What is insurance fraud?
Insurance fraud is a willful misrepresentation or falsification that the individual or business makes, knowing that the deception may result in unauthorized use to the person or company or another party. The most common type of fraud is a fabricated statement, misrepresentation or willful mistake that is critical to determining the benefits to be provided. Fraudulent activities are always criminal, although the nature and extent of the crimes can vary from place to place. Over the course of a year, millions of health insurance claims will be submitted to healthcare companies that are helping to make quality care affordable. A certain percentage of these millions of claims are fraudulent, and it is costing the system, taxpayers, insurers and the government in billions of dollars annually, leading to higher premiums and other expenses.
Health insurance fraud is not committed only by dishonest service providers. Rather we can witness the fraudulent activities spreading over all strata and tiers of the healthcare system.
Impacts of health care fraud
Regardless of whether the person has employer-sponsored health insurance or self-insurance coverage, healthcare fraud inevitably leads to higher premiums, expenses for consumers and a reduction in benefits or coverage. With fraud against private and public employers, healthcare fraud increases the cost of providing insurance benefits to employees and, in turn, the overall cost of doing business. For many Americans, the increased sums involved in fraud could make the difference in whether health insurance becomes reality or not. However, financial losses due to healthcare fraud are only part of the story. Healthcare insurance fraud has a deep impact. Regrettably, the victims of healthcare fraud are not hard to find. These are people who are exploited and deceived and are put in danger to go through unnecessary or unsafe medical procedures. Patient records are compromised and sometimes legitimate insurance information is used to file counterfeit claims.
Patients who have private health insurance often have a lifetime limit or other limits on benefits under their insurance policies. Each time a wrong claim is paid on behalf of a patient, the dollar amount counts for the life of the patient or for other limits. This means that if a patient rightfully needs the insurance benefits, they limit may already be exhausted.
Popular fraudulent schemes that trick the system
- Medical equipment fraud
- Billing for services not provided
- Upcoding of services
- Double claims
- Excessive and unnecessary services
- Falsifying the medical procedures
Medical equipment fraud
It is Similar to the upcoming of services, as providing medical devices fraudulently. For example, a paralyzed patient would get Medicare billing for a power wheelchair while only a manual wheelchair was required. The patient will be charged for the devices that he never actually used. The health insurance company will pay the bill for Medicare devices that the patient has never received.
Billing for services never provided
Medicaid and Medicare can only reimburse for the procedures that are medically performed. Unethical medical billing practices for treatment that were never given to the patient often used as a method of billing fraudulently to health insurers. This may include falsifying the signature of persons enrolled in Medicare and the use of bribes or kickbacks for corrupt medical professionals.
Upcoding of services
Upcoding is a medical billing fraud. Billing Medicare and Medicaid programs for services that are more expensive than the actual procedure. By using codes for serious procedures with higher payment rates, providers can significantly increase their claimed payments.
In this type of insurance fraud, a provider will not submit exactly the same bill but will change a small portion of the date to bill Medicare twice for the same service rendered when services were rendered only once. Instead of filing a single claim twice, the same health care service is charged twice, and fraudulently get paid extra.
The bills for a particular group of services that are supposedly covered by a single comprehensive code. But the physician will provide billing codes for multiple procedures for each service provided. These services would normally cost less if bundled together. However, handling the claim will charge Medicare a higher fee, leading to a higher payout for the fraudulent party.
Excessive and unnecessary services
In contrast to excessive services, this fraud occurs when claims are submitted for treatment that is not applied to the condition of a patient, such as charging an echocardiogram procedure, when a patient arrived with a sprained ankle. Some healthcare providers may intentionally provide patients with medically unnecessary treatments or procedures to increase their reimbursement.
Falsifying the medical records
Forgery of documents is another type of fraud. It includes changing or modifying a document to fool another person. In the case of this type of fraud, the healthcare officer falsely diagnoses patients so that they can order these additional tests and collect them through the billing process. The same thing can happen with treatments because certain treatments are unlikely to be approved (and not paid) unless a diagnosis is made first.
Frauds vs Mistakes
It is important to distinguish health scams from mere mistakes, omissions or improper payments. To commit fraud, a person knowingly has to exercise a plan, program, or activity to provide falsehoods with the intention of making a financial gain. Fraud is not the same as a mistake that causes a patient to be billed for a treatment he has not received. Conversely, if a healthcare provider knowingly offers treatments or procedures that the healthcare provider knows that patients do not need, and then bills an insurer for these procedures to make a profit, this behavior is a fraud in health care
Punishments for health insurance frauds
The federal law provides for both civil and criminal sanctions for fraud in the healthcare system. The difference between civil and criminal sanctions includes fines, imprisonment and a repayment order (compensation of the victim for any money lost through fraud). Civil penalties are imposed only for restitution (no imprisonment or fine). Crime-fraud in the health sector can have serious consequences for all convicts at the federal and federal level.
Fraud in health care is a serious crime and can lead to long prison sentences. A fake or false statement regarding a Medicaid or Medicare claim may result in a 5-year sentence for each offense, while a federal conviction for federal health fraud can result in a 10-year sentence for each offense. If the fraud in the healthcare sector results in serious personal injury to a person, there is a possibility of imprisonment of up to 20 years, while a healthcare-related fraud that leads to the death of a person constitutes a life sentence.
Individuals convicted of fraud in the health sector are also subject to significant fines. For example, a person who makes a false statement in a Medicaid or Medicare claim will be fined up to $ 250,000 per offense, while organizations that make false claims will face up to $ 500,000 per offense. Organizations that participate in ongoing programs that address healthcare breaches in multiple ways can face millions or even billions of dollars in fines.
In the context of criminal penalties, the judge may order the defendants to repay the amount of money they have unlawfully received for their fraudulent activities. For example, a doctor who has not been properly billed to an insurance company and has been paid for these tests may be required to return that money to the insurance company. The refund is in addition to a fine that is paid to the government.
A person convicted of a health crime may also face a potential suspended sentence. The probationary period limits the freedoms a person has instead of sending the person to prison. The probationary period is usually at least 12 months, but three years or more is possible. Persons on probation must meet certain conditions, such as Regular meetings with a probation officer, maintenance of employment, no connection with known offenders, and no further crimes.
Health insurance fraud is a grave crime that affects everyone including government officials and taxpayers, insurers and premium payers, health care providers and patients should be concerned about it. This is something that all stakeholders can never overlook to make the system successful.