Does Medical Fraud Drive Up Insurance Costs?

Medical fraud is a crime. Medical personnel who commit medical fraud lie about doctor visits and services, billing and procedures to turn a profit. It is mostly a professional or "white-collar" crime, although not exclusively. The cost of these crimes are passed along to the taxpayer in the form of higher medical costs and insurance premiums. Both state and Federal programs like Medicaid and Medicare are routinely affected. What are common types of medical fraud? What laws do they fall under and how much is it costing you? How can you make sure that you're not victimized?

Types of Medical Fraud

This isn't an inclusive list, but these are four common types of medical fraud that are costing you money:

  • Medical identity theft: this is more of a cover-all term. It simply means that your identity is being "misused" to garner health benefits such as goods, services or money.
  • Unnecessary billing: billing that is not classified as a medical necessity.
  • Fragmentation billing: splitting up billing unnecessarily in order to gain profit.
  • Coding: medical codes that are used to bill for goods or services that gain higher profit. This is also known as upcoding.

What Laws Cover Medical Fraud?

Fraud cases are covered under both state and Federal laws. Recent law cases include indictments for phony prescriptions, doctor visits and medical kickbacks. Federally, the Federal Bureau of Investigation (FBI) combats medical fraud utilizing various government task forces. You can find more information about Federal law and medical fraud by reading about the False Claims Act (31 USC §§3729-3733). Twenty-nine states currently have some type of False Claims Act at the state level to help them recover monies lost to fraud.

How Much Is Fraud Costing You?

According to the FBI, medical fraud costs taxpayers tens of billions of dollars annually.

What Can You Do About It?

Don't fall victim to medical fraud:

  • Always look over your medical statements thoroughly. Do not be timid about asking for itemization about durable medical goods or other supplies. Mistakes happen. You might be charged for an aspirin that you didn't receive at the hospital because you are allergic. That's not medical fraud. What you are looking for are services or goods that aren't received and that you are billed for.
  • Don't give out personal information without a good reason. Never give your Social Security Number, Medicare, or Medicaid information over the phone to a stranger. Report lost or stolen cards immediately to mitigate medical identity theft.
  • Free medical services are not coded or billed. Therefore, no one needs to see or copy your insurance card.
  • Check your credit report to see if you have any collection activity. Those committing fraud using your name will not be paying their bills.

These steps will help protect you against medical fraud. By protecting yourself, you are protecting others. Costs will stay lower and you'll have peace of mind. Don't be a victim.