Risk managers should be on the alert for fraud and abuse related to reimbursement issues and financial restructuring related to the COVID-19 pandemic, says Michael F. Ruggio, JD, partner with Nelson Mullins in Washington, DC.

Many hospitals and large healthcare providers are facing massive financial restructuring or insolvency while also dealing with healthcare fraud because of the COVID-19 pandemic. With the high reimbursement rates for a COVID-19 diagnosis for hospitals ($13,000) and an additional large sum for the use of a ventilator ($39,000), the potential for fraud and abuse in hospitals is substantial, Ruggio says.

“Unless a system or careful review with proper documentation and checks and balances is developed and maintained, this could be low-hanging fruit for the Department of Justice and HHS-OIG [Department of Health and Human Services Office of Inspector General] investigations and prosecutions,” he explains.

Hospital restructuring from the operations side also is needed. With ambulatory centers cutting healthcare costs, the massive expansion of telehealth services, and the rapid increase in durable and non-durable medical supplies costs, hospitals could be stuck with either a large oversupply of product or supply chain interruptions, Ruggio says.

“This situation and the rapid expansion of COVID-19 cases requires hospitals to completely restructure operations to enable them to position their supplies, supply chains, and sales forces to scale with the new and different demand for healthcare services that is developing,” he says. “To fail to do this and retool appropriate governance and operations in this regard will be the beginning of the end for many hospitals and large healthcare providers.”

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