Healthcare Fraud and Its Consequences

Healthcare fraud is increasingly common. According to Mastercard Healthcare Solutions, “Up to 10 percent of U.S. healthcare claims are fraudulent.” And it costs payers billions of dollars a year.

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Healthcare fraud is becoming increasingly common. According to Mastercard Healthcare Solutions, “Up to 10 percent of U.S. healthcare claims are fraudulent.” And this fraud is costing payers billions of dollars every year. Fraud is growing more prevalent — and fraud schemes are growing in complexity and getting harder for payers to detect. What types of healthcare fraud should payers look out for — and what can they do to find and fight it?

Healthcare fraud

Healthcare fraud usually falls within one of two main types — provider fraud and consumer fraud. But within these broad categories, fraud can come in a variety of different forms.

Provider fraud techniques include:

  • Billing for services never performed
  • Misrepresenting procedures performed to get paid for non-covered services
  • Altering a patient's diagnosis to justify medically unnecessary procedures
  • Upcoding — or billing for services more expensive than those performed
  • Unbundling — or maximizing reimbursement by billing each stage of a procedure as if they were separate procedures
  • Accepting kickbacks for patient referrals

Sometimes, provider fraud is altruistic. A doctor might alter a patient’s diagnosis, for instance, so patients can receive necessary medical treatment not covered by their health insurance plan.

Consumer fraud is more limited in type — but in scope, it raises just as many concerns as the provider variety. Fraudulent consumer activity includes:

  • Allowing — or benefiting from — the illegitimate use of an insurance card to obtain medical services.
  • Using insurance benefits to pay for fraudulent prescriptions.

Again, consumer health insurance fraud is not necessarily committed with criminal intent. It might be as simple as someone trying to help and uninsured friend or family member access necessary medical care.

Consequences of healthcare fraud 

Healthcare fraud affects everyone. It causes billions of dollars in losses and results in higher medical costs — and higher insurance premiums. And false claims and reimbursement payouts affect payer revenue streams.

Fraud can also have consequences for patient health. Unnecessary procedures and prescriptions can be dangerous — as can a lack of necessary medical care. Fraud can also result in inaccurate medical records, and medical identity theft can also lead to an early, unexpected exhaustion of a patient’s medical insurance coverage.

Ultimately, healthcare fraud is a crime, and offenders can be fined or imprisoned depending on the severity of the fraud.

Detecting and preventing healthcare fraud

Detecting fraud is difficult. Patients with health insurance are shielded from actual medical costs, and they’re not necessarily equipped with the knowledge to detect fraud and waste. So, it’s up to payers to discover fraud and system abuse, and it’s not always easy. Physicians have different billing practices, so variations between providers can’t automatically be labeled fraudulent, and differentiating between unintentional mistakes and deliberate fraud is not always a straightforward process.

Payers are turning to technology solutions for fraud detection and prevention. Data analytics platforms and artificial intelligence (AI) tools use large data sets to determine when and how fraudulent activity is likely to occur, and data visualization platforms provide a picture of said activity to help determine its prevalence and audit claims information.

Payers need strategies for detecting and preventing fraud that affects their revenue streams. Create an investigative team equipped with the expertise and technologies to combat fraud, and contact TruBridge for help implementing a fraud detection strategy for your organization.

Written by Cassie Wise
TruBridge Executive Director