Insurance fraud makes premiums more expensive

I often talk about how insurance fraud affects your premiums. That’s because according to some estimates insurance fraud adds 20 percent to your insurance bill.

Americans pay $308.6 billion annually just to cover the costs of insurance fraud, according to a 2022 study conducted by the Colorado State University Global White Collar Crime Task Force for the Coalition Against Insurance Fraud. That’s an average of $932.63 for every American or nearly $3,800 for a family of four.

What could your family do with an extra $3,800 a year? Perhaps you’d take a nice vacation, make some improvements to your house or pay down a debt.

One major part of insurance fraud is health insurance fraud. That includes Medicare and Medicaid fraud. I want to provide some examples of health insurance fraud and look at how some fraudsters use artificial intelligence (AI) to commit such fraud. AI can also be used to combat health insurance fraud.

I also want to offer some ways that you can help fight insurance fraud.

That 2022 study estimates that health insurance fraud totals $36.3 billion annu- ally. In addition, Medicare and Medicaid fraud costs $68.7 billion. That totals $105 billion in insurance fraud within our healthcare system.

Health insurance fraud may be initiated by a provider who bills for services that were never rendered. Or a provider may up-code a claim by billing for a more complex service with a higher reimbursement rate than the service that was provided.

A patient can also commit health insurance fraud. One way this occurs is for an uninsured or under-insured patient to provide a name and health insurance information of another person to the provider. Or an individual may use a computer program to create a fraudulent invoice to submit with a claim for services that were not provided.

Then there’s AI, which can be used for both good and bad.

Karen Weintraub, president of Healthcare Fraud Shield, told Insurance Business Magazine last year that perpetrators can use AI to generate false medical records to support fraudulent claims. That can make it more difficult for insurance companies to review the claims to see if they are legit.

Here’s the good news about AI. It can help insurance companies analyze data on a larger scale and detect patterns that would otherwise escape the human eye. That could help insurance companies and health insurance members who pay their premiums.

Consumers can help fight fraud by being vigilant when it comes to claims being paid by insurance companies, Medicare or Medicaid. Carefully review your Explanation of Benefit statements when you receive them.

EOB statements can be difficult to understand. But you need to review your EOB statements and ask your insurance company or provider questions if something isn’t clear. Also, look for red flags such as being charged twice for the same service or being charged for medical equipment that you did not receive.

Such errors may be honest mistakes. Or they could be a sign of fraud. If you’re unsure, you may call our consumer experts at the Department of Insurance from 8 a.m. to 5 p.m. weekdays at 855-408-1212.

I’m dedicated to fighting insurance fraud. I hope you’ll join me in this fight.