Health Insurance: Vulnerable Payers Lose Billions to Fraud and Abuse

GAO discussed how fraud and abuse besets public and private health insurers. GAO noted that health insurance system vulnerabilities that allow unscrupulous health care providers to cheat health insurance companies and programs out of an estimated 10 percent of total health care spending each year include: (1) insurers that operate independently with limited ability to collaborate on efforts to confront fraudulent providers; (2) growing financial ties between health care facilities and the practitioners who control referrals to those facilities; and (3) the high cost of pursuing fraud and abuse. GAO also noted that: (1) health insurance fraud and abuse practices include overcharging for services, charging for services not rendered, accepting bribes for referring patients, and rendering inappropriate or unnecessary services; (2) insurers have problems detecting and pursuing fraud and abuse because of the difficulty in discerning wrongful acts amidst the multiple activities that take place during claims processing, privacy concerns that limit collaboration among industry members, and the lack of consensus concerning appropriate regulation of new provider types and financial arrangements; and (3) increased coordination of public and private insurers' efforts would facilitate the pursuit of health care fraud and abuse.