Insurance Fraud Overview
NHCAA, the leading national organization focuses exclusively on the fight against healthcare fraud and identified the following as common examples of healthcare fraud
- 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.
- 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).
- Performing medically unnecessary services solely for the purpose of generating insurance payments-seen very often in nerve-conduction and other diagnostic-testing schemes.
- 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 repairs.
- 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").
Scams against government and private healthcare insurers form by far the largest type of insurance fraud. The exact size of annual theft is unknown, and is the subject of considerable debate. Healthcare fraud likely steals tens of billions of dollars a year.
- Healthcare expenditures in the U.S. are projected to reach $3.2 trillion in 2015 — or about $10,000 per person. (Centers for Medicare & Medicaid Services, 2015) (See second table, NHE Projections 2014-2024)
- Medicare spending is projected to reach $616.8 billion in FY 2014. (Centers for Medicare & Medicaid Services, 2015)
- Financial losses from healthcare fraud are amount to tens of billions of dollars annually. (National Health Care Anti-Fraud Association, 2015)
- Global healthcare fraud and error losses have risen 25 percent to 6.9 percent total since 2008;
- This means $487 billion lost in a year — one-fifth of total U.S. healthcare expenditures for 2011; and
- Reductions in fraud and error losses of up to 40 percent are possible within one year — freeing up to $195 billion globally. (BDO International, March 2014)