Healthcare fraud is a serious concern that increases healthcare costs considerably. According to the CMS, US spending on healthcare is projected to grow at an average rate of 6.2% annually. In healthcare fraud, false or misleading healthcare information is provided to a health insurance company with the objective of securing unauthorized benefits to the plan holder, healthcare provider, or another party. Typically, the fraud is committed either by the covered individual or the healthcare provider. Though there is only a small percentage of fraudulent claims among the millions of health insurance claims submitted to insurers, that small percentage is responsible for tens of billions of dollars in terms of healthcare expenditure annually. This leads to higher premiums and other out-of-pocket expenses. Medical insurance fraud and Medicare/Medicaid insurance frauds constitute the majority of false claims among all the types of insurance frauds recorded in the United States. Medical claims review, one of the value-added medical review solutions, is a practical way to detect fraudulent claims. When a claim reviewer inspects the claim, he/she can notice anything unusual or incongruous in the medical claims and records.
Common Types of Healthcare Insurance Fraud
The NHCAA (National Healthcare Anti-Fraud Association) has identified the following types of fraud.
- Providing medically unnecessary services for the purpose of obtaining insurance payments
- Misrepresenting a patient’s diagnosis to justify medical tests, surgeries or other procedures that are not medically necessary
- Accepting kickbacks for patient referrals
- Upcoding or billing for more expensive procedures or services than were actually performed or provided. This requires “inflation” of the patient’s diagnosis code to a more serious condition to match the false procedure code.
- Billing for services that were not provided. This is done either via identity theft, using genuine patient information to forge entire claims, or by inflating claims with charges for services/procedures that never took place.
- Billing each step of a procedure (unbundling) as if it were a separate procedure.
- Misrepresenting non-covered treatments such as cosmetic surgery treatments as covered treatments that are medically necessary.
- Billing a patient more than the co-pay amount for services already prepaid or paid in full by the benefit plan under the terms of a managed care contract.
- Waiving patient deductibles/co-pays and over-billing the payer or benefit plan
The above-mentioned fraud patterns can be detected by a trained medical chart review professional.
Falsifying Medicare and Medicaid Billing
This is also something very unfortunate with fraudsters attempting to cheat the system. Here too, the Medicaid and Medicare programs are billed for procedures that were never performed or were performed for illegal reasons. Types of fraud could be in terms of falsified ambulance costs, durable medical equipment, prescription drugs, hospice or long-term care and so on. Medicare.gov categorizes three types of fraudulent claims as follows.
- False patient billing: Here a patient may provide his/her Medicare number and allow a provider to bill Medicare for unnecessary/unfulfilled tests or procedures.
- Phantom billing: Medicare is billed for unnecessary or unperformed procedures.
- Up-billing or upcoding: Here the healthcare provider aims to receive additional, unjustified and illegitimate Medicare funds by reporting a code that may not be relevant at all.
It is surprising that in spite of the heavy penalties and consequences instituted for healthcare fraud, people engage in this kind of activity. The laws and consequences for healthcare fraud are regulated by the HIPAA and a national Coordinated Fraud and Abuse Control Program. Those found guilty of fraud could be facing a sentence of up to 10 years in a federal prison alongside considerable monetary fines. In case a patient was injured because of the fraud, the conviction and prison term could be extended up to 20 years. If the patient died because of these fraudulent acts, the guilty person could be sentenced to life in prison.
Though the government has created many federal agencies to crack down on fraud, fraudulent schemes continue to occur. Therefore, more attention can be given to medical claims review to identify coding issues and avoid paying for illegitimate claims. This increases the significance of a medical review company providing this service. The increasing fraudulent activities in the US healthcare is one of the major factors that has led to the growth of the US healthcare fraud detection market. According to a Research and Market report, the US Healthcare Fraud Detection market valued at $337.41 million in 2018 is expected to reach $1,254.48 million by 2024, growing at an estimated CAGR of 24.47% during the forecast period. Insurance claims review is expected to hold the major share in the market.