We have discussed types of healthcare fraud (i.e. Rent-a-Patient Schemes, Pill Mill Schemes, Drop Box Schemes & Third-Party Billing Schemes) in a previous post. However we didn’t highlight some new ways scammers and fraudsters are stealing your healthcare dollars, mainly through the online world.

A recent ABC News article, “Health Care Fraud: Two Ways Scammers Are Trying to Take Your Money” describes two “ingenious” ways fraudsters are stealing your money. The article explains that because of all the healthcare hoopla occurring, people do not understand and are unaware of current policies – leaving what they call “anxious Americans.” This is how the scammers get you.

The first scam that was highlighted was “Door-to-door salesman selling bogus policies.” What does that entail? Scammers are going door-to-door selling fake insurance policies by stating that current legislation is accounting for the low “limited enrollment” period fees. They are confusing people by essentially telling them that if they don’t buy the insurance now, the price will increase excrementally and they will not be able to afford it in time.

The next scam “1-800 advertisements promoting scams” is very similar to the door-to-door scam; however, this time the fraudster are taking it to the airwaves and asking people to call and 1-800 number for “limited enrollment specials made possible by new legislation.”

As always, don’t forget about Medical Identity Theft – this practice is increasing by 375%. The key to any insurance deal is if it is too good to be true than it probably is.

We all know that healthcare fraud is a growing concern. Private (e.g. Blue Cross Blue Shield, Aetna etc.) and public insurers (e.g. the government – Medicare and Medicaid) are both susceptible to fraud with the latter receiving the biggest hit. We know that fraudsters steal money – but how do they do it? In an article released by the United States General Accounting Office (GAO) they highlight some of the major and most prominent healthcare fraud schemes.

1. Rent-a-Patient Scheme
In this scheme organizations pay for—or “rent”—individuals to go to clinics for unnecessary diagnostic tests and cursory examinations. The scary thing is that licensed physicians sometimes participate in the rent-a-patient scheme. Case and point: Robert Bourseau, 75, was sentenced to 37 months in prison and ordered to pay $4.1 million in restitution for his role in a scheme to defraud Medicare and Medi-Cal. He pleaded guilty in June to paying a recruiter to deliver homeless patients to his hospital for unnecessary medical services.

2. Pill Mill Scheme
In this scheme, separate health care individuals and entities (usually including a pharmacy) collude to generate a flood of fraudulent claims that Medicaid pays. After a prescription is filled, the beneficiary sells the medication to pill buyers on the street who then sell the drugs back to the pharmacy. Example: Rick Kloxin, pharmacist in charge of Hogan’s Pharmacy in Lyons, Kans., was found guilty in an internet pill mill scheme. Kloxin pled no contest and was found guilty of 14 misdemeanor counts of violating Kansas Pharmacy laws.

3. Drop Box Scheme
This scheme uses a private mailbox facility as the fraudulent health care entity’s address, with the entity’s “suite” number actually being its mailbox number. The fraudulent health care entity then uses the address to submit fraudulent Medicare, Medicaid, and other insurance claims and to receive insurance checks.

4. Third-Party Billing Scheme
The third-party billing scheme revolves around a third-party biller—who may or may not be part of the scheme—who prepares and remits claims to Medicare or Medicaid (electronically or by paper) for health care providers. It is possible, however, for a third-party biller to defraud Medicare, Medicaid, and others by adding claims without the providers’ knowledge and keeping the remittances or by allowing fraudulent claims to be billed to Medicare or Medicaid through its service. Example: Recently, in Miami, Ihosvany Marquez and several alleged conspirators were indicted on charges of having filed $55 million in phony Medicare claims for HIV, AIDS, cancer, pain and varicose vein treatments.

Healthcare fraud is a $60 billion industry. Fraud “rings” are popping up all over the country mainly because stealing from healthcare providers, patients and government run health programs is safer and easier than being a drug dealer. How can we deter criminals from stealing money from our already troubled healthcare system? Well, if the House of Representatives has anything to do with it, the proposed IMPROVE (Improving Medicare and Medicaid Policy for Reimbursements through Oversight and Efficiency) Act will hopefully provide enough barriers that criminals will find drug dealing/other crimes more lucrative.

The bipartisan bill would end the common practice of mailing reimbursement checks to post office boxes. However, we first should all be asking a very important question. Who thought it was responsible to send reimbursement checks to post office boxes in the first place? What reputable healthcare provider doesn’t have a permanent address where to send checks?

The Act will mandate that all government sponsored health programs pay healthcare providers and suppliers by using direct deposit. This certainly seems to be a step in the right direction and into the 21st century. Direct deposits will eliminate an easy way for criminals to get their hands on reimbursement checks, save the government money on stamps, envelopes, paper check etc., and don’t forget about the environment.

Congress, please say, “Yes,” to healthcare reform.

It was announced yesterday that Blue Cross and Blue Shield health plans recovered close to $350 million thanks to a very efficient 2008 anti-fraud investigation. The total money recovered added up to a 43% increase from the previous year. Fraud activities included false claims, improper billing practices and non-covered procedures.

WellPoint – an independent licensee of Blue Cross and Blue Shield – also announced that they recovered $75 million due to waste, fraud and abuse in their system. According to their estimates, for every $1 spent on investigating fraud the company saves or recovers $11.

Read full article.

If insurance companies can find ways to combat waste, fraud and abuse in their systems, Medicare and Medicaid need to find more productive methods. An estimated $68 billion every year – or 3% – of all healthcare expenditures is stolen. The government could insurance millions with that “extra” money.