In 2007, health care expenditures in the United States hit approximately $2.6 trillion, according to the Centers for Medicare and Medicaid Services. Estimates put the portion of this outlay that is attributable to health care fraud — payment for nonexistent, exaggerated, or ineligible services — at anywhere from 3% to 10%, according to the National Health Care Anti-Fraud Association (NHCAA). Health care fraud comes in many different shapes and sizes. Perpetrators include patients, providers, as well as individuals or groups with no connection to the health care system. Organizations such as the NHCAA emphasize that, although the vast majority of doctors, hospitals, therapists, etc., are honest and submit valid billings, most cases of health care fraud do originate with providers. The types of health care fraud seen from providers include:
- Billing for services that were never actually provided to the patient.
- Falsifying a diagnosis.
- Upcoding, or billing for a more expensive service, treatment, or procedure than the one that was actually performed.
- Recoding, or billing for a different treatment or procedure than the one actually provided (for example, the service actually provided is a nose job, which is considered a cosmetic procedure and not covered under the plan; but the provider codes it as a repair to the septum, which would be covered).
- Performing unnecessary tests and/or procedures (e.g., diagnostic tests).
- Unbundling services that are part of one procedure and billing for each separately.
- Billing for the entire cost of a service when partial payment (such as a copayment) has been collected from the patient.
Patients commit health care fraud by listing and filing claims for ineligible dependents; sharing health plan identification cards; filing claims for services they never received; altering or forging bills and receipts; and buying and re-selling prescription medications. Health care fraud can also be perpetrated by individuals or groups posing as providers who, using stolen or purchased patient insurance information and provider billing numbers, submit bills for services from a fictional clinic. Or, they might pose as providers in order to obtain other individuals’ legitimate health insurance information, and then use the information for themselves, or even sell it.
Although health care fraud adds to costs, it also carries a price tag that is not financial. Patients undergoing unnecessary procedures, testing, or drug therapies face risks to their health. Phony or inflated diagnoses result in inaccurate patient medical records, which can complicate later treatment. Amounts paid on fraudulent claims might result in an insured reaching a dollar-amount or number-of-visits maximum under a policy when seeking coverage for later, legitimate claims.
Industry groups, insurance companies, and state and federal governments have become increasingly proactive in their efforts to prevent, detect, and punish instances of health care fraud. The Health Insurance Portability and Accountability Act (HIPAA) established health care fraud as a federal criminal offense. HIPAA provides for financial penalties as well as imprisonment for up to 10 years for health care fraud convictions, with longer sentences if the fraud results in patient injury or death. Many state insurance departments require anti-fraud efforts by the insurers or HMOs that operate in their states. Insurers and HMOs staff dedicated investigative units that use computer technology, patient education, and solid communications with other insurers and law enforcement to battle health care fraud. The NHCAA offers a professional certification — the Accredited Health Care Fraud Investigator — to those that complete a training course.
It is in the best interest of every business and individual to do what it can to prevent health care fraud. Not only does fraud contribute to the overall rate of health care cost increases, it affects your rates at renewal. Talk one of our health insurance professionals about anti-fraud efforts, and help your employees become attuned to what they can do to avoid becoming an unwitting participant in a health care fraud scheme (e.g., safeguarding their health insurance ID cards and insurance information; being wary of offers for “free”� services; examining explanation of benefits (EOB) statements for accuracy). These efforts, at a grassroots level, do make a difference.