Many states, perhaps through lobbying efforts of doctors and hospitals, have legislated rules for the quick payment of medical claims. Such laws may potentially be a factor in the growing amount of fraud loss in medical billing. The estimated healthcare fraud, according to the U.S. Department of Health & Human Services, is between $77 billion and $259 billion annually. With the advent of the Affordable Care Act of 2010, expansion of Medicare (especially as the “baby boomers” reach retirement age) and expansion of Medicaid in many but not all states, medical-bill-related fraud is growing.
A 20th-century patient saw a physician, paid the bill and submitted it for reimbursement to an insurance company, securing advance clearance for payment for any out-patient or hospital services if necessary. Today, after the physician or other health-care provider scans a patient’s insurance cards, he or she receives treatment and departs. The patient rarely sees the bills submitted to the insurer or government, but may occasionally receive a separate bill from the physician, hospital or service provider for deductible amounts, co-pays or amounts not covered by the plan. But rarely does the patient see the actual original billing.
Medical bill payors, such as Medicaid, Medicare or private insurers, are pressured to pay quickly. Rarely is there any communication between payor and patient to ascertain what service was received. Most bill paying occurs in a coded manner over the Internet. As a result, physicians, out-patient services, hospitals and pharmacies—even ambulances—can bill for services or products never provided, and the patient or insurer would never know.
Although some fraudulent injury or illness situations still exist, especially in the workers compensation or class action arenas, today’s biggest concern surrounds billing errors or fraud that causes government and insurers to pay for more than was provided.
Organized fraud often occurs when criminals hack into a medical service providers’ computer systems and steal names, Social Security numbers and other data. This happens frequently, particularly for elderly patients or those with certain diagnostic codes.
For example, an elderly, arthritic Medicare patient might receive a prescription for an expensive motorized chair for mobility. A fraudulent “service provider” could submit a chair bill to dozens of insurers or to Medicare and be paid the permitted coverage. Meanwhile, the unaware patient neither needs nor receives this special chair. If and when the payor discovers the deceit, the fraudulent provider has changed its address and disappeared.
How can such fraud be prevented? If “quick payment” is a legal requirement (and it could be a well-justified requirement as delay in payments is a problem for physicians and hospitals), simply changing the law to expand the payment-due time is not a totally reasonable answer. What is reasonable, however, is taking time to verify with the patient—the insured—whether the treatment, medical device, prescription, etc. was actually performed, was required. That, of course, equals more claims department personnel—but the price of additional staff is far less than the industry paying $100 billion annually. What steps would help?
Fraud prevention situations are taught in Crawford & Company’s Educational Services classroom and KMC on Demand courses.
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