers, about the False Claims Act. In addition, New York State requires Medicaid providers to develop and implement compliance programs aimed at detecting fraud, waste and abuse in the Medicaid program. Providers should ensure that their personnel are familiar with the requirements below.


False Claims Act

Neither EmblemHealth nor our providers may submit false or fraudulent claims to the Federal government. The Federal False Claims Act makes it illegal to:


"Knowingly" includes acting not only with actual knowledge but also with deliberate ignorance or reckless disregard of the facts. To impose liability, it is not necessary for the court to find a specific intent to defraud. Simply presenting a false claim is a violation, even if the claim has not been paid and no money has been expended.


The federal government may impose fines of up to $10,000 per claim and treble damages (i.e., three times the amount of actual damages) for False Claims Act violations.


In addition to the Federal False Claims Act, New York State (NYS) and New York City (NYC) have each enacted a False Claims Act. All three prohibit the items set forth above and all three can impose treble damages for each violation. A civil penalty of between $6,000 and $12,000 may be imposed for each violation of the NYS False Claims Act and a penalty of between $5,000 and $15,000 may be imposed for each violation of the NYC False Claims Act. In each instance, the court is authorized to reduce the fine to two times the amount of damages if the alleged violator (i) provided full information to the Commissioner of Investigation, or the investigating agency or official(s), within 30 days of receiving the information; (ii) cooperated with any subsequent government investigation; and (iii) at the time the individual provided information about the violation, no action had commenced with respect to the violation and the individual did not have any actual knowledge that an investigation was underway. It should be noted that the NYS False Claims Act does not apply to claims, records or statements made under the tax law.


Whistleblower Protections under the False Claims Act

The Federal False Claims Act provides that private parties, known as "qui tam relators," may bring an action on behalf of the United States. The Act provides protection to qui tam relators who are discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against in the terms and conditions of their employment as a result of their furtherance of an action under the Federal False Claims Act. Remedies include reinstatement with seniority comparable with what the individual would have had but for the discrimination, two times the amount of any back pay, interest on any back pay and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys' fees.


Under New York's Labor Law, employers are prevented from taking any retaliatory actions (i.e. discharge, suspension or demotion of an employee, or other adverse employment action taken against an employee in the terms and conditions of employment) against an employee who discloses or threatens to disclose to a supervisor or a public body an activity, policy or practice of the employer that is in violation of a law, rule or regulation the violation of which creates and presents a substantial and specific danger to public health or safety or which constitutes health care fraud. An employee who has been the subject of a retaliatory personnel action may institute a civil action for relief within one year after the alleged retaliatory personnel action was taken.


New York State Medicaid Fraud Detection

Chapter 442 of the Laws of 2006, which established the New York State Office of the Medicaid Inspector General (OMIG), also created a new Social Services Law § 363-d which requires that Medicaid providers develop and implement compliance programs aimed at detecting fraud, waste and abuse in the Medicaid program. Each provider covered by the requirements must develop and adopt an effective compliance program based on a set of minimum core requirements. Provider compliance programs shall, at a minimum, be applicable to billings to and payments from the medical assistance program, but need not be confined to such matters. The law contains only the minimum requirements for such plans and, effective January 1, 2007, the OMIG, in consultation with the DOH, is authorized to impose additional requirements for compliance plans beyond the basic statutory requirements.


Additional requirements, minimum standards, etc., may be found at the Office of the Medicaid Inspector General Web site at In addition, a new Part 521, entitled "Provider Compliance Programs," is added to Title 18 of the Codes, Rules and Regulations of the State of New York.



  • Knowingly present, or cause to be presented, a false or fraudulent claim for payment to the federal government.
    1. Knowingly make, use or cause to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the government.
    2. Conspire to defraud the government by getting a false or fraudulent claim allowed or paid.
    3. Have possession, custody or control of property or money used or to be used by the government and, intending to defraud the government, either willfully conceal the property or deliver or cause to be delivered less property than the amount for which the person receives a certificate or receipt.
    4. Authorize the making or delivering of a document which certifies receipt of property used or to be used by the government and, intending to defraud the government, make or deliver the receipt without completely knowing that the information on the receipt is true.
    5. Knowingly buy, or receive as a pledge of an obligation or debt, public property from an officer or employee of the government or member of the Armed Forces who may not lawfully sell or pledge the property.
    6. Knowingly make, use or cause to be made or used a false record or statement to conceal, avoid or decrease an obligation to pay or transmit money or property to the government.