The Impact of Fraudulent Medical Claims
Abstract
A fraudulent medical claim refers to a situation whereby false or information is provided to an insurance organization with the sole goal of having them settle the demand of the policyholder. This kind of fraud can be undertaken by either the insured person or the individuals who provide the health services. However, the impact of health insurance scams is usually felt by other parties, both directly and indirectly. In this essay, the focus will be first on how medical scams result in financial losses to the entire healthcare system. Then, the second part will explain how fraudulent medical claims result in higher premiums for consumers. After that, the next segment will connect medical insurance fraud to patient harm. In other words, this section will describe how fraudulent billing could lead to a patient’s death. Then, the next part will highlight how fraudulent medical claims overburden the healthcare system. Lastly, the final section will summarize all the major points of the essay.
The Impact of Fraudulent Medical Claims
Introduction
Apart from the currently raging debate on healthcare reforms, another topic that is receiving a lot of attention is fraudulent medical claims. In other words, healthcare fraud is becoming rampant. The National Health Care Anti-Fraud Association approximates that between 3% and 10% of the United States’ yearly Medicare expenditure is lost to scams (NHCAA, 2020). These frauds range from those committed by the consumers as well as those carried out by the insurance providers. In brief, the most common frauds linked to consumers include false claims, medical identity theft, and physician shopping. On the other hand, the scams undertaken by the providers include accepting kickbacks, conducting phantom billing, offering unnecessary care, as well as pharmacy fraud, among others. Nevertheless, despite the enormous sums of money that are lost due to these fraudulent claims, the entire health care system is affected in many more other ways. The section below will discuss some of the impacts of these medical scams. All in all, fraudulent medical claims have adverse effects on the healthcare system.
Fraudulent Medical Claims lead to Financial Losses.
Globally, losses in the healthcare sector as a result of fraud have steadily grown. According to a 2014 report compiled by Gee & Button (2014), the world is losing approximately $487bn to medical fraud. The findings indicate that the average losses in the pharmaceutical industry have risen by 25% since 2008. In the United States, the National Health Care Anti-Fraud Association estimates that damages arising from healthcare fraud could have been more than $300bn in 2018 (NHCAA, 2020). Moreover, a 2019 study on the healthcare detection market found that the global market value was at $679 million and will rise to 2.54bn by 2024 (Orbis Research, 2019). From these figures, it is clear that fraudulent medical claims are expensive to all the players involved except those who perpetrate the act.
In other words, the insurers lose money when it has to pay for medical procedures that were never performed. Also, insurance companies make losses when they have to pay for an expensive surgical procedure that was not necessary. Lastly, the consumers have to put up with costly insurance premiums that come about as a result of medical fraud, as seen below.
Higher Premiums
Irrespective of whether an individual has a personal insurance cover or employer-sponsored coverage, healthcare scams eventually results in higher premiums (Van Capelleveen et al. 2016). At the same time, it leads to increased expenses for consumers, as well as lower insurance benefits. The rationale behind this increase in premiums is founded on the fact that the insurance companies devise ways of cushioning themselves from losses incurred from fraud. Thus, charging higher premiums while reducing the value of benefits or coverage acts as a way of shielding the cover providers from massive losses. However, in the long run, the customer is the one who pays the price for the fraud due to the resulting high cost of doing business. It short, fraudulent medical claims is one of the reasons why medical insurance is expensive and not affordable to many citizens in America.
Potential Patient Harm
Apart from the high direct cost of insurance premiums, fraudulent billing affects the quality of medicare provided to the patients (Drabiak & Wolfson, 2020). In other words, the desire to get more money from insurance companies can lead to a situation whereby the patient is subjected to unnecessary and risky interventions. For instance, a patient could be made to undergo a surgical procedure, which is pointless. On the same point, during surgery, the patient could develop complications or contract a disease, which, in turn, worsens his condition.
In relation to the above, it is worth pointing out that the present reimbursement models encourage medical practitioners to engage in practices that are geared to cheat the system (Drabiak & Wolfson, 2020). However, when the insurance companies become aware of the scheme, it is the patient who pays the ultimate price. For instance, from an independent medical perspective, a medical practitioner might believe that a particular test or medication is vital to the patient’s recovery. However, some insurance companies can restrict or limit the ability of a physician to prescribe some tests, procedures, or medicines. An insurance company might deny coverage or has to be informed, for instance, that a highly-recommended brain surgery will not be available due to cost.
Also, the decision by a physician to over-treat patients with unnecessary medications or procedures, can at times be fatal. In other words, regardless of whether the choice is the doctor’s or the patient’s, ordering extra tests increases the likelihood of misdiagnosing or overdiagnosing a condition. Such a situation, in turn, results in the prescription of a harmful medication regimen (Drabiak & Wolfson, 2020). For example, an anomaly can be viewed as cancerous cells which require immediate action like surgery. As a result, a patient could have her breast wrongfully removed due to an abnormality that would have self-reversed.
In the end, a patient is denied medical care because the insurance company does not cover a particular procedure. In other instances, a physician prescribes a medication that will not improve the health outcome of the patient simply because the insurer refuses to pay for the required medicine. Thus, despite having a medical cover, the patient is left on his own. The fraudulent medical claims bring about all these issues, and the insurance companies are just devising ways of minimizing losses, as well as remain afloat.
Overburdening the Healthcare System
The global healthcare system is already overburdened, whereby there is too much demand for medical services as compared to minimal supply. Fraudulent medical claims exacerbate this situation. One way in which this process occurs is through ordering unnecessary procedures. In short, when a physician requests for unnecessary treatments, also known as overtreatment, he takes away valuable health resources from the persons who need the medical service. Nevertheless, it is worth noting that the fear of malpractice could be the driving force behind the physicians’ decision to perform these unnecessary procedures. However, a survey by Lyu (2017) showed that most doctors overtreat patients only when they stand to profit. In connection to the above, it is imperative to state that the choice to overtreat an individual is one of the reasons why health facilities are often overcrowded, and the waiting time for procedures longer. As a result, an individual’s health can deteriorate in case one is unable to find the service that he needs or has to wait longer for the physician “overtreat” other patients.
On the same note, overcrowded hospitals also put a strain on the doctors and nurses who have to attend to the patients. For example, a nurse might be required to attend to thirty patients at the same time, which makes it easy to make mistakes. Eventually, the whole healthcare system is itself sick as it is unable to offer the needed medical service at the appropriate time just because some individuals want to make money fraudulently.
Conclusion
In brief, fraudulent medical claims are some of the problems that affect the healthcare sector. These schemes range from false claims, phantom billing, identity theft, and physician shopping, amongst others. Such frauds engineered by either the consumer or the insurance company present a lot of challenges to the entire sector. For instance, they lead to financial losses to both the insurers and governments. Also, they result in higher insurance premiums, as well as pose possible patient harm. Lastly, they overburden the entire healthcare system. All in all, fraudulent medical claims have brought along unwanted changes in the healthcare industry and changed how insurance companies conduct their business.
References
Drabiak, K., & Wolfson, J. (2020). What Should Health Care Organizations Do to Reduce Billing Fraud and Abuse?. AMA Journal of Ethics, 22(3), 221-231.
Gee, J., & Button, M. (2014). The Financial Cost of Healthcare Fraud 2014: What Data from Around the World Shows. https://fullfact.org/wp-content/uploads/2014/03/The-Financial-Cost-of-Healthcare-Fraud-Report-2014-11.3.14a.pdf. Accessed on August 20, 2020.
Lyu, H., Xu, T., Brotman, D., Mayer-Blackwell, B., Cooper, M., Daniel, M., & Makary, M. A. (2017). Overtreatment in the United States. PLoS One, 12(9), e0181970.
National Health Care Anti-Fraud Association (NHCAA), (2020). The challenge of health care fraud. https://www.nhcaa.org/resources/health-care-anti-fraud-resources/the-challenge-of-health-care-fraud/. Accessed on August 20, 2020.
Orbis Research, (2019). Healthcare fraud detection market-growth, trends, and forecast (2019-2024). https://www.orbisresearch.com/reports/index/healthcare-fraud-detection-market-growth-trends-and-forecast-2019-2024.
Van Capelleveen, G., Poel, M., Mueller, R. M., Thornton, D., & van Hillegersberg, J. (2016). Outlier detection in healthcare fraud: A case study in the Medicaid dental domain. International journal of accounting information systems, 21, 18-31.