This article discusses the fraudulent healthcare billing practices and its impact on the U.S. healthcare system. This type of medical billing is to be avoided at all costs.

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Fraudulent Medical Billing – An
Overview
Fraudulent medical billing is one of
the major contributing factors to the
rising healthcare costs in the U.S. This
can be attributed to human or
computer error, but in some
cases it may be an intentional
deception by the hospital, doctor, insurer or other
medical billing specialist. A person
who knowingly submits a false claim
to benefit himself or others commits
fraud. Fraud can also result from
medical coding and billing errors
that lead to excessive
reimbursement. Examples of fraud may include
submitting claims for services not provided, falsifying
claims or medical records and misrepresenting dates,
frequency, duration or description of services rendered.

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With today’s incredibly complex medical billing system,
medical providers and organizations are bound to make
occasional mistakes when coding the services provided
to patients.
Most Common Types of Medical Billing Frauds and
Abuse That Affect the U.S. Healthcare System
• Upcoding: Submitting a claim for a service more
comprehensive than the actual service provided
leads to upcoding. For instance, billing for a broken
ankle while the actual treatment provided was for a
sprained ankle.
• Cloning: This is the fraud practice of using an EHR
system to automatically generate a more detailed
patient observation profile by copying the details of
another patient with similar symptoms to create the
impression that a more thorough examination was
done. The OIG (Office of the Inspector General) has
indicated that this practice leads to improper

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payments, incorrect documentation of records, and
considerable risk to patients.
• Phantom billing: One of the most common types
of billing fraud has to do with services being billed
that were not actually performed. This also affects
healthcare costs in the millions of dollars invested in
tracking and prevention.
• Inflated hospital bills: Inflated medical bills occur
when patients are billed more than a procedure
should have cost, for extra equipment not actually
used, or for the same service twice. Deliberate
billing mistakes also contribute to inflated hospital
bills. Patients can use an itemized bill to detect
these fraudulent billing practices.
• Service unbundling: With this practice, bills are
provided for multiple procedures separately rather
than billing them together as a bundle, with the aim
to increase profit.
• Self-referrals: This is when healthcare providers
refer themselves or a partner provider to perform a
service, usually for a financial incentive.

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• Double billing: This is the practice of charging
more than once for the same service that is similar
to billing using an individual code and then again as
part of an automated or bundled set of tests.
EHR Technology Can Contribute to Healthcare
Fraud
According to a recent report from the OIG for the Health
and Human Services Department (HSS), flaws in
electronic health record systems (EHR) can also lead to
overcharging. The online survey for this report found
that CMS had provided only limited guidance to
Medicare contractors on EHR fraud vulnerabilities. HSS
officials have issued severe warnings against healthcare
professionals who use web-based medical billing
systems to overbill.
Real Life Cases of Medical Billing Fraud
1. Report from the official website of the United States
Attorney’s Office - Engage Medical, the medical
billing group and three other medical practices have

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agreed to pay a total of $3,340,979 to resolve
claims that Engage Medical overbilled for nuclear
stress tests conducted between July 2007 and
March 2011. It is claimed that physicians and
practices hired Engage to help process billings, and
the company routinely billed Medicare twice for the
same tests.
2. LONGISLAND.com reports the case of a New York
doctor arrested for submitting millions of dollars in
false billings to Medicare. From January 2011
through mid-December 2013, Medicare was billed at
least $85 million for surgical procedures purportedly
performed by the doctor.
CMS’ RAC Audits
To reclaim the money wasted and lost, CMS implements
recovery audits or RAC, to motivate healthcare
providers to help create and sustain more accountable,
evidence based, and streamlined healthcare services.
The primary focus of RAC auditors or recovery firms is
to identify overpayment of medical bills. Individual
providers, hospitals, clinical laboratories, durable

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medical equipment suppliers, hospices and home health
agencies have all been the subject of fraud
investigations.
Medical Billing Advocates of America (MBAA) has also
issued a free report on the web to educate the general
public on medical bill overcharges and fraudulent billing
practices.
Fraudulent medical billing must be avoided at all costs.
This is an area that needs special attention, which may
not be possible in a busy physician office setting. A
professional medical billing and coding company
can be of immense support here, providing the service
of experienced medical billing specialists and coders
who can help healthcare providers avoid billing errors
and adhere to industry guidelines.