Dr. Mehmet Oz, in his Senate confirmation hearing regarding his nomination to be the next administrator of the Center for Medicare and Medicaid Services, said that he would prioritize uprooting fraud and abuse in healthcare.  What is fraud and abuse, how extensive is it, and what are the economic consequences?

What Is Fraud and Abuse in Healthcare?

Fraud in healthcare is defined as intentionally deceiving an insurance provider to get money for services or supplies that are not due.  Examples include: 

• – Misrepresentation of the type or level of service provided
• – Misrepresentation of the individual rendering service
• – Billing for items and services not rendered
• – Billing for items and services not medically necessary
• – Unbundling
• – Upcoding

Unbundling refers to charging for each service or item when one overall intervention is the basis for the appropriate bill.  For instance, the bill for an appendectomy includes all services and items under one rubric.  Unbundling would mean that the patient is charged for IVs, pain medications, sleeping pills, etc. individually—a much more lucrative way to bill.

Upcoding refers to billing for a service at a higher level than is justified.

Examples

Here is a sample of indictments/convictions/settlements for one week at the end of February this year regarding fraud and abuse in healthcare.

– A chiropractor in Illinois was convicted of billing for neurostimulators that were never provided.  The cost to Medicare was $1.5 million. 

– An advanced care practitioner was convicted of “providing” therapy adjuncts such as braces and physical therapy.  None of this occurred, while Medicare and Medicaid were billed $10 million.

– A counsellor was convicted of submitting fraudulent claims totalling $1.6 million.  The services were never provided.

– In September of 2021, a couple admitted to a fraud scheme that billed the government over $10 million for fake home and health services.  They were able to get personal information of recently deceased patients from obituaries.  Each received over 10 years in prison.

– A psychiatrist in Miami pleaded guilty in 2016 to multiple healthcare fraud-related counts of conspiracy.  The scheme  included entering false psychiatric diagnoses into the medical records of patients. These diagnoses resulted in more than $20 million in false disability payments.

The FBI conducted all of the above investigations, which are a small sample of fraud that was uncovered.  It typically brings ten cases of medical fraud per week to the justice system.  

What to Do

You can do your part in preventing fraud and abuse.  If your health insurance card turns up missing, call your insurer immediately.  Check your monthly statements.  If you are being billed for goods or services you never received, call your insurer.  If you are contacted (either by phone or email) about “free” medical services, it is almost certainly a scam.

Impact 

Total expenditure for health care in the US is about $1.7 trillion.  Fraud is a least $100 billion of this figure, which means that about six percent of our healthcare dollars go to bad actors.  Economists believe this figure is grossly understated.

The government hotline for possible fraud is 1880 447 8477.  The Medicare fraud hotline is 1800 633 4277.