Seven Popular Healthcare Provider Fraud Schemes

Healthcare fraud has skyrocketed in the United States over the last decade, with billions of dollars being paid on false or improper claims every year. 

It is estimated that the economic cost of fraud related to this industry in the country is three percent to ten percent of all its overall spending of $2.6 trillion.  

There are countless ways fraudsters can defraud the system to generate illegal profits. While many of these frauds occur unintentionally as the result of poor billing practices, many others are intentionally committed by dishonest individuals, small and medium-sized healthcare practices and large healthcare organizations for illegitimate reasons.

Types of Healthcare Frauds:

Following are some of the most common healthcare frauds. 

1. Misrepresenting the Type of Treatment  

It is one of the most common medical billing frauds that isn’t easy to detect. In this practice, a healthcare provider assigns a diagnostic code for a more severe condition than the one the patient actually has. For example, if a patient has come into the hospital to receive treatment for a sprained ankle, the healthcare provider may submit the bill to the insurance company for a broken ankle.

This practice increases the revenue of the practice because they get more money for serious conditions from the insurance providers.

2.     Misrepresenting Dates of Service

Since insurance providers usually consider each office visit as a separately billable service, healthcare providers might take unfair advantage of it by misrepresenting the date of the service that they provided to a patient to make more money. For example, they may report that they visited or treated the same patient on different days rather than one.

Most often, the healthcare providers list correct information about the services they provide to a patient on the claim forms; however, the dates are false because it is more profitable for them.

3.     Duplicate Billing

Though most of the healthcare practices use electronic billing software now a day for managing their billing processes, duplicate billing yet remains to be a big problem. As insurance companies manage heavy caseloads from so many business providers, it is a daunting task for the practices to identify all cases of duplication.

4.     Overutilization of Services

Since healthcare providers are paid more to do more, they may provide treatments, services, or drugs that are not really necessary for the patient. Unfortunately, hypochondriac and elderly patients become easy prey for unscrupulous doctors for this type of fraud.

Alcohol/Drug rehabilitation centers are ripe for this fraud.

5.     Billing for Fictitious Services

In this type of medical billing scheme, a practice bills for the services that were not actually provided. The patients involved in the scheme can be real or fake. Practices may either steal or purchase the personal information of real people to create fake patients, falsely list them as patients and bill for fictitious services rendered to them.

6.     Billing for Non-Covered Services/Items

Non-covered services and items are not reimbursable by the private insurance providers and the government. Medical practices often fraudulently label non-covered services and items as covered items in a bid to obtain reimbursement for covered services/items.

7. Waiving of Deductibles 

Most often, the medical practices and facilities are not allowed by the governments and insurance providers to waive the deductibles or copayments of their patients. The reason behind it may be that if the patients have to pay something from their pocket to see a doctor, they will only seek care when really necessary.  

Unscrupulous practices often waive deductibles or payments of the patients and then submit other false claims to insurance providers to make a difference in dollars. They may also add fictitious services to the claim form to maximize their illegal profit, and as they know that the patients are unlikely to complain when the out-of-pocket expense is really low or non-existent.  

Conclusion: 

All the healthcare frauds listed above are dangerous. Unfortunately, most of these fraudulent activities are committed by a handful of dishonest care practices that don’t have the best interest of their patients in mind. 

In response to increasing acts of healthcare fraud, several federal agencies, including the FBI, FDA, and EDA have joined hands to combat and reduce the threat of healthcare fraud in recent years. They are working with local and state agencies and private insurance providers to crack down on fraudulent practices. 

However, despite their efforts, healthcare fraud remains a big threat to the country’s economy and the patients individually. 

Medical practices need to put in place effective measures and processes to detect and prevent such fraudulent activities to avoid investigations that may not only cost them their reputation and revenue but also lead them to civil suits and criminal charges.

Precision7, Your Trusted Medical Billing and Coding Experts

Precision7 is a medical billing outsourcing company in New York that offers comprehensive and fully-integrated revenue cycle management solutions to help the medical practices cut down their expenses, maximize their revenue, reduce claim denial rate, and improve their productivity and efficiency.

We provide end-to-end medical billing management to the practices including patient pre-authorization, eligibility & benefits verification, claims submission, payment posting, denial management, AR follow-up, and reporting.