Common Types of Healthcare Fraud

By Brock Benjamin
Founding Attorney

Healthcare fraud is a broad term used to describe any type of fraud occurring in the healthcare industry. Generally speaking, healthcare fraud occurs when an individual misrepresents or deceives a healthcare provider, a patient, or a health insurance provider for their own benefit.

Healthcare fraud can be perpetrated by more than just hospitals, doctors, nurses, pharmacists, and private individuals. Healthcare fraud can also be perpetrated by medical transportation companies, home healthcare providers, medical equipment suppliers, nursing homes, laboratories, rehabilitation providers, and more.

As the United States combats surging healthcare costs, people working in the healthcare industry have fallen under an unprecedented level of scrutiny. With this increasing level of oversight, healthcare fraud charges are on the rise. These charges can be brought in both state or federal court, and the penalties can be incredibly severe, with prosecutors showing little mercy. Anyone who is facing a healthcare fraud charge should immediately contact an experienced healthcare fraud defense attorney to protect their future and their freedom.

Some of the most common types of healthcare fraud include:

  1. Medical Identity Theft

Medical identity theft involves a person committing identity theft (by appropriating another person’s name, social security number, insurance information, or Medicare/Medicaid number, for instance) with the intent to obtain medical services or treatment. This often occurs when individuals want or need medical treatment and don’t have insurance, or aren’t covered by Medicare or Medicaid. Even if the person whose identity is being stolen consents to the use, it is still illegal for a person to impersonate someone else to receive medical treatment. Medicare, Medicaid, and insurance companies will only cover the medical costs of the person receiving their coverage, and anyone committing medical identity theft can face severe criminal penalties. 

Medical identity theft can also occur when an individual appropriates the identity of a healthcare provider to fill fraudulent prescriptions, refer patients for unnecessary services or supplies, or bill for services that weren’t rendered.

  1. Upcoding

Upcoding occurs when a provider bills for services which were more complex or involved than the services that were actually rendered, which is charged at a higher price point. This can occur, for example, when a physician bills a basic, 10-minute exam as an hour-long complete physical, or when a pharmacist provides a patient with a lower-cost generic medication but bills for the brand name medication which comes at a higher cost. This can also occur when a medical equipment supplier bills for medical equipment that was of a higher cost than the equipment the patient was given. Similarly, upcoding can occur when a doctor bills for a service that was actually provided by a nurse.

  1. Double Billing

Double billing occurs when healthcare providers bill for the same service multiple times, even though it was only rendered once. It can also occur when two providers bill for the same service on the same date to the same patient. Double billing can also occur when a provider bills a patient, Medicare, Medicaid, or a private insurance company for an individual service that was part of a bundle of charges, along with the full bundle, effectively receiving compensation for the same service twice.

  1. Unbundling

In healthcare, providers use codes to bill patients, private insurance providers, Medicare, and Medicaid. These codes can represent individual procedures, or can be bundled to cover a multi-step procedure. These bundles are designed to reduce costs to patients. Similar to double billing, unbundling is a type of healthcare fraud involving billing multiple individual procedure codes when the group of procedures were covered by a single comprehensive code. This allows the provider to receive payment for each aspect of the treatment, rather than being paid for the treatment as a whole, which can result in higher reimbursements from patients, Medicare, Medicaid, or a private insurance company. For example, a laboratory may attempt to increase the amount they can bill for by unbundling and charging for each individual blood test rather than charging for the panel as a whole. Similarly, a surgeon may bill the individual codes for incisions and suturing when the whole surgery was covered by one comprehensive code.

  1. Billing for Unnecessary Services

Another common type of healthcare fraud occurs when a healthcare provider bills for a service that wasn’t medically necessary. Healthcare professionals are legally required to only provide services that are necessary to the patient’s health. This commonly occurs when providers order unnecessary tests, procedures, and imaging during the course of legitimate treatment so that the provider can bill for additional services that weren’t medically necessary for the patient’s treatment.

This type of healthcare fraud can also occur when providers attempt to misrepresent non-covered services as medically necessary. Medicare, Medicaid, and private health insurance companies have a list of approved services and medications that are seen as medically necessary. Sometimes healthcare providers fraudulently misrepresent a service that wouldn’t ordinarily be deemed medically necessary so they can be reimbursed by insurance providers as well as paid by the patient for the services.

  1. Billing for Services Not Rendered

Another common form of healthcare fraud involves healthcare provider billing a patient, private insurance company, Medicare, or Medicaid for services or equipment that weren’t provided to the patient in the first place. To be covered by insurance, Medicare, or Medicaid, the patient must have actually received the service or supplies. However, this doesn’t stop some individuals from trying to increase their rate of reimbursement, such as billing for a patient’s crutches following a sprained ankle, when the patient was never given crutches.

  1. Kickbacks

Generally speaking, it is illegal for any healthcare provider or medical facility to receive anything of value from another provider, facility, device manufacturer, or pharmaceutical company during the course of their professional duties. These can include cash, equity, gifts, or any other form of renumeration. This is because healthcare providers shouldn’t be influenced by any factors other than the patient’s best interests when making vital medical decisions. However, there are many instances where providers or facilities receive “perks” for referring patients, meeting quotas, using specific devices, prescribing specific medications, and the like. When providers or facilities are being renumerated for making decisions that benefit someone other than the patient, this is considered receiving a kickback, which is a form of healthcare fraud. Even if the provider or facility legitimately believes they are acting in the best interest of the patient by favoring a certain service, practice, facility, medication, or device, they are still breaking the law if they are receiving any form of renumeration for that decision.

  1. Medicare and Medicaid Fraud

Medicare is a federally-funded health insurance program for Americans who are 65 or older, or who have long-term disabilities. Similarly, Medicaid is a government program at the state or federal level which provides healthcare benefits to low-income Americans. Fraud targeted at these services is prosecuted harshly, with the potential for hefty fines and even incarceration. 

Even so, Medicare and Medicaid patients are the most frequent targets of healthcare fraud. This occurs when an individual overbills Medicare or Medicaid for fake, inflated, or unnecessary services. There have been countless cases of fraud committed against Medicare or Medicaid patients by individuals charging an inflated price for services, prescriptions, or equipment only those with Medicare or Medicaid coverage. All healthcare providers must charge all customers the same amount for their services, prescriptions, or equipment, regardless of coverage and what entity may be providing that coverage.

  1. Prescription Fraud

Prescription fraud involves a wide range of fraudulent practices, including prescription forgery, diversion, and doctor shopping. Prescription forgery occurs when a prescription has been stolen, altered by someone other than the prescribing professional, or is not signed by the authorized medical professional. Prescription diversion involves a patient selling or giving away a legally obtained prescription for illegal use. Doctor shopping occurs when a patient visits multiple providers under the guise of a legitimate purpose to obtain a controlled substance for illegal use. Doctor shopping can also occur when a patient seeks out a medical office that engages in unethical practices to secure a prescription for a controlled substance.

Texas Healthcare Fraud Defense Lawyer

If you or a loved one are facing healthcare fraud charges in Texas, it’s vital that you contact an experienced Texas fraud defense attorney as soon as possible. A healthcare fraud conviction could lead to disastrous consequences, including the loss of your license, hefty fines, and even jail time. You need an experienced advocate who will fight relentlessly for you, your rights, your freedom, and your future.

The Benjamin Law Firm offers comprehensive criminal defense services, with an entire practice area dedicated to fraud defense, along with civil litigation services and aviation law services. With decades of experience in the field of criminal law, founding Attorney Brock Morgan Benjamin is one of few attorneys who can say they specialize in criminal defense. That’s because Attorney Benjamin is Board Certified in Criminal Law by the Texas Board of Legal Specialization. Many attorneys have experience in criminal law, but few truly specialize in it like Attorney Benjamin.

As a former prosecutor, Attorney Benjamin understands the tactics prosecutors use to secure convictions, and he uses this knowledge to mount the most effective defense possible for his clients.

Our office is located in El Paso, but we proudly serve clients across the great state of Texas. Contact us or call us at (915)-221-7462 today so we can get started preparing your defense. También podemos ayudarte en español.

About the Author
Brock Benjamin is board-certified in Criminal Law by the Texas Board of Legal Specialization.  His practice is primarily state and federal criminal law and appeals.Brock 

Posted in: Healthcare Fraud