A national problem of ginormous proportions is prevalent in the whole country and it is growing with every passing hour. It is the fraud being committed in the healthcare sector, prevalent in federal and state, as well as private insurance programs.
This trend has skyrocketed with billions of dollars being paid on improper claims. The National Health Care Anti-fraud Association conservatively estimates that three percent of all health care spending, or $60 billion, is lost to health care fraud. Other estimates place this number closer to $200 billion.
There are millions of health insurance claims submitted yearly to healthcare companies that help make quality care more affordable. Of these millions of claims, a small percentage are fraudulent, but that small percentage costs all Americans and the government an estimated tens of billions of dollars annually, leading to higher premiums and other out-of-pocket expenses.
Health care fraud, waste, and abuse not only contributes to higher insurance premiums; every dollar spent on fraudulent or abusive claims reduces the amount of money available to improve the quality of care for those incurring legitimate expenses.
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Although most medical providers work with integrity and honesty and put in their hundred percent to improve their patients’ health, a few black sheep in the profession do ‘go south’ and are solely fixated on making money.
They will do whatever it takes to illegally increase the size of their bank accounts. That is why, of all the types of insurance frauds recorded in America, medical insurance fraud, and Medicare/Medicaid insurance fraud make up the majority of false claims, making it a critical issue.
Health care fraud is the same as in any other industry. People with the means and opportunity reap unjust benefits by abusing the system. Unjust profiteering is on the rise. Healthcare crooks inside and outside the industry include patients, payers, employers, vendors and suppliers, and providers, including pharmacists.
Types of Fraudulent Activities
From unnecessary and duplicate tests and procedures to hacking into a patient’s personal medical records to submit false claims, fraud has many ways and types.
According to the National Health Care Anti-Fraud Association (NHCAA), the most common types of healthcare fraud are:
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. Hackers and cyber criminals are sometimes involved in such activities alongside the healthcare practitioners.
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).
Misrepresenting dates of service – Providers might make more money by reporting they visited and treated the same patient on two separate days rather than one day. Each “office visit” is usually considered a separately billable service.
Misrepresenting location of service – If a patient does not visit the clinic and perform services at home themselves, the clinic cannot bill such a service for reimbursements. Such as taking an insulin shot at home cannot be billed for reimbursement by the care providers. This is another avenue where fraud occurs. Patients are shown to have received services at the provider’s facility rather than at home to falsely claim reimbursements.
Performing medically unnecessary services solely for the purpose of generating insurance payments – seen very often in nerve conduction and other diagnostic tests.
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
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”).
Medicaid and Medicare Fraud
Medicare and Medicaid fraud is very common. Instances of individuals, companies, and large healthcare organizations attempting to cheat the system keep coming to the fore every now and then. There are many ways fraud occurs such as falsifying ambulance costs, prescription drugs, hospice or long-term care and much more.
Procedures are not performed on patients but billed and the system’s flaws and loopholes are being used for fraudulent practices.
It is true both these systems are great and are helping millions of people with their health care needs, but they are not perfect. And these imperfections are being capitalized by opportunistic healthcare providers.
The system’s design is such that it provides swift payments to practitioners for services provided. It is not a flaw but a feature that is being misused by healthcare crooks.
Medicare and Medicaid fraudulent claims fall into three main categories of dishonest practices:
- Up-coding and Up-billing – The care provider seeks to receive additional, unwarranted and illegal Medicare funds by using a code that may not be merited.
- Ghost Billing – Medicare is billed for procedures which have not been performed and are falsely claimed. A more alarming trend is performing costly procedures on patients who do not even need them which put the patient’s life in danger. Such practitioners do not care for the wellbeing of their patients. They are just concerned with making easy piles of money.
- False Patient Billing – This is where patients are involved in wrong-doing as much as the provider. The patient provides his/her Medicare number and allows a provider to bill Medicare for tests and procedure either unneeded or unfulfilled.
Fraud Detection and Technology
Both federal and private insurance programs can be investigated by the U.S. Federal Bureau of Investigations (FBI). Although this agency tries hard to combat health care fraud, it is still a far way away from systematically and proactively curtailing fraudulent activities and rounding up fraudsters.
Apart from the FBI, a number of federal agencies have come together to help eliminate the occurrence of healthcare fraud. EPA and the FDA along with the FBI are teaming up with local and state agencies and private insurance groups to help crack down on fraudulent practices as well as identify the loopholes in the system that allow for these acts to occur unnoticed.
Technology can significantly help this problem. Analytical solutions for proactive detection and elimination of fraud are available and they help a great deal. Verification and authentication of all provider identities and a commitment to ongoing background evaluations is vital to improve the system and prevent fraud.
A health plan’s current provider file can be quickly and easily evaluated for false information or indications of risk. New providers should also have their identities verified and evaluated as part of a standard enrollment qualification process.
All healthcare organizations need to create wide-reaching fraud, waste, and abuse prevention programs that address the overall problem more holistically. By combining identity and entity resolution, rules-based claim and clinical review, complex linking analysis, and predictive analytics into a seamless workflow, fraud can be caught and stopped before it causes loss of billions of dollars in improper payments. This loss is a problem for both the patient as well as the economy.
The Centers for Medicare & Medicaid Services (CMS) recently began using predictive modeling technology to identify fraudulent claims before they are paid. The new technology works in a similar way to what credit card companies use to recognize suspicious behavior. The system provides a proactive anti-fraud solution to the CMS, a significant improvement over the former ‘pay & chase’ recovery system.
A system of using predictive models and other advanced analytics to scrutinize incoming Medicare claims, identify potential problems, create alerts and assign risk scores is a proactive solution to the problem of fraudulent practices in the medical industry.
The claims that are marked as suspicious can then be routed to case managers for review, allowing the CMS to assess the need for investigation or further enforcement. Algorithms are able to filter claims by the beneficiary, provider, service origin or other patterns to cut down on turnaround time and streamline reviews.
Apart from the National Health Care Anti-Fraud Association (NHCAA), there are laws that are in place to deter and control healthcare fraud. The Health Insurance Portability and Accountability Act (HIPAA), along with a national Coordinated Fraud and Abuse Control Program helps to regulate the laws and consequences for violations of health care insurance claims.
According to HIPAA, individuals or groups involved in healthcare insurance fraud, if found guilty, can be served a sentence of up to 10 years in a federal prison along with substantial monetary fines. Furthermore, if a patient is injured in the process of the false claims, the conviction and prison term can be doubled up to 20 years, and if the patient died as a result of fraudulent acts, the person found guilty can be sentenced to life in prison.
With the Affordable Care Act, more people in the US are insured than ever before. According to a survey by the Transamerica Center for Health Studies, the number of Americans without health insurance dropped from 22% to 15%.
Although this is good news generally because more and more people are being insured and it is a positive step towards healthcare in the U.S., it also translates indirectly into more opportunities available to fraudulent practitioners to loot government money through false claims.
In response to increasing acts of health insurance fraud and Medicare and Medicaid fraud, the U.S. government created the Health Care Fraud Prevention and Enforcement Action Team (HEAT) and the Medicare Fraud Strike Forces that are focused on investigating and eliminating all claims of health care fraud.
These programs, led by members of the FBI, the Department of Justice, and the Department of Health and Human Services, have already convicted many individuals guilty of health insurance fraud. Despite their efforts, healthcare fraud and abuse continue to pose a big threat to individuals as well as to the economic condition of the nation.