Understanding Health Care Billing Fraud

In 2018, $3.6 trillion was spent on health care in the United States. The National Health Care Anti-Fraud Association estimates that at least 3% of annual health care spending is lost to fraudulent activity. Other organizations estimate fraud to account for up to 10% of all health care costs. Medicare fraud is legendary and most of the time it goes undetected, costing taxpayers billions of dollars each year.

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What Is Health Care Fraud?

Health care fraud takes place in several 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 that require several 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, health care 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 drains our tax reserves, these fraudulent activities are recorded in our medical records. Eventually, these misrepresentations may lead to wrong treatment, errors in our Medical Information Bureau records, and even medical identity theft.

What Patients Can Do

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, you can follow the advice online by going to: report Medicare fraud.
  • Likewise, should the problem involve a Medicaid claim, you can also follow the advice online by going to: report Medicaid fraud.

Because health care fraud is so common and expensive, it is often considered part of the discussion of health care reform in the United States.

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Article Sources
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  1. National Health Care Anti-Fraud Association. The challenge of health care fraud.

  2. Schulte F. Fraud and billing mistakes cost Medicare — and taxpayers — tens of billions last year. Kaiser Health News. Published July 19, 2017.

  3. Seiber EE. Physician code creep: evidence in Medicaid and State Employee Health Insurance billingHealth Care Financ Rev. 2007;28(4):83-93.