Common Health Care Fraud Schemes

In addition to hospitals, doctors and pharmacists, health care providers include the following:

• Medical transportation companies such as taxi/van service providers
• Home Health providers
• Durable Medical Equipment suppliers – i.e. wheelchairs, prosthetics, adult diapers
• Nursing Homes
• Medical Laboratories
• Home Infusion Treatment Companies
• Managed Care Organizations – PPOs, HMOs
• Rehabilitation Providers

Billing for Goods/Services not Provided

A common type of Medicaid or health care fraud scheme is billing for a treatment or procedure never rendered -- such as X-rays, laboratory tests, or drugs that were never dispensed.

Fraudulent providers also "upcode" various medical procedures. When a patient sees a doctor, they may be unaware of the extent of services which were provided. If payment is made by units of time, the time can be expanded. A minor service can also be upcoded as a more labor intensive or expensive service.

Paying "Kickbacks" in Exchange for Referring Business

"Kickbacks" are common in health care fraud cases. State and federal law generally prohibit payments to individuals who refer patients to a particular hospital or doctor. Medicaid fraud prosecutions have been brought, for example, against corrupt doctors for splitting fees in return for rent, demanding cash payments from Medicaid patients, and taking money in exchange for patient referrals.

Billing for Medically Unnecessary Tests

An age old scam by some providers is misrepresenting the diagnosis and symptoms on patient records and then submitting invoices to insurance companies to receive a higher rate of reimbursement. An example of this would be a patient who visited the doctor for a common cold treatment, but the insurance company was billed for a condition diagnosed as pneumonia, with associated pneumonia testing.

Charging Personal Expenses to Medicaid

This is a scheme most often engaged in by corrupt nursing homes. Nursing homes are reimbursed based upon the annual submission of a cost report. The inclusion of personal expenses in these costs reports is fraudulent. An example of this occurs when a nursing home administrator includes the cost of his personal car or home on the cost report. This is a criminal violation.

Inflating the Bills for Services Provided

This regularly occurs in the Medicaid transportation sector when van/taxi companies greatly inflate their claimed mileage in order to receive greater reimbursement.

Managed Care Organizations (MCOs)

Managed care presents different fraud issues. Whereas in standard health care reimbursement situations, the fraud is characterized by overbilling, a managed care environment creates an incentive to deny care to patients/consumers. This means that while a fee has been paid by the MCO to the doctor for covered services, the services are denied or cut back for other than sound medical reasons. This not only defrauds the insurance company, but also compromises patient health.

Fraud in MCOs also arises in enrollment practices whereby healthy patients are "recruited" to join certain MCOs in a practice known as "cherry picking." Often, they are paid in some fashion for their enrollment.

Double Billing

Double billing occurs when the provider obtains payment from two sources. For example, a provider involved in a drug study bills the insurance company while at the same time receiving payment from the pharmaceutical company. Similarly, two insurers or public programs, or both, may be billed for the same service.

Consumer Deception Fraud

Some fraud is committed by patients/consumers. Examples include using someone else's insurance card for benefits, listing a non-relative as a family member to obtain coverage, claiming coverage for treatments or supplies not received, faking worker's compensation injury to receive disability payments, and staged accident frauds. This type of fraud is handled by the Department of Medical Assistance Services as MFCUs are prohibited from handling recipient fraud.