Common Medical Frauds Around The World

Fraud is one of the major threats to the healthcare industry around the world. Every year, global healthcare spending loses an estimated US$455 billion due to fraudulent practices.

In 2012 in the United States, medical fraud cost Medicaid and Medicare around US$98 billion, raising the country’s total spending by 10%. In the EU, the healthcare system loses about €56 billion every year because of fraudulent activities. The World Health Organization (WHO) lists fraud as one of the leading worldwide disruptors of health services efficiency.

The first ones to be affected are the healthcare payers (both public and private) who pay or arrange for health or medical care goods and/or services. Medical fraud cuts into their bottom line. They have to charge higher taxes or premiums and pay lower rates to healthcare providers.

When private payers need to renegotiate with healthcare providers, the list of medical networks begins to shrink, which is even worse for business. In other words, medical fraud increases taxes and premiums, decreases budgets for healthcare providers, increases costs for everyone who needs medical care and lowers the quality of patient care.

Here are the six (6) most common medical frauds that occur around the world.

1. Medicare fraud

One of the most common Medicare fraud practices is performing services that aren’t really medically necessary to pad billing, which is illegal. The National Health Care Anti-Fraud Association (NCHAA) in the USA says that this type of fraudulent practice tends to be more prevalent in diagnostic testing procedures such as nerve-conduction and electromyography. Furthermore, according to Healthcare Finance, this is a significant issue in the USA with over $200M spent on Medicare fraud annually.

2. Upcoding

Upcoding takes place when healthcare providers intentionally bill for services or products that are more expensive and complex than the ones provided. While it’s true that upcoding sometimes happens accidentally when providers mistakenly enter incorrect codes, it’s often an intentional fraudulent action.

For instance, some medical device manufacturers produce a device that could be implemented with a more invasive, expensive procedure (or a simpler one) than what is actually provided. Some of these companies are guilty of advising healthcare providers such as surgeons to bill for the more invasive and expensive surgery than what they actually provide.

3. Billing For Unprovided Items Or Services

Billing for items or services that have not been provided is a clear and intentional act of fraud by a healthcare provider. The bill is for a patient appointment that never happened or for medical items or devices that a physician didn’t actually supply.

This type of medical fraud is a way for providers to divert funds into their wallets instead of going to serve those who are in real need of medical care. For example, manufacturers of medical materials forge prescriptions so as to double a product or service, for which it could then be billed for double the amount.

4. Doctor Shopping

In the United States, one side effect of prescription pain medication proliferation is doctor shopping. This is when patients visit multiple physicians to obtain multiple doses of the same controlled substances. They then illegally distribute the products to others or overuse them themselves. Opioids have killed over 33,000 individuals in the USA in 2015, far more than in any recorded year. Nearly half of these opioid overdose cases involved a prescription opioid.

In Europe and around the world, rates of addictions to prescription opioids are on the rise, in many cases attributed to aggressive marketing that hype benefits while, at the same time, downplaying harmful effects. Careless physicians’ prescription practices, as well as patient’s deceitful behaviors, contribute to the proliferation of prescription opioids. While some healthcare providers are now taking measures to combat doctor shopping, others just don’t have sufficient safeguards in place.

5. Unbundling

Unbundling is closely similar to upcoding. This refers to the illegal practice of submitting bills in a fragmented manner in order to maximize payments for procedures or test reimbursements that should have actually been billed together for a lesser cost.

One common example of this is when a hospital laboratory performs a panel of blood tests for a patient but instead of preparing a bill for the entire panel, the hospital tries to increase its revenue by separately billing each test.

6. Medical Identity Theft

The healthcare industry enjoyed many benefits when personal health information (PHI) was digitized. The move continues to improve and increase the efficiency of patient care. However, digitization has also increased the vulnerability of PHI to patient identity theft.

One continuing concern is the misuse of an individual’s medical identity to illegally obtain healthcare funds, services, and goods. The number of cases related to medical identity theft has increased in recent years and, unfortunately, each incident costs victims significant amounts to fix (around $13,500 says a 2015 study).

Final Thoughts

Medical fraud practices are dangerous. Fraud can affect the company-rated healthcare plan of any organization, particularly its claim history, rating, as well as the premium amounts that it has to pay.

Fraud even directly steals from self-insured plans. Because most medical services in the USA are funded through a payroll tax on both employees and employers, medical fraud directly drains taxpayers. Taxes are raised as more funds are needed, thus, affecting everyone.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes