Mental Health Fraud Schemes: How to Protect Your Plan

Even though the federal public health emergency for the Covid-19 pandemic is over, Americans are still feeling its psychological impact. According to an American Psychological Association survey, 37% of U.S. adults reported having a mental condition in 2023, up from 32% in 2019. The APA says the rise is likely due to the collective trauma caused by the pandemic as well as racial injustice, financial pressures and other lingering societal stresses.

Given the critical need for mental healthcare across the country, improving access to behavioral health services remains a top priority for providers and payers. But that expanded access — namely through telehealth — also brings more opportunities for fraud, waste and abuse (FWA). However, by being aware of the latest schemes, health plan leaders can ensure their members have appropriate access to care while preventing bad actors from exploiting telehealth policies established during the pandemic.

Telehealth demand remains high post-pandemic

The need for virtual behavioral health services rose exponentially during the early years of the pandemic, and since then, demand has remained steady. In fact, over half of mental health appointments in 2023 were conducted via telehealth rather than in person.

Individual psychotherapy sessions have continually led the list of billed behavioral health services. This can be attributed to the rise in demand for mental healthcare, with the number of Americans receiving mental health treatment increasing from 18.5% to more than 23% between 2019 and 2021.

Temporary and permanent flexibilities present opportunities for fraud

Although evolving regulatory policies on telehealth from the Centers for Medicare & Medicaid Services continue to expand access to behavioral health services, they also set the stage for potential fraud, waste and abuse schemes. These telehealth policies cover a range of areas, including:

• Audio-only technology for behavioral health: In a permanent change, providers may use audio-only technology (such as through a phone) for behavioral or mental telehealth. Through the end of 2024, providers also do not have to see a patient in-person within six months of the initial telehealth visit or annually.
• Prescribing controlled substances via telehealth: Through the end of 2024, authorized providers may continue to prescribe controlled substances via telehealth without the need for an in-person medical evaluation. Combined with the flexibility to use audio-only technology, this policy creates an opportunity for bad actors to prescribe controlled substances to patients who don’t need them.
• No originating site requirements: Prior to the Covid-19 pandemic, patients were required to access telehealth at an “originating site” in a certain geographic area. However, these restrictions have been permanently eliminated for behavioral or mental telehealth, allowing patients to receive telehealth wherever they are located.

Despite policymakers’ worthy intentions, such flexibilities create opportunities for certain providers to bill payers for behavioral health services that never occurred and bypass standard procedures for care delivery that could compromise patient care.

A key scheme to watch: Upcoding 60-minute sessions

Given the rising demand for these services, along with expanded telehealth care services, some are finding opportunities to game the system. One of the most common schemes is upcoding 45-minute psychotherapy sessions to 60-minute sessions to increase reimbursement. Fortunately, this bad billing behavior can be reversed through targeted prepay auditing. Besides generating a positive change in provider behavior, these interventions can also protect a plan’s payment integrity.

For example, providers could upcode 60-minute sessions with add-on codes such as interactive complexity, which refers to communication difficulties during a visit, such as when a translator is needed or when a child welfare representative is present. In this type of case, reviewing medical records could reveal poor documentation and help the provider begin billing more appropriately.

Other persistent upcoding schemes involve the addition of evaluation and management (E/M) services. For example, a provider may add an E/M code for a medical service during office visit to a procedure code for a 60-minute psychotherapy session and fail to provide adequate documentation to distinguish between the two services.

Other FWA schemes to watch in 2024

While upcoding is the most common “creative billing” scheme for behavioral health, many other schemes are gaining ground. At the start of the pandemic, inappropriate billing could often be blamed on providers’ lack of knowledge on new telehealth policies. But by now, providers have had enough experience working with the policies and should be held accountable for schemes such as:

• Cloning records and boilerplate billing: Medical record reviews can reveal conflicting documentation, such as patient ages that don’t match their dates of birth, which suggests records were fabricated. Additionally, a high percentage of duplicate diagnosis codes, such as for anxiety, across services can also be a potential sign of fraud. As AI-generated records become a more common tool to ease the documentation burden on providers, plans will need to closely monitor that medical records are accurate and appropriate. In the wrong hands, such tools could be used to commit fraud.
• Inappropriate billing of applied behavioral analysis (ABA) therapy:  ABA therapy typically involves a provider working one-on-one with a child with autism spectrum disorder (ASD) to improve their communication and other essential skills. But bad actors have billed ABA services for individual children when they actually provided the services in a group setting. Other schemes involve billing ABA services for children without ASD or billing an excess of ABA services (the equivalent of more than four hours) per patient per day.
• Billing impossible days:  Billing for more than 24 hours of service in a day amounts to an “impossible day” and is a clear sign of fraud. But patterns of billing fewer hours can also be a concern. The Justice Department recently accused one Philadelphia behavioral health clinic of repeatedly billing Medicaid for days that would equate at least 21 hours of appointments. The clinic’s owner is also accused of billing for thousands of 15-minute medication checks when he actually spent less time with patients assessing the efficacy of drug therapy.

Taking a proactive stance against fraud

Due to the sensitive nature of behavioral health, plans have traditionally been hesitant to request medical records and potentially disrupt patient care in pursuit of fraud. Additionally, with limited resources to focus on FWA in a specialized area like behavioral health, many smaller plans choose to concentrate their payment integrity efforts on medical claims. However, allowing behavioral health schemes to persist robs plans of resources needed to sustain their missions and provide some of their most vulnerable populations — children and adults with mental health or substance abuse issues — with optimal care.

In a landscape where permanent policy changes have made telehealth more accessible — and where temporary policies could be extended through next year or beyond — plans need to be prepared for the new reality. Providing payment integrity teams with the support they need can help them identify suspicious patterns in behavioral health billing so they know where to focus their efforts. When used appropriately, analytics that use AI and machine learning can uncover potential hot spots more quickly and safeguard their organizations against significant losses. Paired with clinical and investigative expertise, these resources can support a plan’s FWA efforts while the demand for behavioral telehealth services is likely to remain strong in the future.

Photo: Feodora Chiosea, Getty Images

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