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Health care fraud may be a $175 billion problem

By Maryalene LaPonsie on June 19th, 2013

Health care fraud and waste could be costing health insurance plans $125 to $175 billion each year, according to an analysis published by Truven Health Analytics.

The research group looked at claims data from 11.6 million commercially insured individuals and their dependents to reach its findings. The individuals work at 150 large employers, and their data was used to identify six areas that accounted for $122.6 million in annual overpayments.

Top areas for health care fraud and waste

Truven Health Analytics found potential fraud and waste was concentrated in six areas.

  1. Schedule II drugs administered without physician oversight: Medications such as oxycodone, morphine and Ritalin are controlled substances categorized as Schedule II drugs by the Drug Enforcement Administration. However, 20 percent of patients received prescriptions for Schedule II drugs despite not having an associated medical visit within 90 days prior to filling the prescription. Cost: $84.3 million
  2. Schedule II refills: By law, Schedule II drugs cannot be refilled, and a new prescription must be written for more medication. Despite this prohibition, 1 percent of patients received refills for these drugs. Cost: $5.2 million
  3. Excessive new patient visits: While the American Medical Association stipulates physicians can only bill patients for a "new patient" visit once every three years, 1.4 percent of visits did not adhere to this guideline. Cost: $18.5 million
  4. Diabetic supplies to those without diabetes: The analysis found 7.4 percent of patients with diabetic supply costs had no diagnosis for diabetes. Cost: $8 million
  5. Improperly billed psychotherapy and drug management services: According to Truven Health Analytics, health insurance plans should be billed using one medical code for psychotherapy and drug management services that are provided together. But for 1.8 percent of patients, these services were billed separately despite being administered by the same provider on the same day. Cost: $5.3 million
  6. Questionable medical transportation: Finally, the analysis found there was no medical visit associated with nearly 5 percent of the medical transport costs paid by health insurance plans. Cost: $1.3 million

"This analysis of real-world health claims data is critical because it cuts through the rhetoric to shine a spotlight on the specific instances where fraud, waste, and abuse are increasingly visible to us," said Mike Boswood, Truven Health Analytics president and CEO, in a written statement.

While fraud and waste may be adding to health insurance rates, the cost per person appears negligible for now. Truven Health Analytics calculates organizations pay $4.93 per member per year as a result of fraudulent or wasteful practices.

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