Understanding Health Insurance Fraud: Types, Costs & Prevention

In the United States, more than $2 trillion is spent on health care every year. The National Health Care Anti-Fraud Association (NHCAA) estimates that about $60 billion of what is spent on health care each year is lost to fraud.

Member Fraud

• Member fraud is committed when an insured person supplies false information to an insurance company or a health provider. Some examples include the filing of false medical claims, hiding preexisting conditions or prescription drug fraud.

Provider Fraud

• Provider fraud can involve bogus insurance companies, unethical billing practices or performing non-essential medical procedures for financial gain.

Warning

• More than $54 billion is stolen every year via health insurance scams. Most of these involve stealing patient identification and insurance information.

Punishment

• In 1996, Congress made health insurance fraud a criminal offense with punishment of up to 10 years in prison and fines.

Prevention/Solution

• Read all correspondence from your insurance company, including your policy, explanation of benefit statements and any other documents. Contact your provider and request a list of your annual charges to make sure there's nothing unusual.