American flag and 100 dollar note
Medical insurance fraud costs US citizenz $54 a year. But who are the guilty? Image: Flickr.

Medical insurance fraud happens more than you think. Just recently, Ohio legislators are warning residents that a new scam has been developed. Callers are claiming to be representatives of the government working with the new health insurance marketplaces.  They’re offering to help answer any questions and assist with the exchanges but of course they’ll have to collect certain health insurance information from you first. In the same state, an Ohio psychiatrist has to repay the Bureau of Worker’s Compensation $150,000 for overbilling his sessions. A little further south, a Miami couple was sentenced in Medicare scam that netted them a cool $13.3 million. Too bad they have to pay it all back.

You can call it ‘working the system’ or ‘sticking it to the man’ but insurance fraud affects everyone and costs insurance companies billions of dollars every single year. The Coalition Against Insurance Fraud (CAIF) estimates that healthcare fraud costs U.S. citizens around $54 billion a year. The cost of average health care is rising every year and there are some people that think they deserve a piece of the pie but we all pay for their payday.

Understanding Insurance Fraud

There are two kinds of fraud: hard fraud and soft fraud. The kind that is costing us money is hard fraud and that involves deliberately faking an accident or injury to collect money from an insurance company. Normally, there are two sub categories of insurance fraud which are called consumer or insurer scams but within the field of medical fraud, many deceptions take place in the middle ground as a provider scam. Medicare and Medicaid, the two federal health insurance programs, are taken advantage of most often. The government lacks the resources to track down all questionable benefits that are issued so in reality, that $54 billion could be much higher.

The Rise of Insurance Fraud

It used to be that organized crime conjured images of a ‘gangster’ with a ‘shoot em up’ style, similar to the Capones and Mafia bosses of New York. But as much as we don’t like to think about it, criminals have wisened up and realize that street violence and robbing banks isn’t he way to make money. Of course, many people who engage in medical fraud have no ties to the organized crime world but the fact that it has become such a lucrative field cannot be denied and it’s for several reasons.

  • Insurance Companies: Recently, insurance companies have begun to crack down on fraud and are upping their efforts to pinpoint suspicious claims but there are many that still pay claim benefits without questioning the validity of the services. Insurance companies as well as representative from Medicare and Medicaid don’t have the ability to track down each and every claim so it seems that a few million dollars falls through the cracks ever year.
  • Low Risk, High Payout: When compared to moving drugs and illegal weapons across international borders and robbing banks, padding an insurance claim is nothing to professional criminals. Getting some information from an elderly individual over the phone? It’s like taking candy from a baby. Unfortunately, some states make it easier by not enacting insurance fraud laws and if you are convicted, many lawyers don’t to get involved with insurance fraud because it can be so complicated.
  • American Attitude: Surprisingly, American citizens don’t see what the big deal is. CAIF research found that 2/3 citizens will tolerate insurance fraud to some degree and that 2/5 thing insurance fraudsters should suffer no repercussions for their act.

The Types of Insurance Fraud

In the healthcare system, the opportunity for fraud is far and wide. The sheer scope of the medical field make it an easy target and many medical professionals find themselves engaging in an entire fraud network. Of course, the biggest you are, the harder you fall. Here are some ways that insurance scammers are taking advantage of you:

  • Service Not Rendered: In this scam, the medical provider will bill the insurance company or federal government for services that were never actually performed. If you’re taking a kickback, you’re considered a willing participant and can also be charged with fraud.
  • Overbilling Services: This occurs when a provider will bill the insurance company more than the actual procedure cost and pocket the difference.
  • Medical Equipment: This is a popular form of fraud which involves things like walkers and wheelchairs. Scammers insist on giving you a free wheelchair but will the company for an electronic chair.
  • Duplicate Claims: If a patient has regular insurance as well as Medicare some providers believe that it’s okay to bill both companies. Without a proper system of checks and balances, your doctor gets an extra check.

How Medical Insurance Fraud Affects You

Every time a claim is made, especially within Medicare and Medicaid, it gets added to the growing bill of our national healthcare cost. When insurance companies go to set your group or individual premiums, they use these numbers to calculate how much to charge you to cover their operating cost. If the cost of healthcare keeps rising, whether substantiated or not, your premiums will keep rising but insurance companies are still not equipped to protect them efficiently against fraud.

Additionally, your taxes rise and it can be hard to know which medical professional are legitimate practitioners and which ones are out to make a buck. Many times, federal investigations have found entire networks that span the country taking advantage of insurance companies. So next time you think to yourself that a little while lie on your next claim isn’t that big of a deal, think of the ripple effect. Make sure you know your provider and question their claims process. Keep track of your insurance statements and call someone if something doesn’t look right. Insurance fraud affects everyone.