Insurance Fraud and Abuse: A Very Serious Problem

By Stephen Barrett, M.D.
Posted by Chaoran Hu

Fraud and abuse are widespread and very costly to America's health-care system. Fraud involves intentional deception or misrepresentation intended to result in an unauthorized benefit. An example would be billing for services that are not rendered. Abuse involves charging for services that are not medically necessary, do not conform to professionally recognized standards, or are unfairly priced.

An example would be performing a laboratory test on large numbers of patients when only a few should have it. Abuse may be similar to fraud except that it is not possible to establish that the abusive acts were done with an intent to deceive the insurer.

Although no precise dollar amount can be determined, some authorities contend that insurance fraud constitutes a $100-billion-a-year problem. The United States Goverment Accountability Office (GAO) estimates that $1 out of every $7 spent on Medicare is lost to fraud and abuse and that in 1998 alone, Medicare lost nearly $12 billion to fraudulent or unnecessary claims.

Many frauds can be detected by examining insurance payment reports to see whether they accurately reflect the services rendered. Suspicious reports involving a private insurer claim should be reported to the company's fraud department.

Reference: http://www.quackwatch.org/02ConsumerProtection/insfraud.html