Health Care Fraud – The Costly Deception?

For years significant resources have reportedly been directed towards combating health care fozia shan fraud by insurers, regulators, law enforcers and legislators. Yet, despite these reported efforts, it would appear, based on the annual estimates, the problem continues to grow and flourish.

Could this indicate that health care fraud is at epidemic proportions and can’t be stopped as our health care system is infested with health care providers who will stop at nothing to make a buck? I think not.

My experience, over two decades of working with insurers, law enforcers, regulators and health care providers, suggests that most health care providers are honest, ethical and strive to do the right thing!

Additionally, my experience has provided me with the opportunity to see the fraud problem from both sides, that of enforcement and the provider. When viewed from both perspectives, it is readily apparent that our health care fraud problem is caused by a number of factors, including:

Insurers, the main reporter and victim of the fraud, indicate that all policyholders pay for the fraud in the form of higher premiums. According to the National Insurance Crime Bureau, the average American household will pay $200 more every year in premiums to pay for the fraud.

Insurers are very aggressive in reporting how costly the problem is, revealing estimates of double-digit percentages of claims submitted that are fraudulent, and billions of dollars lost each year due to fraud. These reports and estimates weigh heavily in the minds of state insurance regulators when they allow insurers to raise premiums.

Basically, what insurers and others refer to when they reveal their estimates on the frequency and costs of health care provider fraud is the billing for services not rendered, billing for services that are substandard and/or unnecessary, billing for services that misrepresent the nature of the service provided, billing for services that misrepresent the actual service provider…

The sweeping nature of the attention health care providers are getting, even those not engaged in fraudulent activity, by insurers in post-payment audits is unprecedented, and may take away from the ability of our health care providers to do what they do best – make people better! It is unfortunate that today, health care providers may spend more time documenting and defending their services to a multitude of sources, to include insurers, regulators and law enforcers, then they do providing health care services to patients.

Health care fraud is a crime that should be dealt with swiftly, responsibly and severely! But, health care fraud should not be used as a vehicle for one to prosper at another’s expense. Insurers are in the business of making money, and they are doing just that, making money – making a lot of money! This money comes from premiums collected on the sale of policies to consumers seeking protection from future (unknown) losses.

Many insurers are in a position to limit their potential health care claims exposure as they possess the ability to tell insureds’ what doctor they can see, what treatment services they can get, and how much will be paid for the services.

Further, insurers may capriciously limit payment on health care claims denying health care services reported by health care providers, asserting the services were illegitimate, claiming the services were fraudulent. Many insurers conduct claims-evaluations, reportedly for the purpose of determining if the health care services rendered by the provider were usual, customary and/or reasonable (UCR). Consider that by definition, “fraud is the knowing and willful deception or misrepresentation of the facts with intent to receive an unauthorized payment.”

Wouldn’t such an evaluation be considered a fraud evaluation? It is purportedly done for the purpose of determining if the health care provider misrepresented the nature of the services provided and reported, i.e. fraud.

Unfortunately, the UCR evaluation seems to have little to do with actual fraud fighting, but everything to do with cost containment and the bottom line for insurers. These evaluations typically do not identify that the health care provider did not provide the reported services, but instead report subjective opinions of consultant providers who usually do not even see the patient. In many cases, insurers may successfully reduce the health care provider’s billings using UCR evaluations – not because the evaluations were accurate, but because the health care provider did not have the knowledge or necessary resources to fight back.

Check with your state insurance regulators and health care boards to determine if insurers refer their UCR evaluations to them for fraud investigations, and, if so, ask them how many. Ask your local law enforcers how many cases they investigate or prosecute that were based on UCR evaluations.

Further, ask your insurer what percentages of their estimated losses due to health care fraud include UCR evaluations. And, ask your insurer why, with their duty and ability to examine all claims, are they unable to do a better job in not paying fraudulent claims.

Interestingly, since the late 1980’s, health care providers have had a standard coding system. This system, known as Current Procedural Terminology (CPT), is used by providers to report and bill for health care services rendered to patients.

CPT was promulgated by the American Medical Association (AMA) so that all health care providers, regardless of discipline, could accurately report their services and be compensated for services rendered.

Although CPT has been around for decades, there are no standards of education and training required of health care providers for the proper use of the codes, or insurers for what the codes mean. This may lead to a systematic problem in our health care system, as an unnecessary adversarial system is created between our health care providers and health care payers based on an ‘attack and defense’ of billing codes and treatment records.

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