The Ethical And Legal Conundrum Of Retroactive Insurance Billing

Insurance fraud is a deliberate deception perpetrated against an insurance company or agent for financial gain. Fraud may be committed by applicants, policyholders, third-party claimants, or professionals who provide services to claimants. Insurance agents and company employees may also commit insurance fraud. Retroactive billing for insurance can be considered fraud if it involves dishonest or questionable techniques such as charging for services not rendered, upcoding services, or misrepresenting facts on an insurance application. It is important to note that insurance fraud is a felony in many states and can result in significant legal consequences, including jail time, fines, and restitution.

Retroactive claim denials

• The claim was paid during the second or third month of a grace period.
• The claim was for a service that the member was not eligible for.
• The member failed to pay premiums on time or in full.
• The provider submits a corrected bill.
• The member did not notify the health plan of other insurance coverage.
• The claim was fraudulent, misleading, inaccurate, or incomplete.

Some states, including Maryland, impose restrictions on an insurer's ability to deny claims retroactively. In Maryland, insurers can only deny reimbursement for claims paid to a provider within a six-month period after the carrier paid the provider. However, this time limitation does not apply if the claim was fraudulent, improperly coded, a duplicate, or for services provided during a period when the Maryland Medical Assistance Program had permanently retracted capitation payment for the recipient.

Health insurance fraud

Fraud committed by the insured individual:

• Allowing someone else to use their identity and insurance information to obtain health care services
• Using benefits to pay for prescriptions that were not prescribed by their doctor
• Identity theft/identity swapping: Using another person’s health insurance or allowing another person to use your insurance

Fraud committed by health care providers:

• Billing for services, procedures and/or supplies that were never rendered
• Charging for more expensive services than those actually provided
• Performing unnecessary services for the purpose of financial gain
• Misrepresenting non–covered treatments as a medical necessity
• Falsifying a patient's diagnosis to justify tests, surgeries, or other procedures
• Unbundling—billing for each step of a procedure as if they are separate procedures
• Accepting kickbacks for patient referrals
• Waiving patient co-pays or deductibles and over-billing the insurance carrier or benefit plan

Auto insurance fraud

There are also various other types of auto insurance fraud, such as counterfeit airbags, windshield replacement scams, and towing scams. Additionally, premium fraud occurs when individuals fail to disclose all material information when obtaining an insurance policy, such as omitting a driver from the household or providing false information about the vehicle's garaging address.

To avoid becoming a victim of auto insurance fraud, it is important to be vigilant and aware of the different types of scams. Individuals should also be honest and transparent when applying for auto insurance or filing a claim, reporting events exactly as they happened.

Fraud by deception

• False or inflated claims: This involves exaggerating a legitimate claim or filing a false claim for damage, theft, or injury that never occurred.
• Unlicensed insurance: Selling insurance without a license is illegal in many places and often leaves consumers without the promised coverage.
• Health care provider fraud: Doctors and hospitals may commit fraud by over-billing, billing for services not provided, or performing unnecessary procedures.
• Agent fraud: Insurance agents may commit fraud by selling fake policies, lying on applications, or keeping premiums for personal use.
• Staged accidents: This involves deliberately causing an accident or loss to claim insurance money.
• Premium diversion: This is when an insurance agent fails to send premiums to the underwriter and instead keeps the money for themselves.
• Asset diversion: This occurs during the acquisition or merger of an insurance company, where the subject uses the acquired company's assets to pay off debt, then diverts the remaining assets.
• Workers' compensation fraud: This includes employers misrepresenting payroll or worker duties to pay lower premiums, and workers claiming benefits while working or for injuries that didn't occur on the job.

Insurance fraud is a serious crime that can result in felony charges, jail time, fines, and restitution. It is important for consumers and insurance professionals to be aware of the different types of fraud to recognize and prevent them.

Fraud by company officials

Unauthorized insurance plans are those that are not authorized by the relevant state department of insurance. For example, in Texas, individuals must be licensed to sell insurance in the state. The only exception is for surplus lines carriers, which are out-of-state companies that insure unusual or hard-to-place risks.

Company officials may also engage in fraudulent health plans, such as offering a health-sharing plan and calling it insurance when it is actually an unregulated, non-insurance product.

Additionally, employees of legitimate insurance companies can deceive consumers for personal gain. For instance, an unscrupulous agent could collect premiums from a customer without delivering the insurance policy to the company, or the company could cancel or refuse to renew the policy.

Signs of fraud with reputable companies include the failure to receive an insurance identification card or a copy of the written policy in a timely manner. Consumers should also be wary of agents or brokers using intense sales pressure tactics, such as urging a consumer to buy a policy immediately with the claim that the price may change.

Frequently asked questions