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Fraud Problem Is Very Real

It's Insurers' $100-Billion Headache


The man arrived at the emergency department of Cedars-Sinai Medical Center so dangerously short of breath that medical care was the first priority. Questions about insurance coverage had to wait.

As he was stabilized and transferred to an inpatient bed, the man gave hospital personnel his name, date of birth, Social Security number and other personal details so a file could be created. Records showed the man had been treated there before and was covered by insurance.

Or so it seemed.

Three days later, the man--who was actually posing as his brother--was discharged. The fraud came to light after the real subscriber received a statement--referring to a hospital tab for $10,000--from his carrier and challenged it.

Mention health care fraud--a $100-billion-a-year problem in the United States--and most people think of doctors or hospital officials inflating charges or billing for services never performed.

Provider fraud is still the most prevalent type in the health care arena, but it has been on the decline.

Meanwhile, consumer health care fraud is on the rise.

In 1995, 20% of reported health care fraud cases in the United States were blamed on consumers, according to a study released in June by the Health Insurance Assn. of America, a trade group based in Washington, D.C. In 1993, just 7% of reported health care fraud cases involved consumers.

In the same time period, provider fraud declined from 92% of reported cases to 78%.

In 1995, health insurers investigated 5,024 cases of consumer fraud, compared to 1,151 cases in 1993, according to Thomas D. Musco of the HIAA, co-author of the study, "Health Insurers' Anti-Fraud Programs."

Some of those cases involved what the HIAA calls "false records of employment and eligibility," in which consumers borrow cards or obtain insurance information from a covered member and use it as their own, or use a card from an expired plan. Other cases involved falsifying claims and misrepresenting information on applications.

To stem consumer health care fraud, insurance companies and hospitals are stepping up anti-fraud programs. For insurance companies, the effort often involves paying closer attention to claims and record-keeping.

For hospitals, it means focusing more on identification--being sure the person who has arrived for services is indeed the same person named on the insurance card by asking for additional forms of ID, preferably including a photo, and other requests. Going even further, one Indiana hospital relies on a fingerprinting system.


While these measures might sound extreme, they begin to make sense after hearing a litany of fraud--and attempted fraud--case histories from physicians, hospital admitting personnel, insurers and fraud investigators. A sampling:

* A man who had dental insurance through his employer filed a claim for a tooth extraction, recalls Jim Garcia of Spectrum Infomatics, a health care anti-fraud consulting firm in Middletown, Conn. Later, he filed a claim for a crown for his son, who was not covered on his plan, pretending it was his crown. The problem was, as an alert insurance company employee discovered, the crown was placed on the same tooth that had been extracted.

* An executive from Springfield, Mass. took his son and his son's friend--who lacked insurance coverage--skiing. When the son's friend had an accident on the slopes, the executive took him to an emergency room and passed the friend off as his son.

* A man scheduled for a knee operation told hospital officials during his pre-op visit that his uncle, a well-known pro basketball player, would take care of his bill. When the admitting office called the player's business office to check, recalls Carl Jackson, health systems manager in admissions at Cedars-Sinai Medical Center, Los Angeles, "they did not know who this person was."

* A man showed up at the emergency department at White Memorial Medical Center, Los Angeles, with a head injury and Dr. Brian Johnston, chair of the hospital's department of emergency medicine, ordered X-rays. Medical records showed the man had been a patient before. "I got the [new] X-rays and then looked at the old films," Johnston recalls. "And then I noticed the [dental] fillings were different."


The dismal lack of insurance coverage partly fuels the increase in consumer health care fraud. In 1994, 6.6 million Californians, or 23% of the population younger than 65, were uninsured, according to statistics gathered by the UCLA Center for Health Policy Research for its publication "The State of Health Insurance in California, 1996." Included among those uninsured are 1.8 million children--or one in five.

"Sometimes it's a culture thing," says Garcia, the fraud consultant. People lucky enough to have insurance tell him they have an obligation to share that coverage with family members or friends.

Whatever the consumer's motivation, hospitals and insurers are cracking down, trying to be certain the patient is not an impostor.

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