Health Insurance Articles

How Insurance Fraud Raises The Cost Of Health Insurance

2011-06-11

Health insurance has become a leading topic in recent years. The idea of health insurance being accessible to a larger population has been a subject of political debate. Despite the differing views on this subject, one thing remains clear. Health insurance costs continue to rise due to insurance fraud.

Fraud can range from small cases here and there to schemes involving several people. Some who commit them may not think much of it if there is not a lot of money being defrauded. The problem is there are several cases of insurance fraud occurring across the country and can add up. In some government programs, one in seven claims may involve fraud.

The most common form of insurance fraud is filing false claims. Fraud involves intentional deception with the intent of financial benefit. one way is billing for services that are not rendered. Those who commit fraud almost rely on the system itself to assist them. Thousands of claims for health insurance are submitted every year. The sheer volume makes it difficult to identify which are fraudulent. Double billing occurs by charging more than once for the same service. Billing separately for charges covered under a single fee in another form of fraudulent billing. Intentional miscoding takes place where a single code for billing is left out. All of this can make it difficult to weed out the fraudulent claims.

Fraud can be committed by both patients and medical providers. Insurance fraud can occur not only with billing for services not rendered but also with misrepresenting what was provided and the service involved or even providing unnecessary tests. Claims may be filed on patients that do not exist. Tests and procedures that were not even necessary could also be filed on. False diagnosis and even changing a diagnosis have been committed.

In some areas, there have even been schemes uncovered involving collusion of lawyers and physicians. They work together to file false insurance claims by recruiting people to develop either true or fake auto accident claims or workers compensation cases. Physicians set up false exams, testing and diagnosis. Attorneys begin negotiations on settlements for these schemes. The individuals initiating the claims may be part of the plan or unknowing participants who think they are receiving legitimate services. The complexity scheme makes it look more legitimate and everyone gets a cut from the false claims.

There are many reasons why insurance fraud has a direct effect on health insurance cost. False claims can be paid without being detected. Claims can be paid and then discovered to be fraudulent after. The cost of investigation and prevention of insurance fraud is carried by the health insurance provider.