Here's Everything you Need to Know about Health Insurance Fraud

The above plans and premiums are for AED 1,000,000 Sum insured for 1 Adult of 30 Years for Dubai city.

Fraud is widely prevalent in the insurance industry. It costs insurance providers hefty sums of money and thus leads to increased premiums for the policy holders. The rising health insurance premiums are a consequence of several other factors like demographic changes, the impact of inflation on healthcare expenses as well as exponential usage rates. But the fact of the matter remains that medical insurance fraud has gravely wounded the insurance market, leading to high health insurance premiums. As such, every time someone abuses the healthcare or health insurance system, it is people like you and me who bear the brunt of their misdeeds.

What is a Health Insurance fraud?

One can define medical insurance fraud as a knowing and willful execution of a treatment that is not medically necessary. It could also entail the over-utilization of services that in turn cost the healthcare system as well as the health insurance providers dearly.

It is a crime and the potential offenders can be anyone starting from a patient to a doctor or even a hospital, its suppliers, the pharmacists, or vendors.

The direct consequence of such fraud is the disproportionate rise in the medical costs. This cost is then paid by the innocent bystanders in the form of the individuals and employers who are forced to pay higher premiums for their health insurance plans. However, far worse is the impact on a patient’s health who are advised unnecessary medical procedures and tests by their medical provider.

Reports suggest that the United Arab Emirates loses an estimated amount of AED 3.67 billion (or USD 1 billion) annually due to medical insurance fraud in the country. As a consequence of doctors prescribing unnecessary tests and overprescribing medicines, the health cover premiums have risen by nearly 20 percent in UAE alone.

The Usual Suspects of Medical Insurance Fraud

Usually, health insurance fraud comprises of minor offenses like ordering expensive and unnecessary procedures like an MRI scan or ultrasound or prescribing unwanted medicines to the patients. It also takes the form of patients being kept in the hospital longer than they need to, especially in the ICUs. Such infractions are commonly seen if the patient owns a health insurance policy.

Listed below are some of the other common areas of healthcare frauds committed by medical practitioners and patients:

Mispresenting dates or location of service
Mispresenting the provider of the service
Billing for services not rendered
Billing for services that are not covered
Reporting incorrect procedures or diagnosis
Overutilizing the services
Waiving of co-payments as well as deductibles
Corruption in the form of bribery

Preventing Health Insurance Fraud

Insurance companies are strongly against fraud as litigation against the perpetrators can be costly. Therefore there is a need to adopt a proactive approach towards preventing fraud. Insurance companies should implement mechanisms to identify any possible fraud and take mitigative actions once it is detected rather than wait for someone to commit fraud and deal with it after the damage is done. Moving towards this proactive approach requires the following steps-

Establish a foundational framework: Implementing a robust foundational framework allows the management to make efficient decisions about investments, resource deployment among answering questions like- how to check whether a claim is legit or fraud? How to find fraud before processing the claim? What is the best way to automate fraud detection?

Know the fraud potential: This allows the quickest and the best course of action to be taken to mitigate the damages fraud in online health insurance. Resources are limited and thus is best to have razor sharp focus on the potential culprits. Examples of false claims consist of deliberate damage to property like a car.

Use of data analytics for fraud detection: Data analytics can help identify habitual patterns that can further generate something called a “suspicion score” that depicts the person’s propensity to commit fraud as well as the likelihood of fraud infiltrating the systems of the insurance company. This technology milks data mining tools and quantitative analysis to gather results.

Reviewing and rescoring claims regularly: Persistence is key in fraud detection. Combine this with predictive modeling and data analytics to continuously monitor for potential fraud. On top of this, these can be automated, thereby reducing the need for manual management. Consistently reviewing and rescoring the suspicion scores can help detect patterns of fraud.

Utilize a layered approach: Fraud can be conducted in multifaceted ways. Therefore the insurance industry needs to utilize all the tools at its disposal to detect a potential fraud. Use all the resources like photos, videos to gather evidence for car accident claims. It is important to collect and organize data available online to recognize medical insurance fraud.

Adapt as per market conditions: Adapt according to the changes in the insurance industry as the criminals are resourceful. They are quick to become adept with the data analytics used by the insurance providers to discern fraud. So in order to fight fraud, the insurance industry must also change its tactics.

Ways for Employers to Recognize and Prevent Medical Insurance Fraud

The bonus of educating the employees against possible fraud lies upon the employers. Here are some tips that can be useful in this regard-

1. Never sign an incomplete or empty claim form

2. Do not sign more than one claim for one doctor’s visit

3. Inform insurer if a doctor offers to waive deductible or co-payment

4. Inform insurer if you don’t utilize a medical service after its pre-authorization

5. Inform insurer if a medical practitioner offers to bill them for a service that is not covered

6. Keep the health insurance card safe. Report lost or stolen cards immediately

7. Get your claims pre-authorized wherever you can

8. Ask questions if you have a confusion. It is your right to know the details of your medical services

9. Be careful with treatments that are not necessary as they may be a potential health risk

In a Nutshell

As the healthcare system in the UAE grows it will lead to a rise in the number of medical insurance fraud. The insurance industry thus needs to take firm and concrete steps towards ensuring that the fraud is effectively reduced if not completely obliterated. An efficacious combination of technology, fraud training, and continuous checks can help yield the desired results for the benefit of one and all.