Are Hospitals Misusing a Patient's Medical Insurance?

• Written by Jyotsana Shekhawat

  Reviewed by Akhil Pillai

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In recent years, there’s been a positive change in people's outlook towards health insurance. More people understand its importance and are purchasing  policies. However, there has been an increase in the number of health insurance frauds in India. It may come as a surprise to you that as per a recent Insurance Fraud Survey 2023 by Deloitte, almost 60% of insurance companies in India are witnessing a steady increase in fraud in health insurance. Let us delve a little deeper into this topic.

What is Health Insurance Fraud?

Health insurance fraud involves any deliberate deception or misrepresentation intended to result in unauthorised benefits from an insurance provider. This occurs when healthcare professionals or individuals manipulate the system for monetary gain–and often leads to inflated costs, and even, risks to patient safety. A study highlighted that the healthcare industry in India is losing about Rs. 800 crore to fraudulent claims every year–signalling the need for awareness and vigilance.

What Are the Types of Health Insurance Fraud?

Health insurance fraud takes various forms, each involving different perpetrators and consequences. Common types include:

• Deliberate Fraud: This involves intentionally presenting an accident or loss in order to claim insurance coverage.
• Opportunity Fraud: Exaggerating a genuine claim or providing false information about pre-existing conditions to secure favorable underwriting.
• External Fraud: Illegal practices by individuals or entities (policyholders, beneficiaries, medical providers, vendors) such as false claims or selling fake plans.
• Internal Fraud: Fraudulent activities by insurance company employees (executives, managers, agents) including selling fake plans or creating false records.
• Policyholder’s Fraud: Providing misleading information about pre-existing conditions, employment status, etc., to obtain unauthorized benefits.
• Application Fraud: Knowingly entering incorrect information on an application form to gain more coverage.
• Claim Fraud: Filing claims for which one is not entitled, often involving collusion with healthcare providers to inflate bills or create false documents.

Health Insurance Frauds in India 

Health insurance fraud occurs when medically unnecessary procedures or treatments are provided to overutilise services and inflate costs for patients or insurance companies. Perpetrators range from hospitals to doctors, vendors to pharmacists. Fraud also occurs when patients or policyholders file false/ misinterpreted claims in order to get a bigger reimbursement from the health insurance provider. 

Health insurance fraud in India burdens both insurance companies and policyholders. Here are some common examples:

• Billing for services not covered by the policy
• Billing for services taken in an unauthorised hospital/ healthcare centre
• Falsely reporting treatments 
• Misinterpretation of the location of the service
• Overutilisation of coverage
• False issuance of medicine prescription
• Misinterpretation of dates and location

Are Hospitals Misusing a Patient's Medical Insurance?

Instances of medical insurance misuse by hospitals have occurred. Some examples of such health insurance fraud include:

1. Overbilling: Sometimes hospitals charge for services or procedures that have either not been provided, or they exaggerate the level of treatment/ care given, with the aim to inflate reimbursement.
2. Unnecessary Services/ treatment: Doctors/ hospitals may prescribe/ perform numerous unnecessary tests and procedures under the guise of detailed investigations. Certain treatments are given solely for financial gain without considering the patient's actual medical needs. Prolonged hospitalisation only to jack up the expenditure are also quite common. 
3. Overcharging: Hospitals sometimes do not pass on the discounts they receive on prescription drugs to patients or insurance companies.
4. Consumables: A significant expense is associated with single-use items, or consumables. The selection of these items, such as tissues, cotton, and housekeeping items, varies by hospital. As the brand of each item may differ, the price range can be manipulated.

Health Insurance Problems and Solutions

To address health insurance issues, all involved parties must be more careful and vigilant. As a valued policyholder with Care Health Insurance, we aim to keep you informed about every detail of your health insurance policy. While we are there with you every step of the way throughout the insurance journey, we urge all the Care Health Insurance policyholders to keep a watchful eye and prevent any such health insurance frauds.

Consequences of Health Insurance Fraud

• Involvement in health insurance fraud carries severe consequences, including:
• Cancellation of health insurance policy
• Rejection of fraudulent claims
• Ineligibility for future health coverage
• Legal repercussions
• Hefty penalties

To steer clear of such scenarios, it's crucial for policyholders to provide accurate information during the application process and when filing claims.

How to Prevent Health Insurance Fraud?

Keep in mind the tips given to steer clear of any instances of frauds in health insurance:

• Invest in a health insurance policy from a reputable and trustworthy health insurance provider
• Be wary of services or coverage that seem too good to be true
• Understand the coverage and the exclusions of your health insurance policy. You should know what expenses will be covered by your insurer and what will be out-of-your-pocket
• Keep your policy documents and insurance card safe. Report any loss immediately.
• Understand the claim procedure. Inform us on time and see to it that the formalities, such as pre-authorisation, are completed
• Never sign an incomplete claim form
• Monitor all procedures being conducted. Ask questions if you have any concerns. You have the right to know the details of your treatment.
• If someone from the hospital or outside tells you that they can get you special discounts on the bill, beware; it could be a fraudulent activity. Report it to the hospital authorities at once
• Verify the identity of any health insurance agent or executive by checking their ID and confirming with the company.

Let’s Conclude

Lack of awareness, education, and resources contribute to health insurance problems in India. However, rising medical inflation and increased treatment costs highlight the importance of insurance.

It is important to note that these instances do not imply that all hospitals or healthcare providers misuse insurance policies. However, if you suspect that your medical insurance is being misused, report the health insurance fraud. Always review your medical bills, understand your insurance coverage, and contact the hospital or insurance company to address any discrepancies or concerns.

>> Also Read: How to Stay Away from Fraud in Health Insurance

Disclaimers: All plan features, benefits, coverage, and claims underwriting are subject to policy terms and conditions. Kindly refer to the brochure, sales prospectus, and policy documents carefully.