The health care system in the United States is complex and unwieldy, which unfortunately makes it susceptible to fraud. While only a small fraction of health insurance claims are fraudulent, they carry a hefty price tag. Some estimates put the total cost of health care fraud at more than $200 billion each year.
“Health care fraud costs everyone money — providers, health insurers, employers and consumers,” says Veronica Hawkins, Medical Mutual vice president of Statewide Accounts. “Additionally, it can result in a loss of benefits, higher out-of-pocket costs and inaccurate medical records.”
Smart Business spoke with Hawkins about health care fraud and identity theft, and the role employers can play in helping to decrease the risk.
What does health care fraud involve?
Health care fraud involves using the health care system for financial gain. It can be committed by dishonest providers, pharmacies, medical equipment companies and other related entities. There are even organized crime groups that run complicated scams. The most common types of fraud are misrepresentation of services, billing for services not performed, altering claim forms for higher payments and providing unnecessary medical services to patients.
Fraud can also be committed by regular people who steal medical identities so they can see a doctor, get prescription drugs, receive medical equipment or file false claims with insurance carriers. This can affect treatment, insurance and payment records, and credit reports. A 2015 study found that more than 2 million people are victims of health care fraud each year. These victims have to pay an average cost of $13,500 to fix their stolen or compromised identity.
How can fraud impact patient care?
Patients who are victims of fraud may not get the treatment they actually need. If a doctor falsifies or exaggerates a diagnosis, a condition that someone doesn’t have could be added to his or her medical record. Fraudulent providers may order inappropriate medical services or expensive and unnecessary diagnostic tests.
In cases of medical identity theft, patient medical records can be compromised or legitimate insurance information can be used to submit falsified claims. This could make a big difference in your future treatment if your medical records are inaccurate.
How does it affect health insurance?
Health care fraud can have a big effect on insurance by leading to higher premiums and out-of-pocket expenses for consumers, as well as reduced benefits or coverage. For employers, health care fraud increases the cost of providing insurance benefits to employees and the overall cost of doing business.
What role can employers play in helping to lower the risk?
Employers can help educate their employees about how to better protect themselves. First, encourage them to pay attention to their explanations of benefits and billing statements to make sure the listed services are accurate. Too often, people don’t read these documents thoroughly.
Member ID cards, explanations of benefits and other health plan correspondence should be secured just like credit cards. These documents need to be kept in a safe place so that no unauthorized people can gain access to them. It’s also a good idea for employees to monitor their credit reports to identify any medical debts.
In addition, employees should only share their ID numbers and personal health information with trusted doctors and other providers. Check the network of providers available and make sure to view their ratings. Beware of ‘free’ medical services or treatments, as these offers are sometimes used as way to get information for filing false claims.
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