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How to Avoid Medical Billing Fraud in a Practice

January 9, 2018


Medical billing fraud costs government and private insurers billions of dollars every year. Some of this is unintentional due to billing mistakes or poor practices. However, some types of medical fraud are intentional, which can result in civil suits and criminal charges. Fraud often requires a long period of time to be detected, so healthcare providers often face many charges once caught. Most types of medical fraud may be classified into the following categories:

  • Excessive billing

  • Upcoding

  • Falsifying records

  • Excessive services

Excessive Billing

Submitting too many bills is one of the easiest types of medical fraud for an insurer to detect. Insurers generally have accurate information on a healthcare facility’s size and the services it provides. They also have demographic information on the surrounding area, which tells insurers the number and type of procedures a medical practice can expect to perform in a given period of time. A short-term spike in a particular procedure might not raise any red flags for an insurer, but a long-term increase lasting for months or more may trigger an audit.

Physician’s groups are also capable of detecting excessive billing because they know how long it takes to diagnose and treat patients for a particular condition. This information allows these groups to calculate the number of patients a practice to treat in a day. For example, a solo practice that submits an average of 100 insurance claims per day is quite likely to be committing some type of fraud. The physical impossibility of seeing as many patients as the number of claims that are submitted is the most common method of detecting Medicaid fraud.

Upcoding (Lack of Medical Coding Understanding!)

Upcoding is the process of assigning a diagnostic code for a more severe condition than the one the patient actually has. This practice increases a practice’s revenue because insurers pay more money for serious conditions. The Office of Inspector General (OIG) keeps a list of codes that are particularly suitable for upcoding, and may conduct a full audit of a practice that submits more claims with these codes than expected.

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The OIG also monitors the codes for a practice’s inpatient population across the board to detect conditions that are generally more severe than the norm. A practice can be heavily fined if the OIG determines that it’s intentionally upcoding claims.

Falsifying Records (Improper Medical Documentation)

Falsified records are one of the most difficult types of medical fraud to detect because many of these cases are unintentional. One of the most significant reasons for this problem is that many types of claims may be submitted without medical records. This possibility allows healthcare providers with a good understanding of insurer practices to increase their reimbursements by manipulating claims without triggering an audit.

However, altering medical records for the purpose of increasing the claim amount is illegal. It’s also illegal to intentionally omit critical information from a claim, which is often done to cover errors in a patient’s treatment. Furthermore, it’s illegal for a medical coder to change a code on a claim for the purpose of increasing the provider’s reimbursement, even when ordered to do so.

Excessive Services to Patient

Charging the insurer for more services than the patient needs is another common type of medical fraud. This practice includes both providing unnecessary services and charging for services that were never even performed. The intentional charging for excessive services can be difficult to detect, since it often occurs unintentionally as the result of poor billing practices. Healthcare facilities should have processes in place that effectively capture the charge for each service, although this isn’t always the case.


We can help your back office to avoid medical billing errors. We are a national leader in medical billing, coding and auditing. Contact us at 770-666-0470 or email at to find out more about what we can do for you.


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