Medical fraud is a growing issue across the country. In 2020 alone, the National Coalition Against Insurance Fraud estimated over $3.1 billion in false and fraudulent claims due to healthcare scams nationwide.
As the second largest state in America, it’s no surprise Texas has one of the country’s highest-grossing numbers of medical fraud cases. According to the Texas Department of Insurance, the state ordered $53.8 million in restitution for insurance fraud cases in 2021—a 364% increase from 2020.
Yet this is not a trend the Texas Department of Insurance or top insurance carriers like Central take lightly. In this article, we dive into how these key groups are partnering to end medical fraud in Texas and beyond.
What is medical fraud?
Before we explore the measures these groups have taken to prevent and mitigate medical fraud cases, it’s first essential to understand what it entails.
Medical fraud is the intentional deception of an insurance company to secure unfair or unlawful gain. In some cases, a person committing medical fraud may also aim to deprive a victim of their legal rights.
Who typically commits medical fraud?
Though medical fraud can take many forms, one of three groups is at the helm of these scams.
- Patients who exaggerate or completely falsify injuries or conditions in an attempt to pocket money from their health insurance coverage.
- Providers who recommend tests or procedures that are medically unnecessary so they can bill the insurance company for more money.
- Attorneys who exaggerate or falsify injuries or conditions in support of a certain legal case or action.
What is the punishment for medical fraud?
Alongside paid restitution for any money illegally garnered through fraud, those found guilty of this behavior can face a myriad of legal repercussions.
For example, of the 32 cases of healthcare insurance fraud found in Texas in 2021, guilty parties were sentenced to:
- 20+ years in jail
- 45 years of probation
- 75 years of deferred adjudications
- 2,160 hours of community service
- $14,500 in fines
- A collective $53.8 million in financial restitution
How does medical fraud impact me?
Healthcare fraud is not a victimless crime. Insurance companies, policyholders, and taxpayers directly contribute to reimbursing stolen money through increased insurance rates, higher taxes, and overall inflation for consumer goods and services.
According to the FBI, insurance fraud costs the average U.S. family between $400 and $700 per year in the form of increased payments.
What is the Texas Department of Insurance doing to combat medical fraud?
State Departments of Insurance nationwide are stepping up to help fight against the increasing number of medical fraud cases, and Texas is no different.
This government body, which is designed to regulate the state’s insurance industry and protect the fair treatment of consumers, has played an integral part in identifying, investigating, and prosecuting fraudulent parties.
How do insurance carriers like Central integrate with the efforts of each state’s DOI?
Every Department of Insurance mandates if a carrier writes insurance in that state, they will report questionable claims for examination. While a carrier might aid in unearthing a fraudster’s scheme, its role is primarily to support the DOI throughout the investigation.
Central, however, is not a typical carrier when it comes to fraud. Jeff Lieberman, Central’s Director of Special Investigations & Recovery, and his anti-fraud team are known industry-wide for their dedication to identifying, preventing, and mitigating insurance fraud cases.
For that reason, Central has taken a more in-depth role in the fraud detection process.
“This year, we met with every Department of Insurance for the states we write in,” Lieberman says. “The goal was to really enhance our relationships with them and let them know that we’re a useful partner when it comes to fraud.”
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Part of these conversations included a discussion of what types of fraud are most plaguing each state so Central could align its efforts more closely with the DOI.
“We asked them what their fraud appetite looked like and what they most needed from Central,” Lieberman continues. “In Texas, for instance, there are prosecutors dealing exclusively with insurance, which tells us we can put a lot of effort into stopping insurance fraud in that state because the DOI has the bandwidth to support it.”
Unlike most carriers, Central’s involvement in the anti-fraud process extends beyond submitting a suspicious claim.
“When a fraud case gets reported to the DOI, a task force is created. The DOI is the head of that taskforce, then you’ve got the Drug Enforcement Agency, the FBI, Homeland Security, the IRS…the list goes on and on,” Lieberman says.
Typically, nine federal law enforcement agencies are at the table, with only three insurance companies providing additional insight. Central, known for its industry-leading approach to fraud prevention, is one of them.
“There are only us and two other insurance companies out of thousands who have a voice in that room,” Lieberman says. “Once this committee accepts our claim, these groups conduct a thorough investigation, build out the case, and hopefully make a charge.”
Central’s Larger Role in Fraud Detection
Alongside aiding state Departments of Insurance with investigations, Lieberman and his team dedicate most of their energy to identifying suspicious claims using their industry-leading fraud analytics program.
This program combines historical data from carriers and Departments of Insurance like Texas’ with data from key partners across industries, such as the National Insurance Crime Bureau, the National Recall Database, or TransUnion.
With access to such a wide array of insights, Central’s team has developed a much more accurate understanding of how individual fraudsters operate and how broader patterns of insurance fraud take shape.
The efforts of this team have successfully closed the gap between states and carriers who had previously been persecuting fraudsters in a silo. With more widespread information and documentation of specific individuals and their schemes, Central’s team has led the industry in a more unified approach to fraud detection and prevention.
Digging Deeper: The Major Case Unit under Central’s Special Investigations team is dedicated to investigating multicarrier and multi-claim insurance fraud cases.
Learn more about this work and their current success rate here.
The Future of Fraud Prevention
Medical fraud is a key area of focus for both Central and the Texas Department of Insurance. These groups are working tirelessly on their own and in tandem to adopt new technology, close gaps between resources, and streamline mitigation practices.
For example, as artificial intelligence continues to grow in capability, Central plans to leverage its function in the fight against insurance fraud. “We must constantly think outside the box and beyond traditional parameters to prevent fraud,” Lieberman says.
The added potential of future innovation aside, Central’s team wants medical fraudsters to know their scamming days are numbered.
“We’re all working together now,” Lieberman says. “We all have a seat at the same table. And that will put the nail in the coffin when it comes to medical fraud.”