Each year, billions of dollars are lost to health care fraud. On the low end, the National Health Care Anti-Fraud Association estimates that 3 percent of health care spending in the United States $68 billion is lost to health care fraud each year.
On the high end, the FBI’s Financial Crime Report to the Public puts the amount lost at as much as 10 percent of spending or $226 billion each year.
“Fraud in the health care arena impacts both the insurance carrier and the consumer,” says Marty Hauser, president of SummaCare, Inc. “For carriers, it results in significant losses. But more importantly, for health care consumers, fraud results in increased premiums and out-of-pocket expenses, and in falsified health care records that could lead to the wrong treatment or denied coverage in the future.”
Smart Business spoke with Hauser about how health care fraud occurs and steps you can take to identify it and help prevent it.
What are the forms of health care fraud, and how do they occur?
There are several ways fraud occurs. One of the most common types of fraud is misstatement of services. While this can be blatant, with con artists setting up shop to file false claims, more often it occurs in the form of intentional or unintentional upcoding services or goods provided. With the practice of upcoding, a medical provider filing a claim with a health insurance company substitutes the code of a more expensive service than that which was actually provided to the patient. This results in a higher payment to the provider than would be made if the correct code had been used.
Fraud also occurs when a health care provider performs unnecessary services. In this instance, the provider is actually providing the service for which he or she is billing, but the symptoms presented by the patient don’t warrant the testing.
Unreasonable rates, such as charging $5 for an aspirin, is another form of fraud. In addition to charging rates that may be too high for the services provided, a provider may unbundle services, splitting one procedure into two or more procedures so that he or she can bill for them separately, resulting in a higher payment from the insurance company.
Although rare, kickbacks are another area where fraud occurs, when a doctor refers a patient to a fellow provider with the understanding that he or she will be paid for the referral. In other cases, benefits agents, who make recommendations for plans, may skew those recommendations in return for payment.
Finally, fraud can also occur on the consumer side when a consumer forges names to obtain coverage or services for friends. Consumers may also fail to give accurate and/or complete information regarding eligibility for coverage.