Healthcare fraud includes medical fraud, drug fraud, and health insurance fraud, and it is rampant in the United States. Healthcare fraud costs America in the region of $80 billion annually and with the annual national care spend being in excess of $2.7 trillion, and expenses continuing to outpace inflation, that figure is rising.
The FBI is the primary agency that investigates and exposes healthcare fraud, as it has jurisdiction over both private and federal insurance programs, and recent cases have shown that medical professionals are more and more willing to risk patient harm in their plots.
There are various types of healthcare fraud schemes used to defraud the U.S. health care system, such as Billing for services not rendered; Duplicate claims; Excessive services; Kickbacks; Unbundling; Unnecessary services; Up-coding of services and Up-coding of items.
Various Healthcare Fraud Schemes
Healthcare fraud is perpetrated by many segments of the health care system, using various methods and schemes, including:
Billing For Services Not Rendered
The schemes that render this type of fraud include various methods of cheating which include:
- No medical service of any kind has ever been rendered
- The service that payment was claimed for was not rendered as described
- The service has already been billed and the claim has been paid
- Payment is being claimed for fictitious services or medical items using either genuine patient information or information obtained by identity theft
Duplicate claiming involves two claims being filed for the same service or item. To ensure that the duplication is not picked up by the health insurer, some portion of the claim, most often the date the service was rendered, is changed. This in effect meant that the exact same claim is not filed twice, but he same service or item is billed for twice in an attempt to obtain payment twice for the same service or item.
Healthcare fraud is perpetrated in this manner when billing is done for the provision of medical items or services which are excessive to the patient’s needs. Examples of excessive billing include:
- Billing for daily medical office visits when monthly visits would more than suffice.
- A medical supply company billing delivery of 50 wound-care kits to a nursing home per week when for a patient who only requires one change of dressing per day.
- This kind of healthcare fraud is extremely distasteful as the patient’s condition often needs to be “inflated” as well, to a condition that is consistent with the false procedure codes being used. This can lead to distress for the patient and his or her family if they get to see or hear about the inflated condition and believe it to be true.
Kickbacks are the same in any business, and healthcare fraud that is perpetrated this way means that the healthcare provider solicits, pays, offers, or accepts money or something of value in return for referring a patient to health care services that may be paid for by Medicaid or Medicare.
An example of this could be when a laboratory owner pays a doctor $50 for each Medicare patient that the doctor sends to the laboratory for testing. In this instance both the doctor and the laboratory owner would be violating the Anti-Kickback Statute.
Although kickbacks are generally paid in cash, based on an agreed upon percentage of the amount paid by Medicaid or Medicare for a service, payment is also often made in other forms, such as free paid vacations, jewellery or other valuable items.
Medically Unnecessary Services
When claims are made for services supposedly rendered but not justified by the patient’s medical condition or diagnosis, it constitutes healthcare fraud. An example of this would be claims made for an electrocardiogram test when the patient has no complaints, conditions, or factors that would necessitate such a test.
Misrepresentation of Treatment Rendered
This includes billing for treatments that are not covered as being medically necessary as treatments that are medically required and hence covered, for the sole purpose of eliciting payments. This is widely seen in cosmetic-surgery practices, in which non-covered cosmetic procedures such as “nose jobs” are billed as deviated-septum repairs.
This form of healthcare fraud involves the practice of submitting bills in a fragmented manner in order to maximize reimbursement for procedures or tests that should be billed together at a reduced single cost.
An example of this could be clinical laboratory tests that can be ordered either individually or in a “panel” such as an arthritis panel, a hepatitis panel or a lipid panel. Billing tests within each panel as though they were done on different days in an attempt to defraud the system and receive more money is one example of unbundling.
Up-coding Of Services
Up-coding of services is when healthcare fraud involves a health care provider submitting a bill with a procedure code that yields a higher payment than the code for the actual service that was rendered would.
- The up-coding varies according to the type of services that the provider supplies, and could include:
- A routine, follow-up visit to a physician’s office being billed as an initial or comprehensive visit
- Group therapy being charged out as individual therapy
- Unilateral procedures that are billed as bilateral procedures
- 30-minute sessions being billed as sessions that last an hour or longer
Up-coding of Items
Up-coding is a form of healthcare fraud that is generally perpetrated by a medical supplier, such as when they deliver a basic manual wheelchair to the patient yet charge the patient’s health insurance plan for a more expensive or motorized version of the wheelchair.
Another form of healthcare fraud that is committed is the padding of patient bills; when a patient is billed more than the co-pay amount for services that were either prepaid or paid in full by the patient’s benefit plan under the terms of a managed-care contract.
It has been found that he majority of healthcare fraud is not committed by individual health care providers, but by organized crime groups, working in tandem with a tiny minority of unscrupulous health care providers.
The National Health Care Anti‐Fraud Association (NHCAA)
The Chief Executive Officer of the National Health Care Anti‐Fraud Association, Louis Saccoccio, released a statement regarding the U.S. Department of Health and Human Services (HHS), awarding the Centers for Medicare & Medicaid Services (CMS) $9 million to assist Senior Medicare Patrol (SMP) programs across the U.S. in their fight against the healthcare fraud that is being committed against seniors. The initiative demonstrates a very strong commitment to educate seniors about healthcare fraud whilst protecting them from it.
The NHCAA was founded in 1985 to deal with healthcare fraud, and is the nation’s foremost national organization which focuses exclusively on the fight against health care fraud. The association is comprised of more than 100 private health insurers and various public‐sector regulatory and law enforcement agencies that have jurisdiction over medical fraud committed against both public programs and private payers.
Massachusetts Fights Back Against Health Care Fraud
In September 2012, the Commonwealth of Massachusetts’ Executive Office of Health and Human Services awarded a one-year $2.5 million contract to Dynamics Research Corporation (DRC) to improve the office’s capabilities for detecting and preventing Medicaid fraud. DRC is a provider of engineering, management consulting, and science and technology solutions to federal and state governments, and under the terms of this contract they will develop predictive models to detect improper payments.
The DRC solution will Detica’s NetReveal software, and will integrate with the MassHealth claims processing system and other Commonwealth and public data. It will include workflow management and workstation tools which will consistently deliver information on claims selected by predictive modelling and enable analysts to investigate, review, and disapprove or approve claims in an automated manner; it will have the capacity to build models which render accurate transaction risk-scoring and referral strategy capabilities.
Healthcare is one of the biggest and most significant sectors in the Unite States, as every individual, no matter their age or status, is dependent on the medical assistance and care provided by hospitals, convalescent hospitals, health clinics, nursing homes, health maintenance organizations, physicians and other medical facilities and suppliers of medical services and goods. Unfortunately this sector is being undermined by all the healthcare fraud that is taking place on a daily basis, and creating a pall of mistrust and doubt over the whole profession.
It is up to every citizen to be aware of and wary of this type of fraud, and to report it immediately when discovered. The only way that this scourge can be dealt with effectively is by Joe or Jane Citizen to not be party to such fraud, and to work with the authorities by blowing the whistle on such dastardly practices when confronted by or gleaning any information regarding medical fraud. It must be remembered that the only outcome of healthcare fraud will be that medical costs will rise, more patients with the need for medical care will not be able to get it as there will be rationing due to a shortage of resources, and individuals will find themselves out of pocket and unable to afford the care they need.