Health care fraud is a type of white-collar crime that involves the filing of dishonest health care claims in order to turn a profit. Fraudulent health care schemes come in many forms.
Practitioner schemes include:
- Individuals obtaining subsidized or fully-covered prescription pills that are actually unneeded and then selling them on the black market for a profit
- Practitioners billing for care that they never rendered
- Filing duplicate claims for the same service rendered
- Altering the dates, description of services, or identities of members or providers
- Billing for a non-covered service as a covered service
- Modifying medical records
- Intentional incorrect reporting of diagnoses or procedures to maximize payment
- Use of unlicensed staff; accepting or giving kickbacks for member referrals
- Waiving member copays
- Prescribing additional or unnecessary treatment
Health care fraud committed by members may include:
- Providing false information when applying for programs or services
- Forging or selling prescription drugs
- Using transportation benefits for non-medical related purposes
- Loaning or using another’s insurance card
When health care fraud is committed, the health care provider passes the costs along to its customers. Because of the pervasiveness of health care fraud, statistics now show that between 3 to 10 cents of every dollar spent on health care goes toward paying for fraudulent health care claims.
Most states have laws that require health care insurance to pay a legitimate claim within 30 to 60 days. The United States Department of Justice, the Federal Bureau of Investigation, the U.S. Department of Health and Human Services - Office of the Inspector General (HHS-OIG), the U.S. Postal Service - Office of the Inspector General (USPS-OIG), among others, are charged with the responsibility of investigating healthcare fraud. However, because of the requirements to pay within 30-60 days, these agencies rarely have enough time to perform an adequate investigation before an insurer must pay.
A successful prosecution of a health care provider that ends in a conviction can have serious consequences. The health care provider faces incarceration, fines, and possibly losing the right to practice in the medical industry.
Violators may be prosecuted under 18 U.S.C. 1347 - Health Care Fraud
See also: Healthcare Fraud Data Mining Methods: A Look Back and Look Ahead
[Last updated in July of 2023 by the Wex Definitions Team]