$68 Billion Stolen Annually by Healthcare Frauds

In a statement by Lewis Morris, Chief Counsel with the Office of the Inspector General within the US Department of Health and Human Services reporting before the US House Committee on Ways and Means, Subcommittee on Health, Chief Counsel Morris explains, “Health care fraud, waste and abuse schemes commonly include billing for services that were not provided or were not medically necessary, purposely billing for a higher level of service than what was provided, misreporting costs or other data to increase payments, paying kickbacks, and/or stealing providers’ or beneficiaries’ identities. The perpetrators of these schemes range from street criminals to Fortune 500 companies to physicians.”  According to the National Health Care Anti-Fraud Association, $68 billion is fraudulently stolen from healthcare annually.

Healthcare fraud, waste and abuse affect everyone in the health care system, resulting in increased insurance premiums, costing taxpayers billions of dollars every year, and subjecting patients to unnecessary treatment and procedures.

Unnecessary treatment and procedures carry the increased risk of false-positive results, patient injuries, further unnecessary treatment or procedures, patient anxiety, and costs to members, providers, health plans, and other healthcare entities.

With the increased prevalence of healthcare fraud, waste and abuse, many organizations, including CareCore National have created task forces to combat illegal use of healthcare resources.

For example, CareCore National created a Special Investigations Unit (SIU) to prevent, detect, investigate and report fraud and recover money from those engaged in improper conduct.  Among other measures, the SIU identifies patterns in which medical information is distorted to justify diagnostic tests.  The SIU also investigates whether authorization requests originate from third parties who may have an incentive to seek approvals regardless of medical need.  The needs of patients take a back seat when physicians allow third parties to have a decision-making role.  Unlike physicians, third-party services are in no position to consider why an MRI, which is capable of producing quality results without exposure to radiation, may be a more suitable test than a CT scan in particular circumstances.

To identify fraud, be alert for these situations:

  • Treating physicians who delegate their responsibility to obtain authorization approval to third parties.  In addition to increasing the likelihood that medical information may be miscommunicated, providing personal health information to unregulated, and in some cases overseas operations, increases the risk that patient and physician information may be misused.  Medical identity theft carries a host of unpleasant consequences, such as bills and collection efforts for debt not owed, erroneous credit reports, and benefit and insurability limitations due to falsely reported conditions.
  • Physicians who “self-refer” for testing to use their own equipment or related facilities.  Studies have shown that physicians who self-refer for testing order more tests than physicians who refer to unaffiliated testing providers.
  • Physicians who routinely refer to out-of-network facilities.  While this may be appropriate on occasion, out-of-network facilities can result in higher costs.  Facilities that routinely offer to waive coinsurance may be engaging in fraudulent behavior.
  • Money or other things of value exchanged for the referral of business, commonly called “kickbacks” or “rebates.”

If you have information regarding fraudulent, wasteful or abusive practices, you should contact the affected health plan, or in the case of federal programs the Centers for Medicare and Medicaid Services.

Increased vigilance is a great way to for all of us to help control health care costs.



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