How Health Insurance Companies Can Limit Fraudulent Insurance Payments

Throughout the course of my employment in the medical field, I’ve been extremely unlucky to work for employers who manipulated the health care system in order to receive insurance payments that should never have been issued. The degree to which the manipulation was done ranged from questionable to outright fraud and abuse.

Insurance fraud, in my opinion and based upon my experience, is much more prevalent than most people and most insurance companies realize.

When I began my career in the medical field, I was of the opinion that the insurance companies were the dirtiest aspect of the medical field. And while I continue to believe that many insurance companies unethically focus on saving money or increasing profits by denying care and raising insurance premiums out of greed, I know without a doubt that medical providers play an extremely large role in the increasing costs of medical care due to fraud and abuse and manipulation of the payment system. Unfortunately, patients and consumers are the innocent victims.

For the layperson that is reading this and might doubt my claim, it is important to realize that while Medicare fraud is a crime punishable at the federal level, fraud committed against the private health insurance company remains to be a crime that has little or no consequences. It is for this reason that fraud and abuse against private insurance companies might very well be one of the leading causes of rising insurance premiums and increasing health care costs.

There are numerous ways an insurance company can either limit fraudulent insurance payments to medical providers or recoup insurance payments that have been issued on fraudulent claims. Although my personal list is fairly extensive, I’ve managed to narrow it down to five of the most efficient ways that should be priority in implementing:

Perhaps the easiest and most obvious way to limit fraudulent medical payments to providers would be to flag medical providers listed with the Office of Inspector General who are under Corporate Integrity Agreements (CIA).  These are medical providers who have settled allegations of fraud by issuing a payment to the federal government.  This is public information, and insurance companies do not utilize this information.  If medical providers are committing fraud against Medicare, they are employing the same tactics for payment with private insurance companies.  I know this from experience.  As soon as there is a new provider listed, it’s time for an audit. 

Most of the time, a hard copy claim and medical records must be submitted for inpatient claims and high-dollar claims; however, outpatient surgeries that amount to thousands of dollars in payments are processed electronically. Electronic billing is quick and easy, making manipulation and outright fraud much too easy because there is no transparency.

Insurance companies may not believe it, but it is not unusual for doctors to bill for surgical procedures that were never performed. This is something that is difficult to comprehend because this tactic is outrageous.

Insurance companies must realize that when claims are sent electronically, if the claim is clean, it doesn’t matter what has been billed on the claim form—a payment will be approved by the software. While I understand that employing electronic billing cuts costs and saves time, providers would be less prone to use this tactic if the medical records had to be submitted.

Insurance companies might want to utilize this approach for providers who are under a CIA and have these claims reviewed manually, and slowly incorporate this approach with other medical providers as part of the audit process for a specified period of time.

One of my pet-peeves has always been speaking with a customer service representative who knows little, if anything, about any part of the insurance industry. This was annoying, and I would hang up on these CSRs as soon as they announced their name, because I didn’t need to waste my time with them. Yes, I opted to sit on hold for another 20 minutes than have them handle my inquiry.

For the most part, a customer service representative reads information that the computer system is displaying and relays it to the caller. I believe this is the reason why insurance companies don’t invest in their customer service representatives. Insurance companies wrongly believe that the only qualification for this job is the ability to read and speak.

Medical providers call an insurance company when there is a problem with payment on a claim and discusses the problem with the customer service representative. And while I usually hang up on the incompetent CSRs, other employees, including office managers and physicians who have no problem with collecting payment for services that should not be paid for, possess a deep love for these incompetent CSRs. Insurance companies that pinch pennies in this area end up paying millions of dollars due to fraudulent claims. If you don’t believe me, read my last suggestion.

Insurance companies need to realize that if they employed more qualified representatives, costing a bit more in salary expenses, CSRs would have the ability to flag questionable claims or even stop payment on fraudulent claims that end up costing more per year than it would cost to pay qualified staff a few dollars more per hour.

As far as the fraud and abuse department is concerned, I have often wondered if this is a department that truly exists, leading me to conclude that these departments are understaffed, or incompetent, or both.

If insurance companies focused more on enhancing its fraud and abuse department instead of being so quick to increase insurance premiums and denying care, profits would still skyrocket, customers would be much more satisfied and business might just boom.

Insurance companies do perform random audits on claims and will often catch payments that should not have been made and then issue a recoup notice to the provider.  I was always quite surprised at the insurance company’s ease to issue a recoup notice but never follow up these claims with a more involved audit on additional claims or a visit to the site where the billing is performed. 

If there are recoups done on these random audits, these medical providers should be looked at more closely.  If it is determined that there is an unusual amount of recoups, insurance companies should visit the site.  Insurance companies might find that there is not sufficient documentation for numerous services including x-rays, consults, and supplies.  And while these services are not payable at a high rate like surgeries, these services are performed on a daily basis and could easily amount to hundreds of thousands of dollars yearly.

While I don’t expect a layperson to understand this segment of this hub, and it would be much too involved to explain, I still need to mention it in case, by chance, an insurance company’s fraud and abuse department employee comes across this.

While working for a large group of orthopedic surgeons, it didn’t take me long to realize that several of the surgeons billed for every surgical procedure that could possibly be performed in one session. The dictations on these surgeries were so flawless that I was able to bill each procedure with the modifier -59. If the claim still hit the edits, the dictation was still so flawless that I could appeal the non-payment along with the dictation to prove that the procedures performed were done in different compartments or areas of the body part/joint.

The funny thing about this scenario is, I kept a document saved to word for these appeals. All I had to do for each appeal was change the patient’s name and date of service. Every patient for these surgeons had the same problems in the same areas and the same diagnoses. The dictation was, word for word, the same for each patient, as were my appeals. There were so many of these appeals that I did them in bulk, mailing 20 or 30 at a time in one large envelope hoping that it would seem ridiculous to someone. It never did, which brings me back to hiring knowledgeable employees…

This is true manipulation at its best; however, if this had ever been caught by one of the insurance companies, I am positive the surgeons would have found that their patients suddenly didn’t have mirrored diagnoses and mirrored surgeries.

There has to be some way to flag medical providers who appeal the same type of claim in large quantities. If there isn’t, insurance companies need to find one. These few surgeons were able to collect tens of thousands of dollars monthly in these, at the very least, questionable surgeries.