What is Being Done About Health Care Fraud?

Posted on Monday, May 20, 2019

Regardless of occupation or employment status, we should all be worried about rising health care premiums. The reasons for the increase vary, but a big part of the problem is health insurance fraud. In monetary terms, health insurance fraud these days is approaching the $80 billion mark, and that affects us all.

Fraud Takes a Variety of Forms

The most common form of insurance fraud is disability shirking. Workers pretend to be hurt, and collect benefits from the pool of disability funds even though they are not legitimately injured and are able to return to the workforce.

Sometimes health care workers are either complicit in the fraud, or are outright abusing the system themselves, with double billing and fraudulent billing codes to collect payment for treatments never provided. In one case, officials in Miami, Florida arrested 30 people in a sweeping sting designed to fight insurance fraud.

This sort of fraud rips off taxpayers and everyone else in the risk pool, who depends on the continued solvency of those companies to protect them when the need arises. Ultimately, those who pay the price for insurance fraud are the insured.

Other forms of fraud include staged car wrecks, arson and deliberate damage to property. Individuals have even been known to fake their own deaths to split life insurance premiums with beneficiaries who help perpetrate the scam. 

A less well understood form of fraud is a direct consumer rip-off. Some dishonest agents will solicit health insurance that is priced ridiculously cheap, or offer coverage to people who could not get coverage elsewhere. The company collects the premiums for a while. But when the client has a claim, they discover there is no money available to them.

In this type of fraud, it frequently turns out that the company has no license to operate in the state, or the insurance agent was operating without a license. Often there are few or no assets with which to pay off the claim or make defrauded investors whole.

Combating Fraud is a Joint Effort

Insurance agents are generally astute, but may also be fooled by clever rip off artists. To help fight this growing fraud, a consortium of regulators, health care professionals and insurance companies announced the formation of an anti-fraud partnership, the Coalition Against Insurance Fraud. The goal: ultimately, to protect consumers.

This not-for-profit organization charged with combating criminal fraudsters is comprised of representatives of the National Association of Insurance Commissioners, the Department of Health, Department of Justice, anti-fraud organizations and insurance executives.

In addition to federal efforts, state prosecutors are actively going after those suspected of committing insurance fraud. They have set up 37 separate fraud bureaus in 45 states, according to the Coalition Against Insurance Fraud, with the purpose of nailing criminals violating state laws.

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