Medical Claims Fraud: More to be earned than lost.

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November 6th, 2013

Medical Claims Fraud PayerFusionWith the healthcare industry concentrating on distribution and accessibility, serious financial and administration matters are being overlooked. Medical Claims Fraud is an area where there is a need to improve regulating efforts and a potential to recover billions of lost dollars. By taking a closer look at the issue, analyzing the effectiveness of the False Claims Act, and questioning insurers and providers with regards to where and how they need help, the healthcare industry can offset its oversized spending and protect patients from fraudulent crimes.

A recent study brought to surface just how effective the preventative measures in place against medical claims fraud really are - revealing that for every federal dollar spent on battling claims fraud, at least $20 is recovered. Leading the study was Jack. A Meyer of Health Management Associates. Meyer states, “If all costs and benefits are accounted for, the benefit to cost ratio of False Claims Act law enforcement now exceeds 20:1. Civil health care fraud is one area where federal and state governments are recovering far more than they are spending.”

False Claims Act Medical Claims Fraud ROI PayerFusion

Meyer and his team analyzed the total spent on federal healthcare investigation and prosecution, and compared that to the amount of money returned to the federal treasury minus the costs of awards to whistleblowers. Their findings were a true indication of the severity of medical claims fraud and how important it is to maintain or increase prevention measures. From the study, it was observed that between 2008 to 2012, the Federal Gov’t spent $574.6 million to recover $9.384 billion in federal civil health care fraud related settlements and judgments.

While the government’s efforts to combat medical claims fraud have been very successful, insurers and providers still believe it is a highly important are of concern. A recent FICO Insurance Fraud Survey revealed that one third of its respondents, which included 260 insurers throughout the US & Canada, feel “inadequately protected against fraud.” Many also claimed that over 20% of their total claims costs was lost to fraudulent claims and more than half of the respondents believe that their losses to medical claims fraud will increase.

Currently, one in five fraudulent medical claims are never detected. Furthermore, Meyer stated after conducting his study that, “The IRS has over 10,000 whistleblower cases in their backlog, with each case reported to be worth in excess of $2 million, and some cases known to be valued by defendants at more than $1 billion.”

It’s evident that there is a much-needed demand for further measures to be implemented to prevent and prosecute those involved in medical claims fraud. As the implementation of the ACA to revolutionize the way in which health insurance is purchased and distributed, many are calling for the issue of medical claims fraud to be addressed quickly. The current administration had originally included a list of provisions highlighting the ACA’s attempt to combat fraudulent claims (view here), however industry leaders are continuing to voice their concern.