Types of Health Insurance Fraud

• Detecting fraudulent health insurance claims is extremely difficult.cost of healthcare image by Cindy Haggerty from Fotolia.com
  
  Incidents of health insurance fraud continue to present an expensive problem in the health care industry, one that costs patients and physicians alike. Detecting and deterring fraud is an extremely difficult task to accomplish due to the massive volume of claims received daily by insurance carriers, and because of the multiple types of fraud. According to the Coalition Against Insurance Fraud, more than three percent, or nearly $68 billion, of the $2 trillion spent annually on health care is lost to fraud.
  
  

Phantom Procedures

• Submitting claims for procedures that were never actually conducted is a common method used by physicians to obtain unearned compensation. Falsified documents describing patient visits and procedures get mixed in with other legitimate claims. The National Health Care Anti-Fraud Association explains that claims for phantom procedures are submitted “by using genuine patient information, sometimes obtained through identity theft, to fabricate entire claims.”
  
  

Exaggerated Claims

• Medical professionals often exaggerate the extent of the care provided to patients, submitting claims for procedures that require larger compensation amounts from insurance carriers. This method of insurance fraud is known as “upcoding” and refers to the submission of claims with treatment codes that do not match the services actually provided. The NHCAA reports that most intentionally incorrect diagnosis coding “often requires the accompanying ‘inflation’ of the patient's diagnosis code to a more serious condition consistent with the false procedure code.”
  
  

Unnecessary Services

• Performing medically unnecessary testing on patients who have no legitimate health concerns is a growing method of committing health insurance fraud. These unnecessary services usually present little, if any, physical danger to the patients, and the likelihood that such fraudulent claims will be detected is minimal because fraudsters employing this technique often falsify diagnosis records to justify the unnecessary procedures.
  
  

Unbundling

• Many health insurance carriers pay physicians lower amounts for commonly provided services, called bundles. Fraudulent claims are submitted to carriers requesting payment for legitimate treatment provided, but are sent individually instead of grouped together in a bundle. The result is a series of separate claims that total larger compensation than when presented together. By separately billing for each individual step of a common procedure, instead of properly grouping the steps into one bundle, physicians can illegally increase their compensation. Unbundling has become a less common method of committing insurance fraud because advanced computer software is now able to analyze a physician’s claims and identify individual services that comprise bundles.
  
  

Double Billing

• Fraudulent physicians often take advantage of the notion that health insurance companies may be facing administrative difficulties. Submitting duplicate claims can generate larger compensation and often goes unnoticed by the carriers. However, the development of sophisticated billing programs now utilized by a number of health insurance companies should help reduce payment of duplicate invoices and identify criminals by detecting suspect or repeat incidences of double-billing.