What is Health Care Fraud?

by Jake Newby

| 3 min read

A concerned Black woman reads a document.
Health care fraud is not a victimless crime. 
Every year, the United States loses about $75 billion because of health care fraud, according to the Institute of Medicine of the National Academies. It is a felony that can lead to a rise in health insurance premiums for everyone. Health care fraud can also expose insurance carriers to unnecessary medical procedures, increased taxes, and reduced services.
Health care fraud occurs when an individual, group of people, or company knowingly mis-represents or mis-states something about the type, the scope or the nature of the medical treatment or service provided. It is done to obtain unauthorized payments, health care benefits, services, and other things of value from a health care organization, its subsidiaries, or its customers.

Examples of health care fraud

Here are some common instances of health care fraud, according to the FBI:
Fraud committed by medical providers
  • Double billing: Submitting multiple claims for the same service
  • Phantom billing: Billing for a service visit or supplies the patient never received
  • Unbundling: Submitting multiple bills for the same service
  • Upcoding: Billing for a more expensive service than the patient actually received
Fraud committed by patients and other individuals
  • Bogus marketing: Convincing people to provide their health insurance identification number and other personal information to bill for non-rendered services, steal their identity, or enroll them in a fake benefit plan
  • Identity theft/identity swapping: Using another person’s health insurance or allowing another person to use your insurance
  • Impersonating a health care professional: Providing or billing for health services or equipment without a license
Fraud involving prescriptions
  • Forgery: Creating or using forged prescriptions
  • Diversion: Diverting legal prescriptions for illegal uses, such as selling your prescription medication
  • Doctor shopping: Visiting multiple providers to get prescriptions for controlled substances or getting prescriptions from medical offices that engage in unethical practices

Fraud, waste, and abuse

Abuse and waste are two acts that are sometimes confused with fraud, which is an act meant to intentionally deceive or misrepresent.
Waste: Inefficient activities where there was no intent to deceive or misrepresent. Poor, inaccurate, or inefficient invoicing incurred by a company, for example, is considered waste.
Abuse: Activities that may result in unnecessary costs to the company or its customers. This includes but is not limited to payment for services that are not medically necessary, or that fail to meet professionally recognized standards for health care.
In simpler terms when comparing the three, think of it this way:
  • Abuse bends the rules
  • Waste is inefficient but not intentional
  • Fraud is intentionally deceptive

Recognizing health care fraud and protecting against it

Sometimes fraud is easy to spot, like when someone steals your insurance information to get prescription drugs. But other times, it is not so easy, like when a doctor orders unnecessary services to increase payments from an insurance company.
Here are three ways you can protect yourself and others against fraud.
  • Review medical bills to verify that amounts are billed correctly.
  • Review Explanation of Benefits (EOB) forms to verify that dates and services were accurately billed.
  • Protect your health insurance ID as much as you would a credit card; do not share your membership info unless it is necessary, and only with professionals.

How to report health care fraud

Thanks to members reporting fraud, Blue Cross has recovered more than $400 million. Here’s how you can contact us to report suspected fraud. Remember, all information is confidential.
Call us:
  • Anti-Fraud Hotline: 1-800-482-3787
  • Medicare Anti-Fraud Hotline: 1-888-650-8136 (TTY users call 711)
  • Blue Cross Complete (Medicaid) Anti-Fraud Hotline: 1-855-232-7640
Fill out a form:
Fax or mail:
Fax: 1-800-590-4616
Mail: Blue Cross Blue Shield of Michigan, Corporate and Financial Investigations, Department MC 1825, 600 E. Lafayette, Detroit MI 48226.
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Photo credit: Getty Images

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