Paul Sanchez
Health insurance fraud is a serious issue that affects everyone, causing billions of dollars in losses each year. It can take many forms, including billing for services not rendered, “upcoding”, performing unnecessary procedures, double billing, and prescription fraud. Committing health insurance fraud can result in felony charges, jail time, fines, and restitution. To protect yourself, it's important to review your Explanation of Benefits (EOB) and report any discrepancies or concerns to your insurance company and relevant authorities. With the complex nature of healthcare systems, it's also possible to unintentionally commit fraud, so staying vigilant and informed is crucial.
| Characteristics | Values |
|---|---|
| Committers of health insurance fraud | Medical providers, patients, and others |
| Who investigates health insurance fraud | FBI, Insurance groups such as the National Health Care Anti-Fraud Association, the National Insurance Crime Bureau, and insurance investigative units |
| Examples of health insurance fraud | Submitting multiple claims for the same service, Billing for services that were never rendered, Performing medically unnecessary services, Creating or using forged prescriptions, Phantom claims for services or supplies that were never provided, Using someone else's medical insurance information to obtain services or supplies, Falsifying signatures or medical records, Duplicate claim submissions |
| Punishments for health insurance fraud | Felony charges, restitution, jail time, fines, paying back the money fraudulently obtained |
| How to report health insurance fraud | Call your insurance company, Contact your State Insurance Fraud Bureau, File a complaint with the State Medical Boards, Visit the FBI's Internet Crime Complaint Center (IC3) |
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What You'll Learn
Health care fraud is a federal crime
Health care fraud is a serious federal crime that can be committed by medical providers, patients, or others who intentionally deceive the health care system to receive illegal benefits or payments. It is defined as knowingly and willfully executing or attempting to execute a scheme to defraud any health care benefit program or obtain money from a health care benefit program through false or fraudulent pretenses, promises, or representations. This includes Medicare, Medicaid, Tricare, CHIPS, and any other federal health care program. The FBI is the primary agency for investigating health care fraud for both federal and private insurance programs, and it works in partnership with insurance groups and investigative units.
The key element of a federal health care fraud charge is the intent to defraud. This means that the defendant must have knowingly and willfully executed or attempted to execute a scheme to defraud, with the understanding that their actions could result in obtaining money or services to which they were not entitled. Simply making a misrepresentation (written or oral) to an insurer with the knowledge that it is untrue is sufficient to demonstrate intent. Additionally, the use of mail, telephones, the internet, or other services in the commission of the crime can result in additional charges beyond health care fraud.
There are several specific types of health care fraud that are commonly prosecuted, including:
- Not providing the services claimed
- Providing services that were not medically necessary
- Charging more for services than was allowed ("upcoding")
- Services based on illegal kickback arrangements
- Double billing or submitting multiple claims for the same service
- Phantom billing for services or supplies the patient never received
- Unbundling or submitting multiple bills for services that could have been bundled
The consequences of health care fraud can be severe, with violations resulting in prison sentences of up to 10 years and fines of up to $250,000. Additionally, those convicted of health care fraud may be required to pay back the money fraudulently obtained and may face other penalties such as probation, community service, or confinement in county jail. Health care fraud is not a victimless crime, as it affects individuals, businesses, and society as a whole, causing tens of billions of dollars in losses each year and leading to increased health insurance premiums, unnecessary medical procedures, and higher taxes.
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Examples of health insurance fraud
Health care fraud is a federal criminal offense that can result in a prison term of up to 10 years, with significant financial penalties. If the fraud results in injury or death, the prison term can increase to 20 years or life, respectively. Health care fraud is committed by medical providers, patients, or others who intentionally deceive the system to receive illegal benefits or payments. It affects everyone and causes billions of dollars in losses annually, leading to increased health insurance premiums, unnecessary medical procedures, and higher taxes. Here are some specific examples of health insurance fraud:
Double Billing
This involves submitting multiple claims for the same service, obtaining payment from two sources, such as billing both the insurance company and a pharmaceutical company for a drug study.
Phantom Billing
Phantom billing refers to billing for services or supplies that the patient never received.
Unnecessary Medical Procedures
Some healthcare providers perform unnecessary surgeries or procedures on patients to collect insurance payments. For example, a Virginia OB/GYN was accused of performing hysterectomies, dilation and curettages, and removals of ovaries and fallopian tubes without medical justification.
Forged Prescriptions
Creating or using forged prescriptions is a crime. Prescription fraud has financial consequences and contributes to the opioid addiction crisis, leading to thousands of lives lost each year.
Falsified Claims
Legitimate insurance information is used to submit falsified claims, such as billing for pneumonia testing when the patient only received treatment for a common cold.
Free" Services
Beware of services that ask for your health insurance information in exchange for something "free." These services are often not free and may fraudulently charge your insurance company. Always verify the dates, locations, and services billed to ensure they match what you received.
Identity Theft
In some cases, health insurance fraud can involve identity theft, as seen in a case where a home health agency owner was sentenced for Medicare fraud and identity theft.
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Who commits insurance fraud?
Insurance fraud is a "specific" intent crime, meaning that the perpetrator knowingly commits an act to defraud. It involves an intentional act of deception, concealment, or misrepresentation of information to obtain illegitimate financial gain. This can occur during the application or claims process, or when an insurer wrongfully denies a legitimate claim. Insurance fraud can be committed by both individuals and organizations.
Individuals who commit insurance fraud may be motivated by greed and the perception of low risk compared to other criminal activities. They may exaggerate or lie about information on an application or claim, omit relevant details, or stage accidents to obtain payouts. This includes auto accident fraud, where individuals pad their claims or file claims for accidents or thefts that never occurred. Seniors are often targets of insurance fraud, especially regarding life and health insurance.
Organizations that commit insurance fraud include illegitimate insurance companies, dishonest insurance agents, and healthcare providers. Fraudulent insurance companies may sell bogus policies at low prices with no intention of paying claims, luring in consumers looking for affordable options. Dishonest insurance agents may commit premium diversion, keeping policyholders' premium payments instead of sending them to the insurance company. Healthcare providers may engage in provider fraud by billing for services not rendered, performing unnecessary procedures, or over-billing insurance companies.
According to the FBI, non-health insurance fraud costs an estimated $40 billion per year in the United States, impacting insurance premiums for families. Insurance fraud is a felony, and those convicted face multiple felony charges, restitution, and jail time.
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How to identify insurance fraud
Insurance fraud investigations can be challenging and time-consuming, but there are several red flags and common schemes that can help identify fraudulent activity. Here are some ways to identify insurance fraud:
Common Schemes
Insurance fraud can be committed by both consumers and providers. Some common schemes used by consumers include:
- Exaggerating or inflating genuine claims to negotiate higher payouts.
- Filing false claims for damages that occurred before the policy began.
- Providing fraudulent repair estimates from non-existent businesses.
- Filing claims for items or property they do not own.
- Lying about their entitlement to benefits or payments.
Healthcare providers may commit fraud by:
- Billing for services that were never rendered, using genuine patient information or identity theft.
- Charging for more expensive procedures than were performed ("upcoding").
- Performing unnecessary medical procedures to generate insurance payments.
Red Flags and Detection Methods
- Layering: Using multiple cash equivalents, such as money orders from different banks, to make payments on a policy.
- Structuring: Making multiple large cash deposits within a short period, staying below the $10,000 reporting threshold.
- Suspicious Policy Changes: Regular or abnormal policy changes by insurance agents or sellers may indicate premium diversion or fee churning.
- Inconsistent Claims: Discrepancies in dates, locations, and services billed compared to what was received.
- Data Analytics: Insurance companies use data mining, machine learning, and pattern recognition to identify potential fraud.
- Social Media Scrutiny: Social media checks can help uncover hidden details and identify suspicious behaviour.
Preventative Measures
To prevent insurance fraud, insurance companies should:
- Streamlined Onboarding: Verify customers and validate their personal information and documentation.
- Monitor Transactions: Keep track of transactions and agent behaviour to identify suspicious activity.
- Clear Documentation: Provide clear information to clients about agent responsibilities and typical conduct to help them recognise unusual behaviour.
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What to do if you suspect fraud
Health care fraud is a serious issue that affects everyone, causing billions of dollars in losses each year. It can lead to higher health insurance premiums, expose individuals to unnecessary medical procedures, and increase taxes. The FBI is the primary agency investigating health care fraud for federal and private insurance programs, in partnership with insurance groups and investigative units.
If you suspect health insurance fraud, here are some steps you can take:
- Be vigilant: Stay informed about common insurance fraud schemes and scams. Be cautious of unsolicited calls, emails, or texts asking for personal information or payment.
- Verify the source: If you receive a call or email, verify the caller's identity and confirm that they are authorized to request information. Ask for their name, employer details, and contact information.
- Protect your information: Do not share personal information, such as your Social Security Number (SSN), banking details, credit card numbers, or health information, with unverified sources.
- Review your statements: Regularly check your Explanation of Benefits (EOB) to ensure the dates, locations, and services billed match what you received. Report any discrepancies to your health insurance provider.
- Report suspicious activity: If you suspect fraud, report it to the appropriate authorities. You can contact your local Blue Cross Blue Shield (BCBS) company, the FBI's Internet Crime Complaint Center (IC3), or the California Department of Insurance (CDI) Enforcement Branch, depending on your location.
- Seek official assistance: Connect with trusted partners, such as official government websites or certified application counselors, to obtain unbiased help and information about health coverage.
- Stay alert for scams: Be wary of "free" services or offers that seem too good to be true. Illicit entities may use this tactic to obtain your personal information or fraudulently charge your insurance company.
- Report robocalls and telemarketers: If you receive recorded calls or robocalls that seem fraudulent or malicious, hang up immediately and block the numbers. Report these calls to federal agencies, such as BCBS companies, to help investigate and reduce insurance fraud.
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Frequently asked questions
Health insurance fraud is when someone knowingly lies to obtain a benefit or advantage to which they are not otherwise entitled or someone knowingly denies a benefit that is due and to which someone is entitled. It can be committed by medical providers, patients, and others who intentionally deceive the health care system to receive illegal benefits or payments.
Health insurance fraud affects everyone and causes billions of dollars in losses each year. It can raise health insurance premiums, expose you to unnecessary medical procedures, and increase taxes.
Committing health insurance fraud is a felony and can result in multiple felony charges, restitution, and jail time. You may have to pay back all of the money fraudulently obtained and pay various fines.
Health insurance fraud occurs when you knowingly lie or make a false statement to obtain a benefit or payment. This could include exaggerating a claim, providing false information, or filing a claim for something that was not covered by your insurance. If you are unsure, you can contact your insurance company or a legal professional to review your specific situation.
