The healthcare industry in the United States is enormous, and the capacity for fraud is significant. There are many methods in which individuals and organizations commit healthcare fraud, including identity theft, false billing, kickbacks, sham leasing agreements, ghost employees, upcoding services or devices for more expensive procedures than the work performed (e.g., billing for a surgery when it was only performed to diagnose an injury) and other types of overbilling.
The healthcare industry in the United States accounts for 17% of our nation’s GDP, and it continues to grow at an exponential rate. With more than half of all individuals having some form of insurance, healthcare fraud is an issue that affects everyone. The government agency tasked with combatting healthcare fraud is the Health Care Fraud and Abuse Control Program.
The growth of healthcare fraud is an ongoing concern for consumers, businesses, and the government. According to the Department of Health and Human Services (DHHS), healthcare fraud accounts for 10% of all fraud classes in the United States. There are many different schemes that individuals or organizations can employ to commit healthcare fraud. For example, individuals may submit false claims to get money from the government or private health insurance companies for services that were never performed or were not necessary. The U.S. Department of Justice (DOJ) states that other common types of healthcare fraud include:
– Upcoding/Upselling: billing for a more expensive service or procedure than the work performed.
– False Claims: making a claim to a third-party payer (i.e., a health insurance company, Medicare/Medicaid) for items or services that were never provided, not necessary, or were procured from an unauthorized source.
– Billing for Services Not Rendered: billing for services that were not provided at all.
– Ghost Employees: hiring an employee without reporting the employment to the insurer or employer to bill insurance companies or employers for services that were never rendered.
– Kickbacks: paying health care providers in return for using specific medical products, referrals, or other actions. The payments are often disguised as monetary rewards, free services, or gifts.
– Unbundling: splitting a medically necessary procedure to generate multiple claims for procedures that are generally not reimbursed separately when performed together.
– Stark Law Violations: billing Medicare for any part of an outpatient physical therapy service when the entire service is provided in one visit. It is justified only when the therapy is provided by a physician using an electronic visit verification system.
Ileana Hernandez of Manatt Phelps & Phillips Law Firm and a member of the firm’s healthcare litigation practice said that there are many different types of schemes or scams in which individuals commit healthcare fraud.
“One example would be an effort to defraud insurance companies by billing for unnecessary tests, procedures, or visits,” she said. “Another common form of fraud is billing insurance companies for treatments that were never delivered. And still another type of fraud is to hire employees without reporting the salaries paid or benefits provided as required by law.”
Hernandez noted that there are many different schemes involving the use of technology such as computers and electronic medical records (EMRs) that can be used to commit healthcare fraud.
“The new electronic medical records technology offers the potential of more efficient record keeping and better coordination of patient care,” she said. “It also can facilitate fraud by creating an electronic paper trail that makes it easier for fraudsters to conceal their activities.”
She added that healthcare has become a desirable target for criminals seeking money because the penalties are less severe than other white-collar crime offenses.
“[Healthcare fraud] is a huge business and will continue to be so as long as there are such large sums of money involved,” she said. “It is reported that healthcare insurers lose $100 billion every year due to medical claims fraud, waste, and abuse.”