Fraud & Abuse in Health Insurance

Health care fraud and abuse are widespread, and they are costly to the American health care system. Health care fraud takes place when someone attempts to receive a benefit by intentionally deceiving an insurer or by misrepresenting a medical condition, such as when someone bills for a service that was never received. Fraud also occurs when a health care provider charges for services that are not necessary or that do not conform to professional standards, or when prices for services are at unfair levels. Abuse is similar to fraud, except that it is impossible to establish that the abusive actions were committed with the intent to deceive an insurer.

The Cost of Health Care Abuse

• The exact financial cost of health insurance fraud is impossible to determine. Some authorities place the amount at $100 billion each year. In 1998 Medicare lost almost $12 billion to fraudulent claims. According to the U.S. Government Accountability Office (GAO), $1 of every $7 spent on Medicare is lost to abuse and fraud.

False Claim Schemes

• Fraudulent claims are the most common type of health insurance schemes. Those perpetrating these schemes seek to obtain undeserved payments for false claims. They do this by billing for procedures, services or supplies that were never provided; misrepresenting what was provided, or when it was provided; misrepresenting the identity of the recipient, the charges or the diagnosis; or by providing unnecessary tests or services.

Illegal Practices

• Many practices or behaviors are considered illegal:
  a) physicians charging insured patients more than uninsured patients;
  b) excusing patients from deductibles or co-payments;
  c) collecting fees only from those with insurance;
  d) charging for services that are never performed;
  e) \"unbundling,\" or charging separately for several procedures that are usually covered by a single fee;
  f) \"double billing,\" or charging for a service more than once;
  g) \"upcoding,\" or billing for a more complicated service or procedure than the one performed;
  h) \"miscoding,\" or using a code number other than the one that applies to the procedure performed;
  i) \"kickbacks,\" or receiving payments for making referrals (often disguised as rental payments).

Testing Fraud

• Deciding whether a diagnostic test is necessary is based on whether the results would influence patient care management. Chiropractors and chiropractic/medical practices are where most billings for inappropriate tests are seen. The are several commonly abused tests:
  a) inclinometry, a procedure used to measure joint flexibility;
  b) nerve conduction studies, which provide information regarding the status of nerve function for degenerative diseases and sometimes in cases of injury
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  c) surface electromyography, which measures electrical activity in muscles
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  d) thermography, devices that portray minute temperature differences from one side of the body to the other
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  e) ultrasound, which is not legitimately used in diagnosing muscle spasms or inflammation
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  f) unnecessary x-ray examinations
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  g) spinal videofluoroscopy, which produces x-ray pictures of spinal joints and the extent to which joint motion might be restricted.

Personal Injury Schemes

• Corrupt attorneys and health care providers work together, billing insurance companies for minor or nonexistent injuries. \"Runners\" are paid to recruit accident victims or possible workers' compensation claimants. These so-called \"victims\" are told they need to make several visits to a doctor. Then the corrupt health providers create diagnoses and provide expensive---and unnecessary---services. The corrupt attorneys then begin negotiating settlements based on these fraudulent claims. These activities are usually discovered when multiple claims are submitted for individuals all receiving similar treatment from the same group of providers.