Health Insurance Fraud: A $75 Billion to $300 Billion Problem in the US

Strategic Insights -

A recent report by CNN shed light on the prevalence of health insurance fraud in the US, with only 40 pages of the over 1,000-page House Healthcare Reform Bill addressing the issue. According to various estimates, health insurance fraud costs the US between $75 billion to $300 billion annually. A recent article in Health Plan Week reported that the Blue Cross and Blue Shield Association's national anti-fraud department claimed that anti-fraud investigations in 2008 turned up $350 million in savings, a 43 percent increase from the previous year.

Key Takeaways:

  • The US is facing a significant health insurance fraud problem, estimated to cost between $75 billion to $300 billion annually.
  • A recent article in Health Plan Week reported that anti-fraud investigations in 2008 turned up $350 million in savings, a 43 percent increase from the previous year.
  • The principal types of health insurance fraud include:

+ Providers upgrading to gain higher reimbursements for services

+ Billing for services not rendered

+ "Phantom" providers or identity theft

+ Prescription drug scams

  • The National Health Care Anti-Fraud Association (NHCAA) estimated that as much as 10% of US healthcare costs, or $224 billion in 2007, was due to fraud.
  • The NHCAA is proposing that reform legislation include more information sharing between government and private health insurers to help solve the problem.
  • Healthcare Data Management, Inc. (HDM) has developed a service called BenefitsWatch, which enables self-insured companies to provide their clients with quarterly reports based on monthly data feeds of paid claims from insurers.
  • BenefitsWatch analyzes 100 percent of supplied claims in a client customized data warehouse, against "exceptions" or deviations from plan documents, and applies HDM's own proprietary benchmarks to analyze three critical areas: compliance, budget and cost, and utilization.

Statistics:

  • The US is facing a $75 billion to $300 billion health insurance fraud problem annually.
  • Anti-fraud investigations in 2008 turned up $350 million in savings, a 43 percent increase from the previous year.
  • The National Health Care Anti-Fraud Association (NHCAA) estimated that as much as 10% of US healthcare costs, or $224 billion in 2007, was due to fraud.
  • BenefitsWatch analyzed over 100% of supplied claims in client customized data warehouses.

Sources:

  • CNN report on health insurance fraud
  • Health Plan Week article on anti-fraud investigations
  • National Health Care Anti-Fraud Association (NHCAA) white paper on health insurance fraud
  • Managed Care Weekly Digest editors' article on health insurance fraud
  • Healthcare Data Management, Inc. (HDM) website (www.hdminc.com)