Types of Medical Insurance Frauds

Types of Medical Insurance Frauds

Frauds, cheating, and illegal activities exist in every department and industry and may vary in extent and severity. Criminal and unlawful acts are always damaging to the system but when it comes to the healthcare industry it becomes 2x destructive. It does not only cause financial damage but also risks the life of a patient for selfish motives. Medical insurance frauds are not always committed by medical service providers but sometimes policyholders also take advantage by submitting false claims.

However, the healthcare industry is a widespread organization and the chances of insurance fraud by authorities are more and more difficult to detect. Such medical insurance frauds cost the system, taxpayers, insurers, and the government billions of dollars annually, resulting in  higher premiums and other expenses

What are the Different Types of Insurance Fraud

Ten Major Medical Insurance Frauds Schemes

Ten Major Medical Insurance Frauds Schemes

  1. Charging for unprovided services
  2. Charging for un-covered service as covered service 
  3. Misinforming dates of service.
  4. Misinforming locations of service.
  5. Misstating provider of service.
  6. Waiving of deductibles and/or co-payments.
  7. Incorrect statement of diagnoses or procedures (includes unbundling).
  8. Overuse of services.
  9. Corruption (kickbacks and bribery).
  10. Unnecessary or false issuance of prescription drugs

1. Charging for unprovided services

Billing for unrendered services accounts as most represented cases in the court. In the majority of the healthcare fraud examination, it is observed that medical providers submit claim forms either to insurance companies or the government health care system for care and services that were never provided. Even patient files lack the relevant document. Healthcare examiners give lame excuses for missing documentation that are sometimes humorous. 

Fraud investigators need to locate the witness who knows about the fraud and willingly wants to inform about the fraud. It is because that alone documents are not enough to prove the intentional wrongdoing. 

In the medical field, most health care practitioners are honest and they feel guilty about being a part of such medical insurance frauds so they quit their job. But also some people remain stuck to the job and never admit to the crime until they are being confronted. So interviewing the previous employees and medical staff is helpful in un-veiling such medical insurance frauds. 

2. Charging for un-covered service as covered service 

The Association of certified fraud examination reports a case that shows how charging for non-covered services as covered services cheated the people. In this case, an allergy doctor was giving a treatment that was considered a trial and therefore not approved by government and insurance companies. She got paid for using an experimental treatment method and named it the same as a service that was covered by insurance policies. Patients even did not know that they are receiving an experimental treatment, not the approved care service.

Another strategy of charging for uncovered services as the covered services include false information on patients’ documents. Insurance claims forms represent many patients who were treated at the allergy clinic four or five days per week.  When the patients were interviewed, they said they received the injection only twice a week. 

3. Misinforming dates of service

Healthcare providers may make more money by reporting two visits instead of one ( which is actual ). Each “office visit” is generally regarded as a separate billable service. Usually, the services mentioned on claim forms are really provided, but the dates are incorrect. 

This type of medical insurance fraud can be easily caught by matching the dates of medical file documentation with the dates of service listed on the claim forms.

4. Misinforming locations of service

It is common to mention the false location of medical service in claim forms. Let’s go back to the allergy clinic where patients reveal some more secrets on interviewing them. They say on the first visit of the week, that clinic workers hand over a bunch of syringes with antigens to inject themselves at home.

It is an absolutely non-professional, risky, and weird type of insurance fraud. As it risks the life of the patient in two ways. Firstly unskilled patients may wrongly inject themselves which may lead to serious health consequences. Secondly, It is inappropriate to receive an injection at home because a doctor is required to monitor the patient for a few minutes after giving the injection to check if he gets any adverse effects. 

5. Misstating provider of service

Healthcare services are critical and they need trained technicians and licensed professionals to give treatments. But some medical insurance frauds are reported in which there is misleading information about the service providers. Under the name of a highly qualified doctor mentioned on the claim forms, the freshly medical graduates or unskilled technicians actually give service to the patients. 

In these events, the involved insurance firms would even have paid for the care given by the lesser-educated but certified clinicians but they would have paid less. So in order to obtain high payments, the name of the service provider is falsely mentioned on claim forms.

6. Reserving of deductibles and/or co-payments

Insurance companies and government health care programs do not allow doctors to reserve the patients’ copayments or deductibles. The reason may be that if patients have to pay something to visit doctors, they’ll only seek care if they actually need it. Perhaps it’s also a way to balance some of the charges but it is adopted by fraudsters to make more money. 

         Concerned authorities may justify their false claims by saying that it is a way of helping people who could not afford medical bills and they are not earning extra income by this. However, the insurance companies usually end up settling expenses they shouldn’t have to pay,    which ends in larger premiums for all policyholders or suffered tax dollars.

7. Incorrect statement of diagnoses or procedures (includes unbundling)

This type of medical insurance fraud is associated with reporting incorrect diagnoses or procedures to earn illegal money. It will be well-understood by the example. Suppose if an elderly woman fell inside the home, a health provider misdiagnoses her intentionally to have a head injury and asks the attendant to go for a CT scan or unnecessary blood tests.

In the same way, some diagnoses need a lengthy procedure and expensive hospital ways. This is against humanity to ask the patient for unnecessary laboratory testing for selfish motives. 

Unbundling is another way of earning money through medical procedures. Unbundling a medical package refers to the cost of each and every medical procedure as a single method instead of a deal. For example, a medical package that includes 3 blood tests costs $250 dollars, But hospital staff charged it separately to make $300 in total. 

8. Overuse of services

This type of insurance fraud includes the overutilization of medical services to make more money on medical bills. Medical tests and examinations can continue on endlessly or at least as long as a victim still retains insurance or till he is competent to carry out payments. Furthermore, alcohol and drug recovery facilities are suitable for overutilization.

9. Corruption including kickbacks and bribery

Corruption affects the healthcare industry in the same way just like other industries. Medical practitioners have been known to unlawfully receive or pay the payment for appointments. Surely, that process can impart itself to misuse when appointments are made for services that aren’t alike required, such as X-rays, MRIs, prescription drugs, etc.

Bribery in the healthcare industry is not always giving cash under the table. It may be disguised luxury vacations, discounts on facility rentals, or hidden gifts. 

10. Unnecessary or false issuance of prescription drugs

Unnecessary prescription of drugs includes medical insurance fraud because it is done intentionally to make some extra money. But this practice makes prescription drug abuse so common which is a severe issue in today’s world. Both the patients and authorities are responsible for such type of medical insurance fraud. Some patients — and indeed medical employees have been seen to steal prescription notepads and duplicate prescriptions and medical provider signatures.

Punishment for Medical Insurance Frauds

1. Fines

Individuals in the health care sector when caught for such frauds with evidence are subjected to significant fines. A person who is called for making a false Medicare claim will be fined up to  $ 250,000 per offense, This fine becomes double when it comes to organizations that make false claims that will face up to $ 500,000 per offense. It is because an organization can breach multiple insurance programs and countless people. 

2. Prison

Medical insurance fraud can bring serious consequences to the career of a service provider by leading him to prison. A false medicare claim may result in 5 years sentence for each offense. In the case of federal conviction for federal health fraud will lead to a 10-years sentence per offense. If health insurance fraud results in some physical harm to the patient, it may lead to 20 years imprisonment. It may extend to life imprisonment if the medical insurance fraud causes the death of the person.

3. Restitution

In the background of criminal disciplines, the court may order the offenders to pay back the amount of cash they have unjustly received for their deceitful activities. The compensation is in extension to a fine that is paid off to the ministry. 

4. Probation

A person who commits a health crime may also be punished through a suspended sentence. Generally, the probationary period is of 12 months but it may vary from person to person according to his severity of crime with respect to the law. The offender must meet specific conditions including maintenance of employment, Regular meetings with a probation officer,  no contact with known offenders, and security of not committing further crimes.

Conclusive Thoughts

Medical insurance frauds within health care organizations is an extended web that is rooted so deeply and consists of many people involved in this dishonest game directly or indirectly. It is disappointing to see that the medical insurance which aims to help the policyholder to bear with his medical expenses fills the pocket of the health provider instead of its actual goal. It destroys the reputation of a hospital as well as an insurance company. In order to prevent medical insurance fraud, it is necessary that higher authorities must be honest with their profession. Also, a strict cross-checking system should be established to leave no space for any unlawful act. 

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