The Challenge of Health Care Fraud

Consumer Alert: The Impact of Health Care Fraud on You!

In 2011, $2.27 trillion was spent on health care and more than four billion health insurance claims were processed in the United States. It is an undisputed reality that some of these health insurance claims are fraudulent. Although they constitute only a small fraction, those fraudulent claims carry a very high price tag.

The National Health Care Anti-Fraud Association (NHCAA) estimates that the financial losses due to health care fraud are in the tens of billions of dollars each year.

Whether you have employer-sponsored health insurance or you purchase your own insurance policy, health care fraud inevitably translates into higher premiums and out-of-pocket expenses for consumers, as well as reduced benefits or coverage. For employers-private and government alike-health care fraud increases the cost of providing insurance benefits to employees and, in turn, increases the overall cost of doing business. For many Americans, the increased expense resulting from fraud could mean the difference between making health insurance a reality or not.

However, financial losses caused by health care fraud are only part of the story. Health care fraud has a human face too. Individual victims of health care fraud are sadly easy to find. These are people who are exploited and subjected to unnecessary or unsafe medical procedures. Or whose medical records are compromised or whose legitimate insurance information is used to submit falsified claims.

Don't be fooled into thinking that health care fraud is a victimless crime. There is no doubt that health care fraud can have devastating effects.

What Does Health Care Fraud Look Like?

The majority of health care fraud is committed by a very small minority of dishonest health care providers. Sadly, the actions of these deceitful few ultimately serve to sully the reputation of perhaps the most trusted and respected members of our society-our physicians.

Unfortunately, the stock in trade of fraud-doers is to take advantage of the confidence that has been entrusted to them in order to commit ongoing fraud on a very broad scale. And in conceiving fraud schemes, this group has the luxury of being creative because it has access to a vast range of variables with which to conceive all sorts of wrongdoing:

·         The entire population of our nation's patients;

·         The entire range of potential medical conditions and treatments on which to base false claims; and

·         The ability to spread false billings among many insurers simultaneously, including public programs such as Medicare and Medicaid, increasing fraud proceeds while lessening their chances of being detected by any a single insurer.

The most common types of fraud committed by dishonest providers include:

·         Billing for services that were never rendered-either by using genuine patient information, sometimes obtained through identity theft, to fabricate entire claims or by padding claims with charges for procedures or services that did not take place.

·         Billing for more expensive services or procedures than were actually provided or performed, commonly known as "upcoding"-i.e., falsely billing for a higher-priced treatment than was actually provided (which often requires the accompanying "inflation" of the patient's diagnosis code to a more serious condition consistent with the false procedure code).

·         Performing medically unnecessary services solely for the purpose of generating insurance payments-seen very often in nerve-conduction and other diagnostic-testing schemes.

·         Misrepresenting non-covered treatments as medically necessary covered treatments for purposes of obtaining insurance payments-widely seen in cosmetic-surgery schemes, in which non-covered cosmetic procedures such as "nose jobs" are billed to patients' insurers as deviated-septum repairs.

·         Falsifying a patient's diagnosis to justify tests, surgeries or other procedures that aren't medically necessary.

·         Unbundling - billing each step of a procedure as if it were a separate procedure.

·         Billing a patient more than the co-pay amount for services that were prepaid or paid in full by the benefit plan under the terms of a managed care contract.

·         Accepting kickbacks for patient referrals.

·         Waiving patient co-pays or deductibles for medical or dental care and over-billing the insurance carrier or benefit plan (insurers often set the policy with regard to the waiver of co-pays through its provider contracting process; while, under Medicare, routinely waiving co-pays is prohibited and may only be waived due to "financial hardship").

Consider Some Risks of Health Care Fraud to You