The victims of billing fraud: from insurers to patients

I was looking over my medical insurance statement recently when I noticed something amiss: My doctor had apparently billed the insurer for two office visits in August, but I had only seen the doctor once for a routine Pap smear. I complained to my insurer, who suggested I call the doctor to see if this was a mistake. “We want to give the doctor the benefit of the doubt,” the insurance representative said. The doctor had billed the insurer for an “extended” office visit--a 60-minute encounter to discuss symptoms of moderate to high severity. But I hadn’t spent 60 minutes with this doctor.

Billing for more expensive services than were actually performed -- or billing for services not rendered at all -- are two of the most common types of fraud in the medical profession, according to insurance companies. They occur with some regularity and involve medical providers of all kinds -- family doctors, specialists, labs and hospitals. The problem was illustrated recently when the federal government announced it was investigating Redding Medical Center, a hospital owned by Tenet Healthcare, for questionable billing involving Medicare patients. A study reported in 2000 in the Journal of the American Medical Assn. found that 39% of the doctors surveyed admitted that they exaggerated the severity of patients’ conditions to help them stay in the hospital, reported symptoms patients did not actually have or changed an official diagnosis.

“It’s a very easy system to manipulate,” says Michael P. Stergio, director of special investigations for Aetna Inc. “You take their word that services were performed, and they were medically necessary and justified.” But what happens to patients when services are neither necessary nor justified? I’m still not sure whether my doctor had made a simple mistake or deliberately created a phantom office visit to make a little more money. The doctor’s office says it is investigating the charge. What is clear, however, is that my medical record now includes information about severe symptoms for a medical condition I never had.

A future liability

False information on your medical record can come back to haunt you. Because your information is available to insurers, it could cause you to pay more for -- or be denied -- coverage for life, health or disability insurance. Many insurance companies belong to the MIB Group in Boston, the only organization that allows carriers to exchange health information about applicants. When you apply for a policy, the insurer scrutinizes your medical history.

Say, for example, your medical records indicate that a doctor has diagnosed you with minor depression when you really had insomnia. An insurer can cite the diagnosis of depression as the reason for denying coverage. The insurer can also send this bit of your medical history to the MIB Group databank, which another insurer may look at when considering whether to sell you a policy or not.

False or misleading information, such as an incorrect diagnosis, may also rob you of health benefits you may need in the future. Many health policies set a limit on the maximum benefits the insurer will pay out over the customer’s lifetime. Often policies have lifetime caps of $1 million, though the figures may be lower. There are also limits on other kinds of benefits -- mental illness, for example. A Massachusetts psychiatrist was sentenced to prison in the late 1990s for routinely billing patients’ health insurers for the maximum number of visits allowed under their policies. In fact, he had seen them only a few times. Patients discovered the fraud when claims for treatment from different psychiatrists were denied because their benefits had been exhausted by the bogus billing.

Questionable billing practices also cost the health system plenty. Aetna’s Stergio says that if a physician can create phony or inflated billings for five or six patients a day, the extra income quickly adds up. Earlier this year, the Centers for Medicare and Medicaid Services found that a clinic in Los Angeles had been paying people $20 or $30 to undergo tests they didn’t need so that the clinics could bill Medicare and Medi-Cal for the services. The federal agency said it is working with law enforcement officials on the case. It has long been known that health-care fraud is big business. Government and law enforcement agencies have estimated that health fraud may account for as much as 10% of the nation’s $1.3-trillion medical bill -- or $130 billion a year. Obviously, we all pay for this, whether through higher medical premiums or increased taxes to pay for law enforcement.

Why do such practices continue? Insurers say that proving fraud is time-consuming and costly. And crooks can be ingenious: When one scheme is uncovered, another invariably pops up, often involving the same people. “It all comes down to money and greed,” says Mike Brandt, manager of special investigations for insurer Health Net’s western region.

While greed is not a human trait likely to disappear anytime soon, there are steps you can take to help protect yourself. First, look over your medical bills carefully and report charges that look suspicious. Never give your insurance card or Medicare card to anyone. Protect it like a credit card. If you have reason to believe that your medical records might contain false information, you can request a copy of your file from the MIB Group. (In most cases, there is a $9 charge per request.) You can download a request form from MIB’s Web site at www.mib.com or call the company for information at (617) 426-3660.

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Trudy Lieberman can be reached at [email protected]