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March 14, 2011

What is the Real Cost of Health Care Fraud?

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The National Health Care Anti-Fraud Association (NHCAA) defines health care fraud as an intentional deception or misrepresentation that the individual or entity makes knowing that the misrepresentation could result in some unauthorized benefit to the individual, or the entity or to some other party.

In the United States, it is estimated that almost $226 billion a year are spent on health care fraud. That is 10% of the nation's health care expenditure. Therefore; consumers have higher premiums and out-of-pocket expenses, also reduced benefits and coverage. As for employers, they have increases in the cost of providing insurance benefits to their employees, as well as increasing the overall cost of doing business.

The Coalition Against Insurance Fraud claims that two out of five Americans want little or no punishment for insurance cheats. Consumers blame the insurance industry for its fraud problems because they believe insurers are unfair.
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The Journal of the American Medical Association, claims that almost one-third of doctors exaggerate the severity of a patient's illness to help the patient avoid early discharges from a hospital.

Categories of Fraud:
- Hard Fraud - this occurs when someone purposely plans or invents a loss. For example: staged automobile accidents. The "victim" obtains an attorney, who in turn refers the victim to a physician. The physician then submits charges to the insurance carrier and refers the victim for additional physical therapy. The physical therapy physician then also submits charges to the insurance carrier.
- Soft Fraud - this occurs when policy holders exaggerate a legitimate claim. For example: receiving treatment for a slip and fall accident on 2/1 and submitting that claim to insurance carrier and then changing that same service charge to 2/4 and resubmitting the claim.

The most common fraudulent acts are:
- The billing of late charges by a hospital
- False durable medical equipment claims (DME)
- Behavioral health fraud
- Medical identity theft
- Billing for services, procedures and/or supplies that were never provided or performed
- The condition treated or the diagnosis made
- The charges for services, procedures and/or supplies provided or performed
- The deliberate performance of medically unnecessary services for the purpose of financial gain

The cost of insurance fraud is factored in to the premiums we all pay. In order to lower these premiums, the laws against health care fraud must be tougher. Penalties must be instituted by both federal and state governments. As of the year 2010, only 40 state fraud bureaus exist. In order for health care fraud to be less common and less costly for each citizen in general, each state should have a fraud bureau. It is easier to prevent fraud than to recover payments once they have been made.

We, as consumers, can also do our part to lower health care fraud. We must never sign a blank insurance form. We must comprehend all claim forms we complete. We must request detail bills, or HICFA/UB 92 billing statements and we must always keep our insurance information confidential.

If you need to report health care fraud, please call your insurance company immediately. Also, contact your state insurance fraud bureau and file a complaint with the State Medical board.