Finding high-quality health insurance coverage and paying for health insurance can be a complex process. From buying an adequate plan to finding a reputable in-network doctor and dealing with medical claims, policyholders are susceptible to criminals who find clever ways to profit off consumers who don't know the inner workings of the industry.

Healthcare fraud comes at a huge cost, both individually and to the country at large. The FBI notes that healthcare fraud in the United States alone costs tens of billions of dollars every year. This guide will show you the many insidious forms that health insurance fraud can take, how to spot and prevent a scam, and, finally, what to do if you or a loved one fall victim to health insurance fraud.

Types of Health Insurance Fraud

Fraud can occur at any step of the health insurance process, from buying coverage to receiving care. Here are some of the most common types.

1.) Medicare/Obamacare Fraud

Because Medicare is paid out through the government and not through a private insurance company, some scammers take advantage of the program's size and complexity by trying to slip fraudulent claims past Medicare administrators. In 2014 alone, it was estimated that Medicare improperly paid out $50 billion. The U.S. Government Accountability Office (GAO) explains that Medicare is a high-risk fraud program because it's difficult to navigate, making it easy for fake claims to slip through the cracks and go undetected.

Medicare fraud can happen at any point—when an insurance agent imposter tries to sell you a fake Medicare insurance plan, when a provider bills you incorrectly for health services that you may or may not have received or when a scammer calls you to verify personal information for your Medicare plan and uses that data to steal your identity. Open enrollment season is a common time for scammers to try to steal personal information from vulnerable Medicare users because if any changes are made to a plan, the user may not question someone calling to "verify" information.

2.) Ambulance Fraud

In an emergency, most people feel worried and flustered. Unfortunately, whenever people are going through a crisis, there will be other people trying to take advantage of them. In the heat of the moment, it can be hard to think about the cost of calling an ambulance or how it's billed and paid for, and fraudsters use that oversight to rack up unnecessary charges for ambulance services. An ambulance service provider might charge a patient for more distance than he or she actually traveled or add additional services that weren't used in the ambulance. These grifters are infamous for adding relatively small charges that they hope will be overlooked, but that translate into big profit for their own pockets over time. And as more ambulance service companies expand to provide ambulance transport for non-emergency situations, such as transporting patients in need of dialysis or even just to doctor's visits, the risk for fraud only increases.

3.) Community Mental Health Fraud

The mental health arena is particularly vulnerable to scams. Community health fraud generally involves billing patients and insurance companies for unnecessary or incomplete services. For example, the U.S. Department of Health and Human Services detailed one case that involved therapists billing insurance companies for one-hour therapy sessions for mental health patients, while the actual sessions only took 15 minutes. Some also billed for "recreational" services that actually meant just putting on a movie for patients to watch. Mental health fraud can also involve patients being prescribed unnecessary medications or providers getting kickbacks for using certain services. Mental health patients may be in such crisis that they don't realize they are being taken advantage of, which leaves them especially susceptible.

4.) Medical Identity Theft

Medical identity theft involves a criminal using personal information, such as your social security number or your health insurance policy numbers and codes, to either charge you fraudulently or collect benefits and payments under your name.

5.) Offers of Discount Plans and Cards

These discount plans and cards will ostensibly save you money on health care costs or supplies, but the National Association of Insurance Commissioners (NAIC) warns consumers to be careful when buying them. Some discount cards are legitimate, but according to the NAIC, they are not insurance and will not pay medical claims. Watch out for ads that bandy about words like "premiums" or "copayments" to fool you into thinking the discount cards are a low-cost insurance policy.

6.) Marketing Scams

In this lucrative scheme, fake insurance agents will collect high premiums from customers but not actually pay out any claims. In two years alone, the General Accounting Office found 144 fake insurance companies that were pulling this scam, resulting in more than $252 million in unpaid costs.

7.) Equipment and Supply Coverage Fraud

In this scheme, insurance companies will commit fraud by falsifying medical equipment claims, especially for the elderly or people with disabilities, who often require a lot of durable medical equipment. This scam might include anything from billing for equipment twice, deliberately shipping more equipment than your doctor orders, "forgetting" to issue returns, charging for a more expensive item than they actually give out or issuing false claims.

How to Protect Yourself

To avoid healthcare scams, you need to know how to identify reputable health insurance companies and agents, be aware of your rights as a consumer and understand how to protect your identity.

Determine Whether a Company or Agent is Reputable

The official marketplace of health insurance, www.healthcare.gov, lists several tips to advise consumers how to tell if a health insurance company is legitimate:

  • Browse some plans on the Marketplace site,

    so you can become familiar with the types of insurance companies that are available. When you narrow down your choices, look for signs that a company is reputable, such as websites that end in ".gov," which means they are associated with a governmental agency.

  • Check whether an insurance company is licensed in your state

    by visiting the National Health Care Anti-Fraud Association (NHCAA) website.

  • Be suspicious of any unsolicited calls.

    Insurance companies will never contact you directly to try to solicit any kind of personal information, including your credit card number or social security number.

  • Look for contact information.

    A reputable insurance company will have an easy-to-find phone number to contact a company representative or agent. Try out the number—if the number doesn't work or it's extremely difficult to talk to a real, live person, it may be a sign the company should not be trusted.

  • Stay vigilant.

    If an offer sounds too good to be true, know that it probably is.

Know Your Rights

As a consumer, you have more rights than you may be aware of. If you purchase insurance through www.healthcare.gov, for example, you are entitled to a free, trained assistor who can provide state-specific advice on coverage. You also have the right to never give information out over the phone. Instead, request that the company or agent who is asking for the information send you an official letter in the mail.

You also have the right to know what's in your medical file, which will help you keep track of the healthcare services you're being charged for. The Federal Trade Commission explains that by federal law, you have the right to know what's in your medical files (although in some cases, you may have to pay to obtain copies of those files.) By law, you also have the right to order one free "accounting of disclosures" copy from each of your medical providers every twelve months. This accounting disclosure form lists everyone your provider sent your medical and insurance information to.

Protect Your Identity

To protect your identity, never give out your personal information, including your social security number and insurance number — especially if the alleged company or agent contacts you by phone or email asking for that information. Always use secure websites when filling out health forms online (check for an "https" rather than an "http" URL.) And make sure you have copies of privacy policies that disclose where your information will be shared. Also, before you throw anything away, you should shred any forms containing personal information, such as healthcare bills and statements, and remove labels from prescription bottles What to Do If You Become a Victim

How to Tell You've Been Defrauded

The Federal Trade Commission lists signs to look for if you suspect that you've become a victim of health insurance fraud, including:

  • Receiving the bill for a service or equipment that you never received

  • Getting called about medical debt you are unaware of

  • Noticing medical charges on a credit report that are not yours

  • Finding differences on your explanation of benefits from your insurance company to what services and office visits you actually had

  • Maxing out your insurance benefits suddenly

  • Being denied insurance coverage because of false medical conditions

How to Report Fraud

If you suspect you have been the victim of fraud or that an insurance company or provider is committing fraud, the FBI recommends first contacting your own health insurance company's fraud reporting number. Report Medicare fraud to 1-800-HHS-TIPS (1-800-447-8477) or online at Medicare.gov. Secondly, file a complaint with your state's fraud bureau by finding your state at the NCHAA website here. In addition, file a complaint with your state's Medical board.

Marketplace.gov explains that if someone steals your personal information, you can report the suspected identity theft online using the Federal Trade Commission's online Complaint Assistant. In addition, call your local police department. You can also contact the Health Insurance Marketplace call center at 1-800-318-2596 (TTY: 1-855-889-4325) for assistance.

When to Pursue Legal Action

The Coalition Against Insurance Fraud states that, in some cases, civil suits can send a strong message and help stop insurance fraud. Consult with an attorney and a representative from your insurance company if you are considering legal action.

Expert Q&A

Leigh McKenna is the director of government & public affairs with the National Health Care Anti-Fraud Association (NHCAA). Here she provides her expertise on the kinds of healthcare fraud to watch out for and how to protect yourself and your loved ones.

What kind of fraud do you see the most often?

Leigh McKenna:

"There is billing fraud—for instance, you go to the doctor and see the doctor for one condition or for certain services, but your insurance is billed for different or more costly services," McKenna says. "Or maybe you didn't get the services at all as a patient, but your insurance is billed for services not rendered. There's upcoding, which is when you get one service, but your insurance is billed for something more expensive. There's also something called 'unbundling,' which happens with medical codes. For example, one code will reflect four or five steps in a procedure, but a provider may 'unbundle' it and bill for separate steps for one procedure. There are many, many different types of healthcare fraud."

Who is behind all this healthcare fraud?

Leigh McKenna:

"That's what makes healthcare fraud so complex and so hard to catch because basically it can be done by anyone, from the provider who is providing the services, to an office worker who is doing the billing, to a patient who is complacent," she notes. "Even waiving a patient's co-pay or deductible can be considered healthcare fraud as well. Accepting kickbacks for patient referrals—it can manifest in so many different ways with different types of individuals who are in on the scam."

How much does healthcare fraud really cost the nation?

Leigh McKenna:

"It can be hard for us to estimate what we're not catching, but we're confident that it's tens of billions [every year]."

What's the best way protect myself and my loved ones against health insurance fraud?

Leigh McKenna:

"We strongly recommend to please always, always treat your healthcare insurance ID card just as you would a credit card. To someone looking to scam you, it's basically a credit card. Never give out the number over the phone."

In light of the new regulations for health insurance with the 2010 Healthcare Reform, McKenna has seen an increase in scams that try to scare people into giving up their healthcare insurance information. These take the form of phone calls that threaten consumers with fines if they don't have health insurance and then demand their credit card information over the phone to enroll.

It's also important to always take a look at the Explanation of Benefits (EOBs) statements that your insurance company either sends out or emails to you, she says.

"Check the date," says McKenna. "Were you billed for something you never went to? Was it an appointment that never happened or did someone use your card? Sometimes, EOBs can be somewhat cryptic and difficult to understand, but try your best to read what's on there and what's being billed against your insurance and did that happen. If you went for a routine physical, is that what's billed, or does it show that you had open heart surgery? In our industry, we've seen men get billed for having a baby—there are basic things that you can look out for."

Lastly, McKenna encourages tracking communications for your own visits or for anyone you care for. "If that person is living on their own, have those conversations with them to protect themselves.

What are some new scams to watch for?

Leigh McKenna:

McKenna says many scams run geographically and that home health and prescription drugs are always areas of concern: "Patients can be given placebo drugs instead of the drugs they think they purchased."

What do scammers look for in a victim?

Leigh McKenna:

"It depends on the scammer and the type of insurance. Traditionally, the senior population is the most vulnerable because they are all covered by Medicare, and they have this view of being trusted and listening to what the doctor says and the provider recommends. It's always a big target because Medicare is an enormous program that pays out millions of dollars."

McKenna also explains that regionally, places like Florida are a hotbed of healthcare fraud as more snowbirds and retirees move there. Swindlers want to go after insurance providers that they think they can get the most money from.

"It comes down to who's paying," she says. "Any individual can be at risk, but they are looking at the deep pockets of the payers—the state programs, the federal programs, Medicaid, Medicare, CHIP [the Children's Health Insurance Program]. The insurance will bill all of them, banking on the fact that those payers aren't going to put two and two together and identify what's going on."

What should you do if you are the victim?

Leigh McKenna:

"Contact your insurance company or the program that was billed," says McKenna. She explains that every insurance company has an internal unit called a Special Investigations Unit (the industry term) that handles fraud. "Let them look into it if you suspect you have been the victim of fraud. We realize that that there are mistakes—not everything that is billed incorrectly is fraud. Sometimes it's genuinely an oversight or a misunderstanding, but if not, the SIU will kick in and do its work."

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About Chaunie Brusie

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Chaunie Brusie, RN, BSN is a healthcare expert with experience in critical care, long-term care and obstetrical nursing.