What is Medical Fraud and How Can You Spot It?

Medical fraud in the United States healthcare system costs an estimated $68 billion each year, according to The National Health Care Anti-Fraud Association. That’s roughly 3 percent of the $2.26 trillion in what the nation spends on healthcare annually. Medical fraud contributes to waste in the U.S. healthcare system, which represents a quarter of total medical care spending.


Medicare programs are prime targets for medical fraud, as are senior citizens, many of whom utilize Medicare programs. Healthcare fraud, also known as medical fraud, is classified as a white-collar crime by the FBI (Federal Bureau of Investigation) and usually involves a motivation for profiting off of false healthcare claims.


How Can You Spot Medical Fraud?

Have you ever noticed that your medical bills include codes for each diagnosis and procedure? This is an important component of controlling medical spending and preventing fraud. Items billed incorrectly constitutes medical fraud, which is why your healthcare provider is so rigid about those medical codes.


Because medical fraud contributes to such a large amount of healthcare spending, insurance companies, medical practices, and the federal government take it seriously. In addition to using traditional medical fraud investigators, these entities now use healthcare fraud software to help with fraud detection. Medical fraud investigators now typically review the results of medical fraud software as part of their routines.


Additionally, the FDA (U.S. Food & Drug Administration) reports scams of unregulated and knock-off medications that can harm you. Furthermore, these medications cannot be legally covered by your insurance or your FSA (flexible spending account), and doing so may constitute medical fraud.


Where Should You Report Healthcare Fraud?

If you suspect you’ve been scammed by a person or business claiming to help lower your medical costs, or if your insurance paperwork does not match services rendered, you should clarify your treatment versus medical codes with your insurer. If it seems like healthcare fraud is at play, you should report it to your insurance company’s fraud department.


When this isn’t possible, the FBI can take your fraud report or give you further direction about where to report medical fraud. If you are somehow involved in a larger scheme, the FBI may also be interested in your experience. The FDA also handles aspects of medical fraud when federally unapproved medications are involved.


What are the Consequences of Medical Fraud?

For an individual or organization knowingly committing medical fraud in the United States, consequences are dire. The FBI arrests and reports on those committing fraud. If caught, an individual accused of medical fraud typically engages a high-cost healthcare fraud attorney to defend them in court. Even if the fraud is unsuccessful, the conspiracy to commit medical fraud is enough for trial and possibly conviction.


If a healthcare provider commits medical fraud, they may face the usual fines and jail time, but may also use their license to practice medicine via the 18 U.S.C. 1347 Health Care Fraud law.

Following court, those convicted of medical fraud face high fines and extensive prison sentences. The FBI and other government organizations issue public reports concerning individuals convicted of fraud, and like most crimes leading to imprisonment, prison detention can affect an individual’s ability to gain employment once they are free.


Ultimately, medical fraud has another big consequence for Americans: an increase in the cost of already expensive medical care. To compensate for medical fraud, insurance costs creep, and those costs are passed on to employers sponsoring healthcare for employees and individual insurance consumers.


Contemporary Medical Fraud Detection Practices

To prevent further healthcare fraud, many institutions now use healthcare fraud software. This software highlights potential medical fraud, alerting the auditor who may pass the information on to a medical claim fraud investigator at an insurance company or federal agency. Using AI (artificial intelligence) to review potential healthcare fraud is a smart move in keeping up with the rising instances occurring during the COVID-19 crisis and beyond.

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