Fraud and Abuse in the Current U.S. Health Care Environment

Alex is a college student who makes great grades, is active in his college fraternity and has excellent health care coverage. One day, Alex gives his insurance card to a friend in his fraternity house because his friend broke his arm in an intramural basketball game, but doesn’t have health insurance.

A couple weeks later, Alex is in a car accident and taken unconscious to the hospital. Doctors decide he needs a blood transfusion. Unfortunately for Alex, he’s been taken to the same hospital his friend visited to get his cast, so the information on file attached to his insurance lists his blood type as that of his friend’s — and it doesn’t match his. Luckily for Alex, his mother shows up and tells the doctors that they have the incorrect blood type information. I don’t know the effects of transfusing the wrong blood type into someone’s body, but I can certainly imagine it wouldn’t be good.

Christopher Deery, CFE, director, Corporate and Financial Investigations at Independence Blue Cross, shared this frightening story during his session, “Fraud and Abuse in the Current Health Care Environment.” And even more terrifying is that variations of this scheme are happening in the U.S. because sharing insurance cards has become all too commonplace.

According to Deery, this is just one problem we’re facing in the current volatile U.S. health care environment. “The amount of money we spend in this country on health care is more than the GDP in England,” said Deery. “That’s going to do nothing but grow.”

With so much money being spent on health care, fraudsters are finding opportunities to abuse the system. According to Deery, some of the most common health care fraud schemes include:

  • Services not rendered
  • Practicing without or outside scope of license (phantom providers)
  • Misrepresentation of services (upcoding, unbundling, non-covered services like visiting a spa or personal training)
  • Obtaining billing information for non-patients
  • Material misrepresentations during enrollment:
    • According to Deery, there’s been a significant increase in this type of fraud with the individual market. “From a fraud perspective, the ACA [Affordable Care Act] had the biggest impact on the individual health insurance market,” said Deery.
  • Adding false spouses and/or dependents
  • Submissions of false claims
  • Prescription drug fraud, waste and abuse

So how are insurance companies and health care providers combating these schemes? According to Deery, most, if not all, payers have special investigative units (SIUs) dedicated to investigating fraud. In fact, some states and member groups mandate it. And while staffing and reporting structures vary greatly, from law enforcement and investigative backgrounds, to health care professionals or even certified coders and data analysts, the changing health care fraud landscape is causing providers to up their games.

“If you’re not involved in looking at big data in this space, you really have no shot,” said Deery. He explained that the teams that work best in this space are integrating a more hybrid group — and the most successful groups usually have a stellar group of data analysts.

Unfortunately, there’s no one-size-fits-all solution to combating health care fraud. But Deery explains that knowing where the industry is heading and being flexible can help professionals recognize the red flags of fraud in the changing health care environment. According to Deery, there’s significant and increasing money at stake, so the health care industry will continue to be a prime target for individuals looking to obtain significant financial benefit from fraudulent activities. “The fluidity and uncertainty of the ACA and Medicaid expansion have created an environment where organizations, and the SIUs that attempt to protect their assets, need to be robust and flexible,” he said.