In 2007, $2.26 trillion was spent on health care, 3 percent of which (approximately $68 billion), according to National Healthcare Anti-Fraud Association (NHCAA) estimates, was attributable to health care fraud.1 FBI estimates are even higher, placing losses due to health care fraud as high as 10 percent of our nation's annual health care expenditures - a staggering $226 billion each year.2
Fraud is also prevalent in the property/casualty insurance arena. The Insurance Resource Council estimated in 2008 that between $4.8 billion and $6.8 billion in excess payments occur annually for automobile injury insurance claims due to fraud and unnecessary treatments or diagnostics. This is an increase of between $.5 to $1 billion since 2002 and represents 13 percent to 18 percent of the total payments made on auto claims.4
The impact of fraud manifests itself in higher premiums, lost benefits, inaccurate medical records and increased out-of-pocket health spending. These wasted dollars are just not figures on paper. They are real dollars, hard-earned dollars, taken from you and/or your patients just as if they were stolen from your wallets.
The Bureau of Labor Statistics found that average physician incomes decreased by over 7 percent between 1995 and 2003.5 One can safely assume that with the various changes in insurance reimbursement over the past six years, physician incomes are continuing to decrease.
At the same time that doctors are earning less, health care costs are uncontrollably escalating. There has been an increase in the number of the uninsured as unemployment has risen and people have lost their health insurance benefits. Families are under pressure to obtain and afford health insurance, while physicians struggle to maintain their income.
The Fraud Triangle
Given the opportunity and a way to rationalize wrongful behavior, those pressures can make it easier for a person to cross the line and engage in fraudulent activity. According to the Association for Certified Fraud Examiners, this behavior is an example of the "Fraud Triangle" [a theory credited to Dr. Donald Cressey]. One side of the triangle is the pressure the person is struggling under, one side is the rationalization that allows them (in their mind) to commit an illegal act, and the third side is the circumstances that create the opportunity to commit the fraud.
The pressure of lost income, inability to maintain a certain lifestyle, or loss of status in the professional community may be cited by fraudsters as conditions contributing to their illegal activity. Doctors and/or patients may rationalize unethical behavior by portraying the insurance industry as an evil and bloated corporate bureaucracy that won't miss or need the money taken illegally. The doctor may decide that due to their current financial problems, they have no choice but to commit a fraudulent act "to keep the office open" and will only engage in the illegal activity for a short period of time.
Unfortunately, an opportunity for the unscrupulous doctor to commit health care fraud is built into the system. In 2007, over 4 billion health insurance claims were processed in the U.S. For 35 million Medicare recipients, 1.2 billion claims are processed each year. That is roughly 574,000 claims per hour or 9,579 claims per minute. Few of these claims are touched by human hands; they are processed by computer. Because of this huge volume, insurance companies rely on the provider to submit proper claims. The payor relies on the doctor to be truthful in their care and billing.
Health Care Fraud in Action
Health care fraud has been defined as "A representation about a material point, which is false and made intentionally or recklessly and believed, resulting in damage to the victim." The "material false statement" is typically the false claim submitted for payment. "Intentional" deception indicates that the claim was not a mistake, but purposeful. "Believed" indicates that the payor relied on the doctor to submit an accurate claim. "Damage" indicates that payment or some other damage was caused. And the "victim" is typically the insurance company, payor of the false claim. Some of the typical false claims seen in chiropractic include:
- Upcoding of services, billing for a more extensive service than one that was provided. For example, billing for a five-region manipulation service (CPT 98942), when only a 1-2 region service was provided (CPT 98940), or billing for a comprehensive examination (CPT 99204), when a lower-level service (e.g., CPT 99202) was performed.
- Billing for services not rendered. Example: submitting claims for neuromuscular reeducation (CPT 97112) and/or exercise services (CPT 97110) that the patient did not perform or receive.
- Misrepresenting services to receive payment. Providing a non-covered service such as cold laser, and submitting a claim for therapeutic ultrasound (CPT 97035) to receive payment, etc.
- Providing medically unnecessary services. Services that the patient did not need for the purpose of generating insurance reimbursement. Examples might include certain mobile diagnostic schemes, manipulation under anesthesia schemes or massage therapy schemes.
We should all be concerned with health care fraud and abuse. We should be on the lookout for fraud and abuse in our own and other health care professions. If you suspect a peer is engaged in unlawful conduct, I believe you have a responsibility to take some action.
The insurance company is often the victim in health care fraud cases. Many times, the patient is also a victim. The patient of a fraudulent doctor may not receive the health care they need. The patient may receive health care they do not need. The fraudster may saddle the patient with erroneous diagnoses and fraudulent claims for services. This false information may remain a part of the patient's medical history and could affect the patient's insurability in the future.
Simple Steps to Fight Fraud
Examine your explanation of benefit (EOB) statements for the health care services you and your family receive. Make sure the services listed are accurate. Investigate discrepancies and report what you consider to be fraud/abuse to your insurance company. Instruct your staff and your patients to do likewise.
Each private payor has a telephone fraud hotline for reporting suspected problems. Referrals can be anonymous. Check with your state board to determine proper steps for reporting fraud by a peer. Doing nothing perpetuates the problem. It isn't just the insurance company's money, it's yours, too.
References
- "The Problem of Health Care Fraud." National Healthcare Anti-Fraud Association.
- Federal Bureau of Investigation: Financial Crimes Report to the Public, Fiscal Year 2007.
- "HCI Launches StopHealthCareFraud.com." Health Care Insight, June 22, 2009.
- "Fraud and Buildup Add 13 to 18 Percent in Excess Payments to Auto Injury Claims." Insurance Research Council. Nov. 24, 2008.
- U.S. Bureau of Labor Statistics, Community Tracking Study Physician Survey.
The opinions expressed in this article are the authors and do not necessarily represent the viewpoint, ideas or opinions of WellPoint, Inc., or any Blue Cross Blue Shield insurance company.
Dr. Howard Levinson, a 1984 graduate of Logan College of Chiropractic, is a certified fraud examiner, accredited health care fraud examiner and forensic chiropractor. He is a clinical director for the special investigations fraud and abuse unit at WellPoint, Inc., parent company to 14 Blue Cross plans.