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 20^th-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?

1. Upon receipt of a bill that is not clearly owed (a flu shot in the fall, for example), the patient should be contacted:
    
2.  By phone, email or, if necessary, by mail;
1. Asked to verify whether the billed treatment or service was provided;
2. If so, was it provided by the party submitting the billing?
3. Often a medical service will use an outside collector, but that should be clear from the billing papers.
    
3. If the patient (or someone on behalf of the patient) confirms the validity of the billing, then the amount payable under the policy or allowed amount should be paid as quickly as possible.
4. If the patient is unsure about the billing, or cannot remember what service was rendered, then further follow-up with the provider should be taken. Often elderly patients may not recall all the services received, but a copy of the physician’s notes or charts can be received by the insurer under HIPAA if the patient insured has signed an authorization.
5. If the patient has not pre-signed such authorization, such authorization to review the medical records should be obtained and the records reviewed.
6. If the patient denies having received the service, been treated by the physician, or having the condition or equipment for which the billing was submitted, then even further follow-up with the provider is necessary. The billing may simply be a mistake in identity, with the wrong patient’s name and policy or Social Security number put on the billing by clerical error, which could be immediately corrected.
7. If the billing cannot be verified in any way and fraud is suspected, either the insurer’s own SIU or the state or federal authorities should be called upon to conduct a criminal fraud investigation. (All but six states have a “fraud bureau,” according the Insurance Information Institute 2015 data.) While there may be some mistake that can be clarified by such investigation, the law enforcement agency can take the appropriate legal action, and no payment will be made unless or until the potential fraud is disproven.

Fraud prevention situations are taught in Crawford & Company’s Educational Services classroom and KMC on Demand courses.