Health insurance fraud is enough to make you sick. The National Healthcare Anti-Fraud Association (NHCAA) reports that 3% of healthcare costs (about $68 billion) are due to fraud. Health insurers are on the offensive protecting against bad claims. There are a few red flags that may trigger a review of your claim. Like the airline no-fly list and the tax auditor's check list, the flags may prevent you from getting what you think you deserve. (Learn more in Services That Health Insurers Often Decline.)

Healthcare providers and insurance companies use software to identify bad claims. The software creates and analyzes behavior patterns to identify anomalies. If your claim is flagged it may be for one of the following reasons.

  • Identity Theft
    Millions of Americans don't have health insurance, so the rate of medical identity theft is increasing. The theft could occur as easily as sharing insurance cards. Non-matching or frequently changing patient information is a flag for identity theft. (Learn more in Identity Theft: How To Avoid It.)

  • Coded but not Delivered
    Insurance coding is a big business. The medical codes keyed into claim systems identify the healthcare product or service that was delivered. The wrong code may signal a service that could not possibly have been delivered, like prostate surgery on a woman or an orthopedic exam on a limb that was removed years ago. Most fraudulent claims are not as blatant for example: a more common type of fraud would be to code for a more expensive and extensive exam than the one that was performed.

  • Split Claims
    Providers sometimes submit claims to health insurance companies spread out over several visits to obtain a higher payout. Splits also occur to avoid payout limits. Services that are normally performed together or require a fewer number of procedures stick out when compared to behavior models. The claims are likely to be investigated further or denied.

  • New Coverage and Major Procedures
    If you have new insurance coverage and undergo a major medical procedure within the first 12 months, the claim is likely to be reviewed to identify any previous medical condition. The theory is the insurance may have been purchased because the patient knew he or she was seriously ill. Many insurance policy premiums are priced based on the health and medical history of the insured, so unreported sicknesses on insurance applications lead to losses for insurance companies.

  • Multiple Claims
    Multiple claims for the same procedure from the same or different providers may trigger claim reviews. Getting a second opinion before a procedure is common, but having multiple colonoscopies by different doctors just doesn't sound legitimate. The timing of the procedures may also send an alarm when occurring close together.

  • Erroneous Prescriptions
    It is becoming common to call the doctor and have a prescription phoned into the pharmacy, but a new prescription without a doctor's visit is a red flag for prescription abuse. Prescription databases may be scanned to identify unneeded drugs. One clue is a drug for a previously undiagnosed condition.

Many health insurance claims are processed without additional scrutiny. Some claims initially flagged as fraud are investigated and found to be legitimate. If your claim is denied due to suspected fraud, follow your insurer's procedures for contesting the denial or contact your state insurance commission. (Learn more in How To Choose A Healthcare Plan.)

Related Articles
  1. Insurance

    What's The Difference Between Medicare And Medicaid?

    One program is for the poor; the other is for the elderly. Learn which is which.
  2. Retirement

    Top Signs You Aren’t Ready to Retire Yet

    Think you are prepared to retire? These warning signs may indicate otherwise.
  3. Insurance

    Health Open Enrollment: Read This Before You Renew

    Time to renew your health plan – or shop for a new one for 2016. Here's how to get the most from marketplace open enrollment for the Affordable Care Act.
  4. Insurance

    5 Ways to Ace 2016's Health Insurance Marketplace

    Not sure how the Health Insurance Marketplace/Exchange works? Here are 5 ways to avoid frustration when enrolling through the federal or state exchanges.
  5. Insurance

    Avoid the Obamacare No-Insurance Penalty by Jan. 31

    If you don't have health insurance, act NOW or you could owe penalties on your 2016 taxes, in addition to this year's.
  6. Retirement

    Getting Through the Medicare Part D Maze

    Having trouble sorting through your prescription drug coverage options? Try these solutions to finding the right Medicare Part D option.
  7. Insurance

    Do You Need Short-Term Health Insurance?

    Yes, if you've no other coverage options. Here’s what you need to know about how it works and how it differs from employer-provided and marketplace plans.
  8. Home & Auto

    Make This The Year You Get Vacation Insurance

    With a few simple policy additions you can protect your holiday plans from being ruined.
  9. Insurance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  10. Insurance

    Does an Insurance Plan Network Affect Your Health?

    So-called narrow networks have been criticized. But it's not necessarily true that they have a negative impact on the medical care you get.
  1. Does a Flexible Spending Account (FSA) cover massages?

    Flexible Spending Accounts (FSAs) cover massages for certain medical treatments. These treatments must be approved and prescribed ... Read Full Answer >>
  2. Does a Flexible Spending Account (FSA) cover Lasik?

    Flexible spending accounts (FSA) can be used to pay for qualifying LASIK procedures. LASIK is not the only laser eye surgery ... Read Full Answer >>
  3. Are Flexible Spending Account (FSA) expenses tax deductible?

    Flexible Spending Account (FSA) expenses are not tax deductible. The U.S. Internal Revenue Service (IRS) states you cannot ... Read Full Answer >>
  4. Does a Flexible Spending Account (FSA) cover acupuncture?

    A Flexible Spending Account (FSA) covers acupuncture. The Internal Revenue Service (IRS) has defined acupuncture as a qualifying ... Read Full Answer >>
  5. Can I get dental insurance with Medicare?

    Medicare does not offer dental insurance that will cover dental care and medical supplies, such as cleanings, sealants, extractions, ... Read Full Answer >>
  6. Does money in a Flexible Spending Account (FSA) roll over?

    As of 2015, according to IRS regulations, the maximum amount of funds in a Flexible Spending Account (FSA) that can be carried ... Read Full Answer >>

You May Also Like

Trading Center