Fraud, Waste and Abuse

What Is Healthcare Fraud, Waste and Abuse?

Fraud is intentionally cheating a healthcare benefit program by telling lies, using false representation or making false promises to get money or other things from the program.

Waste is overusing services, or other practices that lead to unnecessary costs to the Medicare program. It's not typically due to illegal actions, but more about misusing what is available.

Abuse includes actions that may, directly or indirectly, result in: unnecessary costs to the Medicare program, improper payment, payment for services that fail to meet professionally recognized standards of care or services that are medically unnecessary. Abuse involves payment for items or services when there is no legal entitlement to that payment, and the provider has not knowingly and/or intentionally misrepresented facts to obtain payment. Abuse cannot be differentiated categorically from fraud, because the distinction between “fraud” and “abuse” depends on specific facts and circumstances, intent and prior knowledge, and available evidence, among other factors.

Intent is the key difference between fraud and abuse. An allegation of waste and abuse can escalate into a fraud investigation if a pattern of intent is determined.

How Does Fraud, Waste and Abuse Affect You?

Fraud, waste and abuse shifts significant resources away from necessary health care services, which results in paying higher copays and premiums, and other costs. Fraud can also impact the quality of care you receive and even deny you of some of your health benefits. Studies show that billions of dollars are lost each year to healthcare fraud in the United States. Laws are in place to prevent healthcare fraud and abuse, and to punish those who commit this crime. Insurance companies such as Essence Healthcare also investigate and try to prevent fraud.

Who Can Commit Fraud?

There are many types of healthcare fraud, which can be committed by individuals, medical providers, employers and others. The primary goal of fraud is to profit financially, or to obtain medical care without valid insurance.

Examples of Individual Fraud

  • Using someone else’s ID card or loaning your ID card to someone not entitled to use it.
  • Providing false statements on an enrollment application, such as adding spouse or dependent information to obtain coverage, or concealing information about past medical history or preexisting conditions.
  • Visiting different doctors to obtain multiple prescriptions.
  • Exaggerating a claim.
  • Providing false information in order to receive medical coverage or services.
  • Failing to report other insurance, or to disclose claims that were a result of a work-related injury.

Examples of Provider Fraud

  • Billing for services that were not provided to the patient.
  • Providing services that are not medically necessary for the purpose of increasing reimbursement.
  • Upcoding—billing for a more costly service than was actually provided.
  • Unbundling—billing each step of a test or procedure as if it were separate, instead of billing the test or procedure as a whole.
  • Submitting claims with false diagnoses to justify tests, surgeries or other procedures that are not medically necessary.
  • Waiving member copays or deductibles.
  • Accepting kickbacks for member referrals.

Examples of Pharmacy Fraud

  • Pharmacies billing and filling more expensive prescriptions when more common, less expensive options are available.
  • Pharmacies billing for prescriptions drugs that are not actually filled, picked up or ever prescribed by a doctor.
  • Pharmacies participating in telephonic phone schemes targeting Medicare members and soliciting for compounded prescriptions (that are not prescribed one’s doctor) for common orthopedic conditions (i.e. arthritis).
  • Prescription drugs prescribed for off-label use (i.e. being used for health conditions not approved by the Food and Drug Administration).

How We Are Fighting Fraud

Essence Healthcare fights fraud and helps protect the funds our members spend on healthcare through a dedicated department called the Special Investigations Unit (SIU). The SIU uses the latest fraud-detection software, fraud hotlines, audits, data analysis and other tools to identify and investigate improper, deceptive and fraudulent billing.

Identify

Essence Healthcare employees are trained how to identify possible fraud and abuse, and will refer these issues to the SIU for investigation.

Detect

SIU staff perform investigations and conduct activities to verify medical necessity, appropriateness of services, proper billing, eligibility for coverage and more.

Prevent

Claim management tools assist with the identification of inconsistent and illogical relationships among claims data. State-of-the-art data mining tools are used to identify providers and members who may be involved in fraud.

How You Can Help

  • Ask your doctor questions and make sure you know and understand the procedures and services performed.
  • You can enhance your ability to identify billing errors by diligently familiarizing yourself with your plan benefits and anticipated costs for services.
  • Be cautious when using websites. Don't enter personal information such as Social Security number, Medicare number, credit card number, etc., unless you're sure it’s secure.
  • Refuse to accept any packages received from an unknown pharmacy or other source.
  • Review your Explanation of Benefits (EOB) when you receive it in the mail. Check to be sure you received the services listed. Are the dates correct? Are there charges that seem wrong to you?
  • Report any suspicious activity or questionable services. All reports are investigated and involve the appropriate federal and state agencies when necessary.
    • Call our toll-free Compliance & Ethics Hotline at 1-800-450-0068. This number is available 24 hours a day seven days a week. You may leave your name and telephone number or choose to remain anonymous. The Hotline is managed by an outside vendor.
    • Online at report.syntrio.com/lumeris
  • DO NOT provide your Medicare or other personal information to unknown individuals who request it (unexpectedly in person, by phone or email) for prescription drug services or durable medical equipment.
  • Be wary of any unsolicited phone calls and/or offers for prescription drugs (including any “free” offers).
  • Only take prescription drugs that are prescribed by your doctor(s). Do a medication review of all the drugs you take with your doctor(s) at every doctor visit.