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What Is Healthcare Billing Fraud and How Can It Be Stopped?

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Updated October 19, 2013

Question: What Is Healthcare Billing Fraud and How Can It Be Stopped?

Answer:

The National Health Care Anti-Fraud Association estimates that 3% of the more than $2 trillion spent on health care in 2007 is lost to fraudulent activity. Other organizations estimate fraud to account for up to 10% of all costs. Medicare fraud is legend, and most of the time it goes undetected, costing taxpayers billions of dollars each year.

Healthcare fraud takes place in a number of ways, on the part of many providers in health care, who may:

  • Bill for services they did not provide.
     
  • "Upcode," meaning they provided a service, but billed for a higher level of that same service. For example, you may have symptoms of a cold. But your doctor may bill for pneumonia, even though all you really have is a cold.
     
  • Provide unnecessary services. You may get an EKG in the doctor's office, even though you don't need one. These services are always extras performed in that doctor's office, simply for the ability to bill for something extra, and not because you needed the service.
     
  • Bill for services that are not ordinarily insurance billable, and may be renamed so they can be billed. For example, a plastic surgery "nose job" which is not covered by insurance may be called a deviated septum, which is a billable procedure.
     
  • "Unbundle" a service. For procedures which require a number of steps and can be billed at one amount, a provider may instead bill them individually so they add up to more reimbursement.
     
  • Bill patients more than their copays for services. This is called "balance billing." Just as fraudulent is billing a patient extra when services have already been reimbursed.
     
  • Accept referral fees from other providers.

In fact, healthcare fraud can be dangerous both to patients' health and to their wallets. Beyond the fact that it takes so much money from our pockets, especially Medicare and Medicaid fraud which drain our tax reserves, these fraudulent activities are recorded on our medical records. Eventually, these misrepresentations may lead to wrong treatment, errors in our Medical Information Bureau records, even medical identity theft.

Wise patients know to review their medical records for errors, including their insurance estimates of benefits, and make corrections to any errors they find.

  • If you review your records and find errors which affect how much your provider was paid, then report the discrepancy to your insurer.
     
  • If the payer billed was Medicare, Medicare provides a procedure for making a report.
     
  • Likewise, should the problem involve a Medicaid claim, there is a procedure for reporting Medicaid fraud, too.

Because healthcare fraud is so prevelant and expensive, it is often considered part of the discussion of healthcare reform in the United States.

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