Fraudulent medical claim results in patient harm and huge financial losses, amounting to hundreds of billions annually. According to the Association of Certified Fraud Examiners (ACFE) (2020), it is estimated that up to 10 percent of national healthcare spending is lost through fraudulent medical claims every year (Pacific Prime, 2020). For example, in 2018 when the United States spent $3.6 trillion in health care, the fraudulent medical claim could have cost the taxpayers up to $ 360 billion in financial losses (The National Health Care Anti-Fraud Association (NHCCA), 2020). However, the US Chamber of Commerce placed the proportion of annual healthcare expenditure lost through fraud at 15 percent (Pacific Prime, 2020). Healthcare frauds carry expensive price tags financially as well as in the public perception of the value and integrity of the US healthcare system. Therefore, the fraudulent medical claim is a devastating problem that affects all taxpayers and consumers of healthcare services in the United States.
Due to fraudulent medical claims consumers spend more on out-of-pocket payments and insurance premiums while insurance coverage and benefits shrink. These effects offset the medical budget of every American. They directly drain those who purchase their insurance policy through the individual market, state marketplace, or HealthCare.gov. For those who have employer-sponsored health insurance, the fraud leads to a bad claims history, and alters their rating, and the due premium amounts. The increased costs resulting from a fraudulent medical claim could make the difference between affordability and the unaffordability of health insurance for many people in the US.
Moreover, the increased expenditure on insurance coverage for employees translates to higher overall costs of doing business for both government and private employers that provide insurance coverage for their workers. Also, fraudulent medical claims, like any theft perpetrated against Medicaid and Medicare systems, directly swindle US taxpayers. These agencies are funded through the employee and employer payroll tax (NHCAA, 2020). Because of the fraud, the government raises the tax to meet the growing need for more funds, affecting every employee.
However, healthcare does not only result in financial losses; it has human impacts too. Sadly, it is easy to find an individual who is or has been victims of a fraudulent medical claim. All types of fraud involve representing some false information as real. One of the common risks of fraudulent medical claims to consumers is a deliberate compromise of their medical records (NHCAA, 2020). The perpetrators enter false diagnoses into patients’ medical records, claiming to have treated conditions or illnesses that they do not have. A similar scheme is to enter the correct illness of the patient but exaggerate its severity. The bogus details are then presented as claims to insurance companies for payment. The health insurers unknowingly keep inflated or phony records as the documented medical history of the patient. Such frauds make many patients face challenges in obtaining healthcare due to exhaustion or complication of insurance claims.
For example, in 2012, several stakeholders including the CEO and owners of the American Therapeutic Corporation (ATC), a Miami-based mental healthcare company were tried and convicted for defrauding Medicare of $205 million through falsified billings (Davis, 2012). It is alleged that the individuals participated in using fraudulent documentation to bill Medicare for the huge compensations for services that either they never provided to clients or were unnecessary
Furthermore, healthcare providers exploit consumers by callously subjecting them to the risk of physical injury through unsafe or unnecessary medical care. Many health providers have placed their unsuspecting patients on dangerous or unnecessary medical treatments to maximize medical claims. Such procedures can cause many irreversible adverse outcomes such as loss of physical mobility or the ability to reproduce. According to NHCAA (2020), in 2015, a federal court in Ohio sentenced a cardiologist to 20 years of imprisonment for unnecessarily performing coronary artery bypass surgeries, stent insertions, tests, and catheterizations in an attempt to inflate the bill for insurance providers by $ 29 million.
In some cases, false diagnosis or overtreatment can result in the death of a patient. In 2016, the proprietor of a healthcare company was sentenced to 10 years in federal prison for falsifying patient information to fraudulently claim over $ 20 million from insurance companies (NHCAA, 2020). Investigations further showed that the company had created false radiology reports that led to the death of two patients. The provider misread the chest imaging of one elderly patient despite it showing congestive heart failure. The second patient’s imaging showed mild congestive heart failure but the facility subjected her to elective surgery.
Another scheme used in fraudulent medical claims is billing insurance providers with stolen legitimate medical details of patients. Medical Identity Theft Alliance (MIFA) estimates that at least two million people have been victims of medical identity theft in America (Wilson, 2019). The perpetrators use people’s identifying information without their consent or knowledge to make false insurance claims. This crime results in the creation of a fabricated medical history in the name of the victim. Consequently, the victims may be disqualified from life insurance or get the wrong medical treatment. Besides, a victim of medical identity theft may unduly fail medical or physical examination for employment due to fictitious conditions added in their medical records. The impact of medical identity theft may well plague the financial status of the victim for many years or even a lifetime.
Lastly, the fraudulent medical claim is overburdening the US healthcare system. When a doctor orders unnecessary treatment, they deny other patients who truly need health resources the opportunity to access care. A 2017 study involving 2,100 US physicians showed that doctors estimated that about 20% of all medical care provided in the country was unnecessary (Pacific Prime, 2020). This includes tests, prescriptions, and procedures. They also said that their beliefs about overtreatment were driven by patient demands and fear of malpractice. However, 70% of physicians reported that they would subject a patient to unnecessary treatment if it profited them (Pacific Prime, 2020). These findings may be partly contributing to the overburdening of the health systems. The situation negatively impacts patients' health. Many have to grapple with long wait times while others fail to get the services they need in time. It also wears out medical staff, especially nurses who have to deliver the unnecessary treatments that the doctors order.
In conclusion, the fraudulent medical claim is one of the biggest challenges facing the healthcare sector in the United States. The cost of this problem goes beyond just the money that the perpetrators steal from the insurance companies. It ripples on everything else in the sector, including the availability of resources and the cost of care. Everyone bears the financial losses associated with fraudulent medical claims, which translates to heightened premium costs, higher taxation, reduced coverage benefits, and shrinking health insurance coverage. The non-monetary impacts of medical insurance fraud are equally devastating. Problems such as overburdening of the healthcare system significantly undermine access to timely and sufficient medical care for many people in the United States. Besides, the phenomenon is associated with the blatant disregard of medical ethics in patient diagnosis and treatment, leading to wrong documentation of patient medical records. As a result, many patients have missed due insurance benefits from their insurers, while others have been removed from their coverage plans. In some cases, patients have suffered irreversible physical injury or even death.
Davis, L. E. (2012, September). Growing healthcare fraud drastically affects all of us. Association of Certified Fraud Examiners. https://www.acfe.com/article.aspx?id=4294974475
NHCAA. (2020). The challenge of health care fraud. https://www.nhcaa.org/resources/health-care-anti-fraud-resources/the-challenge-of-health-care-fraud/
Pacific Prime. (2020, July 23). Health insurance fraud and its impact on healthcare systems. Pacific Prime's Blog. https://www.pacificprime.com/blog/healthcare-system-fraud-impacts.html
Wilson, J. (2019, July 29). Health insurance fraud in the United States, examples and its impact. Sybrid MD. https://sybridmd.com/blogs/general/types-of-health-insurance-fraud-in-the-united-states-examples-and-its-impact/
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