Healthcare Fraud

As the population of America continues to age the healthcare industry will likely become the largest sector of the economy. With this increase in spending and reduced oversight, unscrupulous people will of course prey on the enormous amount of money the government, insurance companies, and taxpayers contribute to this vital industry.

Unfortunately, fraud in the healthcare industry is often overlooked by accountants or investigators without specific knowledge of common types of misappropriation. Therefore it is the duty of people within the industry to keep their cohorts honest by reporting on the theft they witness. Some common types of healthcare fraud include:

• Kickbacks and Self Referrals: Unscrupulous doctors will sometimes send patients back to themselves in order to receive additional payment from insurance companies; or they can be paid money for referring people to doctors who cannot help them
• Overcharging: Simply charging too much for services rendered
• Services not rendered: Charging for procedures not performed
• Upcoding and Unbundling: This complicated fraud involved taking Medicare/Medicaid service codes and submitting them individually; Medicare only pays for an x-ray if a disease is indicated, but not part of a checkup. Some doctors use this to increase reimbursement by claiming a disease without evidence.
• False Certification/Providing False Information: Claiming incorrect or wrong information in order to defraud Workers Compensation or similar program intended to aid patients.

 

Kickbacks and self referrals

The American medical industry is one of the largest industries in the world, with assets totaling billions of dollars. The government and private industries alike contribute significant dollar amounts in order to provide research and operational funding, but this endless bureaucracy is fraught with opportunities for dishonest individuals to take advantage of the system.

Doctors and medical companies often refer patients to each other in order to benefit from materials or increased spending in direct violation of the federal Stark Law. These organizations improperly arrange for patients to receive unnecessary treatment in order to defraud insurance companies and the government out of funds.

 

Overcharging

This most basic type of fraud is one of the most common. Doctors overcharge a patient for services rendered instead of charging the honest rate. These services can include overcharging for drugs, procedures, or simple items such as $40 for a thermal therapeutic device that is a $5 hot water bottle.

 

Services not rendered

Like overcharging, services not rendered is one of the simplest and most common forms of healthcare fraud. Doctors or institutions will demand payment from individuals or insurance companies in order to cover procedures, drugs, or items they did not provide.

Upcoding and Unbundling

One of the more complicated but no less common schemes to defraud the government, insurance companies and taxpayers has to deal with a procedure called upcoding and unbundling. A hospital or doctor that treats a patient who uses Medicare or Medicaid is reimbursed by the government for the services provided. These services have a specific code that the healthcare organization must submit to the government, so it is simple to substitute a more expensive code for a simple procedure and pocket the difference.

A derivation of the same type of fraud involves unbundling or fragmentation. The government reimburses healthcare organizations for groups of common tests, but unscrupulous organizations bill the government for these tests separately and keep the remaining funds.

 

Cost Reporting Fraud