By Shreya Sharma
DRASInt Risk Alliance Private Limited
Introduction
Health care fraud is a type of White Collar Crime (WCC), which involves filing up dishonest healthcare claims in order to earn a profit. It is a crime committed when a dishonest provider or hospital owners mostly leading a reputed health care center, intentionally forces the patients and their families to pay the exceptionally expensive bills for various redundant medical tests and medications, usually by providing distorted facts in determining the amount of forged health care benefits payable. These frauds range from falsification of financial statements to deceive regulators/ shareholders to illegal insurance claims.
Definition
According to the National Health Care Anti-fraud Association in the United States, “Health care fraud is an intentional deception or misrepresentation of facts that could result in unauthorized benefits. These fraud activities often involve fraudulent reimbursement and billing practices” (NHCAA, 2016).
When Health Care Fraud Occurs?
Health care fraud and abuse occur when false or fraudulent information is submitted to a healthcare company to profit from the claim. This might mean getting services covered that you actually do not need. There are different agents involved in such frauds:
Health care providers like doctors, clinics, nurse and hospitals.
Billing companies who work to help medical providers handle claims.
Consumer who want to try and use the system to their advantage.
Medical or health care frauds causes’ irreparable physical harm to the victim, as opposed to mere financial losses, thus, these frauds can be placed under exceptionalities of WCC. Just because some of the stakeholders often lack basic medical training, their actions are usually disastrous resulting in fatalities. Over the years, these frauds committed by health care facilities, institutions and providers are becoming extremely complicated and challenging.
According to World Health Organization (WHO) report on the health care status in India, as many as 31.4% of the doctors were discovered to have been educated only up to a secondary level of education. Another astonishing fact was that around 57.3% did not possess any medical degree, which is one of the utmost necessities as it contains valid proof of your expertise in the field. Another statistic speaks up the high percentile of dentists who were barely having minimum legal qualifications to practice in the field, the percentile speaks up with certainly damning results i.e. 46.2% in urban and 27.4% in all rural dentine professionals (Anand & Fan, 2016).
Above data itself is indicative that eventually after due advancements and developments, medical practitioners in India are committing fraud in broad daylight, risking hundreds of lives in danger and severely impacting the integrity of this respectable professions. We, rely on doctors more than ourselves, without any notable question because of it being the most respected and noble profession. In India, most of the medical practitioners are found involved in activities like issuance of a false medical certificate, unnecessary billings, selling redundant and harmful medicines etc. Although going with due heinousness of these crimes, they can be treated into the category of petty crimes, but unfortunately few of the well- practiced doctors, having mindset of committing a crime tactically would help them to escape from punishments. News of practicing medicines without minimum qualification or with fake degrees, organ trafficking, female feticide in guise of abortion and many other medical crimes is not uncommon.
Case
The multi-billion rupee Gurgaon kidney scandal came into light in January 2008 when police arrested several professional who were running a health care sector. Kidneys from most of the victims were transplanted into clients from foreign countries with an urge of huge gains. Police, after various complaints raided the institution and caught the main culprit’s red-handed. It was seen that the doctors paid as little as $1000 as the buying price and then sold them for as much as $ 37,500 (Simon, 2008).
Reasons behind Health Care Frauds
Just like every other area of expertise, fraudsters have their significant share even in the healthcare sector. Every day every fraudster is busy finding new means for gaining illegal access to someone’s liability and thereby making opportunities for gaining undue profits. Although fraud occurs all the time, affecting different types of industries and organizations, health care fraud can be classified in a specific type of fraud that affects majority of citizens.
Some of reasons behind increase in health care frauds (Dean, Vazquez-Gonzalez, & Fricker, 2013) are but not limited to following:
Lack of Education:
Difficulty in understanding different medical information by patients and their wards facilitates the occurrence of medical fraud. Professionals belonging to health care frauds often take advantage of the innocent people and indulge in wrongful acts by their well deceived actions.
Tough Economic Times:
People usually under pressure fail to think rationally and tend to make choices irrespective of measuring the cost-benefit ratio. There’s a lack of knowledge to general public on this specific topic.
A Need of Urgency:
An emotional call and empathy by the doctor towards family member who is having ill- health often makes the guardian lose his senses in order to save the precious life. The ignorance is then exploited.
Inflating Claims and Associated Frauds:
Billing for higher medical claims and incorrect diagnosis which eventually go unnoticed due to ignorance regarding the medical liabilities to general public.
Difficulty in detecting an unnecessary prescription and additional treatments.
The ease in filing for health care claims and insurances further.
Ease of forging and selling prescription of harmful medicines and drugs.
The Fraud Triangle
Every fraud related crime can be better comprehended by understanding the “Fraud Triangle”. The three pillars forming a triangle usually work in tandem. One of the angles of fraud triangle is ‘pressure’ i.e. which results in irrational behaviour of individual when they face tough times. The other two angles will be ‘opportunity’ and ‘rationalization’.
Pressure: Vulnerability towards commission of fraud increases when individuals are under some form of pressure. This pressure can be either external for e.g. struggling economy or internal e.g. pressure from family issues and to succeed in one’s career to attain high fame in the market industry. The major reason resulting for increase in pressure stands out to be the financial demands viz pressure of making huge profits and meeting aspirations of the family members and employers. Whatever the reason may stand, but many professionals in the health care industry fall victim to this perceived pressure.
Opportunity: Professionals under pressure seek different opportunities to gain extra money and take advantage of the system illegally. Doctors have the ability to ask the patients for different tests which are not even necessary and hospitals with due margins for doctors, try to gain benefits by false charging the money as part of treatment. With the ongoing pandemic, some fraudsters are using the opportunity for extending their illegal means.
In one of the cases of Rajkot, Gujarat five people were arrested for marketing of the drug named ‘remdesevir’ injections in the city. Another racket for selling the same drug was busted in Mumbai, where a group of 7 people used to sell the drug for almost 25,000 to 80,000 per vial (Dalvi, 2020).
Ignorance by patients can grant opportunity to the fraudsters. If there is certain pressure to gain extra revenue and there’s a related opportunity, this ignorance is sure to be exploited.
An organ transplant racket was busted in Tamil Nadu by the officials of the Union Ministry of Health & Family Welfare. It was observed that hearts were harvested from brain-dead patients and were transplanted to foreign nationals for huge returns. In 2017, 25% of all heart transplants and 33% of lung transplants (kennel, 2018) were conducted illegally on foreigners.
Rationalization: In all fraud situations, the last stage is incredibly important especially in health care frauds. Professionals involved in such acts, may not perceive their actions as fraudulent, for instance, a doctor may state that all the tests were equally important to find the real cause of illness. For a patient with mild cold and cough, a CT scan may not be appropriate; a set of antibiotics could have worked. If one of the two stages has occurred, the third stage of fraud triangle follows up closely.
Conclusion
Feedbacks on surveys suggest that the Indian insurance industry is expected to touch US$280 billion by 2020 owing to economic growth, increasing awareness and stronger distribution channels. In terms of gross premiums generated by a country, India ranks 10th for Life Insurance and 15th for Non-Life insurance products. The nexus between corrupt medical professionals and the civil administration is one of the major factors resulting in proliferation of medical venality. Even if people come to know regarding unethical and prohibited activities in the profession, they turn a blind eye, either because they are afraid of the doctors or it doesn’t concern them e.g. many people were aware of the kidney racket but did not report the matter to law enforcing agencies fearing of the consequences. This organ trade was fuelled by poverty. Poverty drives people to easily fall into the trap set by unscrupulous elements that lure with offers of money and sometimes even jobs in exchange for a kidney. Social obligations accelerate the process of medical corruption. A medical professional who is under the weight of someone having professional superiority, finds it difficult to refuse a VIPs request. The National Anti-fraud Unit (NAFU) pointed out several cases of malpractices among empanelled hospitals. Almost 171 hospitals based in Gujarat, Chhattisgarh, Madhya Pradesh and Punjab, were working with illegal medical practices were de-empanelled and Rs.4.6 crore penalty were imposed in such hospitals as a fine for committing frauds with patients (ANI, 2020). Just to summarise:
Although healthcare insurance is generally outside the purview of property/casualty insurance, healthcare fraud affects all types of property/casualty insurance coverage that include a medical care component, such as medical payments for auto accident victims or workers injured in the workplace.
Fraud and abuse take place at many points in the healthcare system.
Doctors, hospitals, nursing homes, diagnostic facilities, medical equipment suppliers and attorneys have been cited in scams to defraud the system.
Financial losses due to health care fraud are in the tens of billions of dollars each year.
Frauds
Billing for services not rendered.
Up coding services and medical items (where the provider submits a bill using a code that yields a higher payment than for the service or item that was actually rendered).
Filing duplicate claims.
Unbundling (billing in a fragmented fashion for tests or procedures that are required to be billed together at reduced cost).
Performing excessive services; performing unnecessary services; and offering kickbacks.
The abuse and resale of legal narcotic and other prescription drugs.
Health Identity Theft
Health identity theft is when criminals steal victims’ names, health insurance numbers and other personal data and then defraud insurers by making false claims.
To combat the problem, some medical facilities have limited employee access to data and require photo IDs for people seeking treatment.
Who commit fraud?
Organized criminals who steal large sums through fraudulent business activities.
Professionals and technicians who inflate service costs or charge for services not rendered.
Ordinary people who want to cover their deductible or view filing a claim as an opportunity to make a little money.
The Anti-Fraud Measures
Insurance entities continue to curtail fraud, yet a lot needs to be done to make the existing framework more robust and comprehensive. Perpetrators have the creativity to identify ways of subverting the system, so staying ahead needs constant software up gradation and monitoring by seasoned professionals!
The legal options of an insurance company that suspects fraud are limited.
An insurer can inform law enforcement agencies of suspicious claims, withhold payment, and collect evidence for use in a court.
The success of the battle against insurance fraud therefore depends on two elements:
i. The level of priority assigned by legislators, regulators, law enforcement agencies and society.
ii. The resources devoted by the insurance industry itself.
The Anti-Fraud Measures(continued)
Most insurers have established special investigation units (SIUs) to help identify and investigate suspicious claims.
These units range from small teams, whose primary role is to train claim representatives to deal with the more routine kinds of fraud cases, to teams of trained investigators, including former law enforcement officers, attorneys, accountants and claim experts.
More complex cases involving large-scale criminal operations or individuals that repeatedly stage accidents may be turned over to the Police, which has expertise in preparing fraud cases for trial.
One of the most effective means of combating fraud is the adoption of data technologies that cut the time needed to recognize fraud. Advances in analytical technology are crucial in the fight against fraud to keep pace with sophisticated rings that constantly develop new scams.
Traditional approaches, such as using automated red flags and business rules, have been augmented by predictive modeling, and link analysis—which examines the relationships between items like people, places and events.
Artificial intelligence can be used, among other tools, to uncover fraud before a payment is made.
These newer strategies are employed when claims are first filed.
Suspicious claims are flagged for further review, while those with no suspicious elements are processed normally.
Systems that identify anomalies in a database can be used to develop algorithms that enable an insurer to automatically stop claim payments.
These initiatives can serve as options for redressal:
i. Stringent laws and regulation to punish the guilty
ii. Insurers reporting every suspected fraudulent claim to the fraud division. Enhancement of common databases which shares fraud data.
To be continued...
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ANI. (n.d.). National Health Authority_ 171 hospitals de-empanlled and Rs 4.
Dalvi, V. (n.d.). Thane_ Five arrested for illegally selling Covid-19 drugs Remdesivir and Tocilizumab.
Dean, P. C., Vazquez-Gonzalez, J., & Fricker, L. (2013). Causes and Challenges of Healthcare Fraud in the US. International Journal of Business and Social Science, 4(14), 4. Retrieved from https://ijbssnet.com/journals/Vol_4_No_14_November_2013/1.pdf
kennel. (2018). In Chennai, the hearts beat for foreigners - The Hindu.
Musau, S., & Vian, T. (2008). Fraud in Hospitals. U4 ISsue, 5(1).
NHCAA. (2016). Consumer Info & Action - The NHCAA. Retrieved from http://www.nhcaa.org/resources/health-care-anti-fraud-resources/consumer-info-action.aspx
Simon, R. (2008). India’s Black Market Organ Scandal. Time. Retrieved from http://content.time.com/time/world/article/0,8599,1709006,00.html
