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Upcoding, Kickbacks, and 3 Other Signs of Medical Fraud

Healthcare costs have risen substantially over the past decade, and experts predict 2024 will be no different. These hikes are largely due to an increase in the number of medical fraud cases across the country—from upcoding to identity theft. 

In this article, we dive into the signs you should look for when dealing with a practitioner and walk you through the steps to take if you believe you’ve encountered a scam.

What Is Medical Fraud?

Medical fraud occurs when an individual tries to manipulate a medical situation to receive a larger payout from an insurance company. Although patients, practitioners, and even attorneys can commit medical scams, doctors are responsible for the vast majority of these cases. 

5 Types of Medical Fraud

Whether you’re a patient, an insurance carrier, an attorney, or a member of a governing body, it’s crucial you’re familiar with the different kinds of medical fraud. The more informed you are, the more qualified you’ll feel to identify and report these cases. 

#1: Billing for Unnecessary Services

Some doctors will charge patients for services or treatments they didn’t receive. In other cases, they may request certain procedures or tests for a patient that weren’t medically necessary to charge the insurance company accordingly. 

#2: Identity Theft

Identity theft is a problem worldwide; unfortunately, doctors’ offices are no exception. Some fraudsters will steal patient information from providers, submit false claims under the patient’s name, and then receive a payout from the insurance companies. These patients are now at risk for further fraud, with their personal and financial data compromised. 

#3: Upcoding 

Upcoding occurs when a healthcare provider intentionally assigns a higher billing code to a medical service or procedure than was warranted or completed, exaggerating the complexity or severity of a patient’s condition purely for increased reimbursement from an insurance carrier. 

#4: Unbundling

Providers who unbundle bill insurance carriers separately for medical services that should be billed together to maximize reimbursement. For example, if a patient has surgery to remove a kidney stone, the procedure would include many components, such as pre-operative evaluations, the surgery itself, and post-operative care. These components should all be billed as part of the single kidney stone removal process, but an unethical healthcare worker might break them down and charge for each service on a granular level.

#5: Patient Kickbacks

Kickbacks in any scenario refer to payments made in exchange for illicit behaviors. In the case of medical fraud, practitioners may offer patients illegal incentives in exchange for them claiming to have medical issues they don’t have. For instance, a practitioner might charge the patient’s insurance company for an unnecessary service and then collect and share some of the reimbursement with the patient. Kickbacks are not only completely unethical but also illegal.

How to Report Medical Fraud

We’ve outlined below the two most important steps in reporting a healthcare scam.

#1: Contact Your Insurance Provider

If you believe you’ve witnessed or are experiencing medical fraud, the best first step is to contact your insurance carrier. Companies leading the industry in fraud detection, like Central, will be able to help you identify whether your provider has a history of past fraudulent behavior and can launch an investigation as necessary.

Keep in Mind: It’s certainly most effective to contact your carrier at the first warning sign of a scam so they can investigate the practitioner before they receive reimbursement. However, if you believe your doctor is fraudulent after services have been provided, it’s still incredibly important to report the situation to your carrier, as they can begin an investigation and stop others from falling prey to their scams.

#2: File a Complaint with Your State’s Department of Insurance

Most states have official Departments of Insurance that monitor and investigate cases of medical and other forms of insurance fraud. Reporting to these government agencies is as easy as logging onto their online portal and submitting the requested information or calling their fraud hotline.

Medical Fraud in Texas

Cases of healthcare fraud in Texas are on the rise, and the Texas Department of Insurance is teaming up with leading carriers like Central to stop it. 

Central’s cutting-edge fraud investigation team utilizes a state-of-the-art fraud analytics model to identify patterns in medical providers and prevent fraud cases before they even occur. This group has teamed up with the Texas DOI and other national DOI branches to help investigate these cases by layering in historical and predictive data from their one-of-a-kind network of industry and non-industry partners across the globe.

Learn More: How Central and the Texas DOI Are Combatting Medical Fraud



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