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Corporate health insurers profit by condoning fraud

Written by Diane Archer

Here’s another reason to support Medicare for All, a single public health insurance system, as well as to beware of Medicare Advantage plans, corporate health plans that contract with the federal government to offer Medicare benefits. A Pro Publica investigation by Marshall Allen reveals that corporate health insurers profit by condoning health care fraud, undermining the health and financial well-being of their members.

It’s projected that we could bring health care costs down by as much as 10 percent if we could eliminate health care  fraud. It would mean a savings of as much as $120 billion a year in private health insurance spending, not chump change.

Pro Publica found that one personal trainer in Texas, who was not a medical doctor, billed four big health insurers for his completely fabricated “services” and received $4 million. He billed the insurers as an out-of-network provider.

The US Department of Justice files thousands of criminal and civil fraud cases each year. But, private health insurers rarely file fraud cases even though they have the data to identify scammers.

Aetna, Cigna and UnitedHealthcare would not permit Allen to speak with the people on their staff who investigate fraud, most likely because they do so little to combat it on behalf of their members. During 2017 and 2018, in California, which has 14.4 million people with commercial health insurance, private insurers referred just 22 criminal cases to prosecutors. And, the insurers brought just one civil lawsuit over fraud. In stark contrast, in that same time period, California Medicaid, which covers 13 million Californians, filed criminal charges against 321 medical providers and recovered $93 million.

UnitedHealth provided Pro Publica with a list of just four lawsuits it had brought, where it had won tens of millions of dollars. That’s a pittance given that it had $226 billion in revenue in 2018 alone. What’s more, UnitedHealth and other corporate health insurers do not appear to be willing to provide assistance–not even basic information–as to the frequency with which their patients are treated at a site–to government fraud investigators.  A fraud prosecutor in Los Angeles told Allen that “It suggests we are not on the same page in terms of enforcement and protecting the integrity of the system.”

Minnesota law requires corporate insurers to refer all cases where there is a “reasonable belief” of fraud. Yet, in 2017, a fraud prosecutor received just two referrals and, in 2018, he received five.The state’s Medicaid unit investigated nearly 600 incidents of fraud and issued 134 indictments. Interestingly, auto insurers made well over 1,000 referrals to the state’s fraud bureau.

The state fraud reporting law seems to work no differently in the 35 other states that have it. In Georgia, only three of the ten biggest health insurers reported any fraud. Arizona received just 32 referrals in one year.

The fraud reporting law applies to fully insured health plans, ones where the insurers bear the risk and pay all the bills. It does not apply to self-funded plans, where employers pay the bills with the help of an insurance company administrator. The Department of Labor regulates these plans. Unfortunately, fraud is not one of its priorities.

Some believe that insurers don’t want to take the time and expend the resources necessary for a fraud investigation. Moreover, going after health care fraud could undermine their network adequacy. If the only specialist in the network is providing poor unnecessary care, the insurer cannot risk losing the specialist. Corporate health insurers might also worry that fraud investigations could have reputational risks for them. What if the prosecutor found the insurer was at fault? Former insurer fraud investigators confirm that insurers don’t want to root out fraud because it hurts their profits.

The takeaway: Don’t count on commercial health insurers to ensure the integrity of our health care system.

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