Medicare fraud and abuse are important national topics. The U.S. General Accounting Office estimates that $1 out of every $10 spent for Medicare and Medicaid is lost to fraud. This translates into fewer resources for health care due to the strains on federal and state budgets. National Heritage Insurance Company has an aggressive program to combat fraud and abuse, but we need your help in reporting problems.

Fraud is the intentional deception or misrepresentation that an individual knows to be false or does not believe to be true and makes, knowing that the deception could result in some unauthorized benefit to himself/herself or some other person.

The most frequent kind of fraud arises from a false statement or misrepresentation made, or caused to be made, that is material to entitlement or payment under the Medicare program.

The violator may be a physician or other practitioner, a hospital or other institutional provider, a clinical laboratory or other supplier, an employee of any provider, a billing service, beneficiary, Medicare carrier employee or any person in a position to file a claim for Medicare benefits.

Under the broad definition of fraud are other violations, including:

• the offering or acceptance of kickbacks, and
• the routine waiver of co-payments.

Fraud schemes range from those perpetrated by individuals acting alone to broad-based activities by institutions or groups of individuals, sometimes employing sophisticated telemarketing and other promotional techniques to lure consumers into serving as the unwitting tools in the schemes. Seldom do perpetrators target only one insurer or either the public or private sector exclusively. Rather, most are found to be defrauding several private and public sector victims, such as Medicare, simultaneously.

According to a 1993 survey by the Health Insurance Association of America of private insurers' health care fraud investigations, overall health care fraud activity broke down as follows:

• 43% Fraudulent diagnosis
• 34% Billing for services not rendered
• 21% Waiver of patient deductibles and co-payments
• 2% Other

In Medicare, the most common forms of fraud includes:

• Billing for services not furnished
• Misrepresenting the diagnosis to justify payment
• Soliciting, offering, or receiving a kickback
• Unbundling or "exploding" charges
• Falsifying certificates of medical necessity, plans of treatment, and medical records to justify payment
• Billing for a service not furnished as billed; i.e., upcoding