Health Insurance Fraud By The Numbers
The U.S. spends more than $2 trillion on healthcare annually. At least three percent of that spending — or $68 billion — is lost to fraud each year. (National Health Care Anti-Fraud Association, 2008)
Fraud accounts for 19% of the $600 billion to $800 billion in waste in the U.S. healthcare system annually. Fraud amounts to between $125 billion and $175 billion annually, including everything from bogus Medicare claims to kickbacks for worthless treatments and other services. (Thomson Reuters, 2009)
More than $2.4 billion in recoveries for fraud, waste and abuse in federal healthcare programs are expected for the first half of FY 2009 (October 2008 through March 2009). Some 1,415 individuals and organizations also were excluded from federal programs for fraud abuse; 293 criminal actions were brought, as were 243 civil actions. (Semiannual Report to Congress, Office of Inspector General, Department of Health and Human Services, 2009)
The Justice Department launched 903 new health-care fraud prosecutions in the first eight months of FY 2011 more than all of FY 2010. This is an 85-percent increase over FY 2010, a 157% increase over FY 2006 and 822 percent over FY1991. If the national trend continues at this pace, 1,355 prosecutions will be logged by the end of FY 2011. (Transactional Records Access Clearinghouse, September 2011)
Consumers need to closely read the explanation of benefits (EOB) forms that health insurers send to policyholders, listing their latest medical treatment expenses. This is important to uncovering dishonest medical providers and identity thieves who’ve made bogus claims against the consumer’s policy. EOBs that are confusing will discourage policyholders from understanding or even reading their EOBs closely, thus making it harder to detect fraudulent billings.
• Nearly 70 percent of explanation of benefit (EOB) forms issued by surveyed healthcare providers confuse people who receive them. (Intuit, 2010)
• The forms failed to be even basically understandable. Only three insurers surveyed included charts or graphics to help consumers understand how their benefits work. (ibid)
• Nearly 40 percent of Americans currently do not understand their medical bills or explanation of benefits statements well enough to know what services they are paying for, why they owe that amount, and if that amount is correct. (ibid)
• Interpreting medical bills can be difficult. When a bill arrives in the mail, 16 percent of consumers do not even understand the descriptions of procedures they received, yet more than half rarely or never contact their providers to ask questions or get clarification on a bill. (ibid)
FAKE HEALTH PLANS
Consumers and small businesses often are targets of swindlers who sell fake health plans. A big reason: Many entrepreneurs don’t know enough about group health insurance. They become natural targets for sales pitches for fake policies that promise generous benefits and easy signup at suspiciously low prices.
In fact, state insurance departments shut down several health plans that were selling unlicensed coverage in 2008 and 2009. This suggests a resurgence of bogus health plans targeting small businesses and consumers, exploiting the economic uncertainty of the recession.
• Two-thirds of small business owners say they aren’t confident that choosing a health policy that fits their budgets and employees’ needs.
• One-third say they can’t afford to provide health insurance for their employees. (National Association of Insurance Commissioners, 2009)
• Only 27 percent say they understand all the factors that can affect their small-group premiums. (ibid)
PRIVATE HEALTH INSURANCE
• Every $2 million invested in fighting health-care fraud returns $17.3 million in recoveries, court-ordered judgments, plus bogus claims that weren’t paid and other anti-fraud savings. (National Health Care Anti-Fraud Association, 2008)
• The average health insurer’s anti-fraud investigative unit has an annual budget of slightly more than $1.9 million and 19 fulltime employees. (ibid)
• The average health insurer has 363 open cases in 2007, and each insurer investigation unit handled an average of 791 cases total for 2007. (ibid)
• More than seven of 10 insurer investigative units use fraud-detection software. (ibid)