Across the industry, healthcare fraud and abuse are rapidly growing issues making a major impact on patients and facilities across the board. In fact, according to data from the United States Sentencing Commission, there were 431 healthcare fraud offenders in 2022 alone.
Fortunately, Master of Legal Studies graduates are paving the way to leverage understanding of topics such as fraud, legal frameworks, and preventive measures to chip away at healthcare fraud and abuse in their everyday work.
Understanding Healthcare Fraud and Abuse
While the terms "healthcare fraud" and "healthcare abuse" are sometimes used interchangeably, it is essential to understand the differences between these two concepts and their detrimental effects on the healthcare system at large.
Defining Healthcare Fraud and Abuse
Healthcare fraud and healthcare abuse can be defined as follows:
- Healthcare fraud involves the intentional furnishing of false information or data as a means of gaining a benefit or payment that would otherwise be unauthorized. An example of healthcare fraud would be a situation where a physician's office submits an insurance claim for a service that was not actually provided.
- Healthcare abuse, on the other hand, may be unintentional—instead involving actions that are outside of acceptable standards of healthcare practice. An example would be billing for a service that was performed but may not have been medically necessary.
The Impact of Fraud and Abuse on the Healthcare System
Although healthcare fraud and healthcare abuse differ in terms of intent, the potential consequences remain severe for each. Healthcare abuse, for instance, can lead to unnecessary procedures or compromised patient safety. Meanwhile, healthcare fraud can result in unnecessary costs for insurance companies and patients as well as a gradual erosion of public trust in the healthcare industry.
Types of Healthcare Fraud and Abuse
Unfortunately, there are numerous common types of healthcare fraud and abuse by perpetrators that occur on a regular basis. According to the Department of Justice, it is estimated that more than $100 billion may be lost each year as a result of healthcare fraud, waste, and abuse.
Billing for Services Not Rendered
One of the most common examples of healthcare fraud is billing for services that were never provided to a patient in the first place. In some cases, perpetrators of this type of healthcare fraud may even use more complex methods (like falsifying records or even creating "ghost" patients) in order to gain unauthorized payments. This can have a serious financial impact on the healthcare system and for individuals who end up being billed for these falsified services.
Upcoding and Unbundling Charges
Another common method of healthcare fraud involves upcoding and unbundling medical services that have been provided as a means of being paid more.
Upcoding occurs when a provider submits codes to insurance providers that are more complex and expensive than the codes/procedures that were actually performed.
Likewise, unbundling occurs when a provider submits individual codes to insurance rather than a single code that encompasses the entire procedure. This may be done intentionally or unintentionally but can lead to the provider being paid more for separate services that should actually be bundled.
Kickbacks and Bribery in Healthcare
Healthcare fraud and abuse can also occur when providers pay for (or receive payment for) referrals to/from other medical providers. While this practice may be legal in some industries, it goes against the Anti-Kickback Statute of healthcare and can result in substantial penalties or fines. In fact, healthcare provider DaVita was forced to pay more than $34 million in fines following a kickback lawsuit in 2024, according to a press release by the United States Department of Justice Office of Public Affairs.
Legal Frameworks Against Healthcare Fraud
Many federal and state laws are designed to combat healthcare fraud and abuse—with both government and law enforcement agencies playing a central role in upholding these laws nationwide.
Federal Laws and Regulations
Numerous federal laws exist to prevent instances of healthcare fraud in the U.S., with some of the most notable including:
- False Claims Act – This law makes it illegal for individuals or providers to submit fraudulent healthcare claims to insurance companies or Medicare/Medicaid programs.
- Anti-Kickback Statute – This makes it illegal for healthcare providers to reward payment or receive payment for referrals to or from another medical practice.
- Stark Law – Otherwise known as the Physician Self-Referral Law, this set of regulations prohibits doctors from referring patients to receive health services from any providers with whom they have family or financial relationships.
The United States Department of Health and Human Services (HHS) is generally responsible for enforcing federal healthcare laws and statutes, though the Department of Justice may also get involved if a lawsuit or charge is brought forth.
State-Level Initiatives and Enforcement
In addition to federal laws, different states have their own laws in place for preventing healthcare fraud and abuse. For example, Indiana has a Medicaid Anti-Fraud Statute that makes it illegal for providers to submit fraudulent claims or records to Medicaid specifically. This same law also prohibits providers from falsifying documents. Typically, state laws are enforced by the state attorney general, although there may be collaboration with federal entities as well.
The Role of a Master of Legal Studies in Combating Healthcare Fraud
There is a great deal that students can learn from an online M.L.S. program, especially when it comes to combating fraud and abuse within the healthcare system.
Understanding Healthcare Laws and Regulations
First, an M.L.S. degree program can equip individuals with the comprehensive knowledge of healthcare's legal framework for spotting non-compliance and risk in their everyday work. This includes an in-depth knowledge of the legal implications of AI in healthcare, which is becoming an increasingly relevant topic as AI technology is more widely adopted in the field.
Identifying Potential Fraud and Abuse Risks
An M.L.S. degree program can also prepare professionals to use their skills to of pinpoint "red flags" of healthcare fraud so they can act quickly to resolve these situations. In an M.L.S. program with a dedicated healthcare track, for example, students will even learn how to use methods like auditing, billing review, and transaction monitoring to look for signs of fraud.
Implementing Compliance Programs and Training
Oftentimes, M.L.S. professionals are also turned to for help in crafting effective compliance programs within their respective healthcare organizations. With the in-depth understanding of healthcare regulations and compliance standards these graduates possess, they can confidently put together quality training for healthcare personnel and keep all employees properly informed.
Working With Healthcare Organizations to Ensure Ethical Practices
Another reason a Master of Legal Studies is worth completing is due to the fact that M.L.S. graduates are prepared to act as consultants for healthcare organizations. Specifically, they have the foundational skills and knowledge needed to foster ethical practices and legal compliance within their respective organizations. This background can empower them, industry-wide, to build stronger cultures of compliance and ethical behavior.
Implementing Strict Internal Controls
Additionally, M.L.S. graduates can help healthcare organizations take the measures needed to strengthen their internal controls and, in turn, minimize the risk of abuse or fraud. M.L.S. professionals can use a wide range of internal controls to achieve this objective, such as implementing segregation of duties, conducting regular audits, and requiring ample documentation.
Providing Training and Education for Healthcare Providers
Healthcare administrators benefit from an M.L.S. education in the sense that these degree programs can prepare them to recognize and avoid fraudulent practices in their own workplaces. A comprehensive degree program can also help these professionals stay current on common fraud and abuse schemes as they evolve, along with new compliance standards and regulations as they are implemented.
Encouraging Whistleblowing and Protecting Whistleblowers
When M.L.S. professionals are putting their knowledge to use in the healthcare field, they can also create safer and more supportive environments for whistleblowers who may have important information about fraud and/or abuse. When these whistleblowers feel like they can make reports without fear of retaliation and are made aware of their legal protections, they can do their part to fight healthcare fraud.
Technological Advancements in Detecting Fraud
In recent years, a number of technological advancements and innovations have made it easier for professionals to detect and prevent instances of fraud and abuse in the healthcare system.
Data Analytics and Fraud Detection
Data analytics tools are being used to analyze the vast volumes of healthcare data out there (like insurance claims and medical records). Leveraging these tools, it is possible to detect unusual patterns that could suggest fraud, such as a sudden increase in the number of claims submitted under a specific code.
AI and Machine Learning in Identifying Irregularities
AI and machine learning algorithms are also being used and trained to recognize fraud patterns, which may enable quicker and more accurate detection. These algorithms, which are extremely versatile, can be easily adapted as new schemes arise.
Future Directions in Combating Healthcare Fraud
Since healthcare fraud is constantly evolving, there is an ongoing need for adaptation of detection technologies and legislation.
Legislative Changes and Reforms
Legislative reforms and new regulations may ultimately be needed to cut down on healthcare fraud. Stronger penalties, enhanced whistleblower protection, and greater transparency in billing practices may all help to deter fraudulent and abusive healthcare practices in the future.
The Evolving Landscape of Healthcare Fraud Detection
Similarly, as technologies advance, it may be possible to explore how innovations like blockchain and predictive analytics could improve fraud detection in the healthcare field. Most likely, implementing this level of fraud detection would require more collaboration between healthcare, government, and tech companies alike.
How can individuals protect themselves from healthcare fraud?
The best way people can protect themselves from healthcare fraud is to be diligent about reviewing their bills, not hesitate to ask about charges, and be wary of unsolicited offers. If an individual believes they have witnessed healthcare fraud or abuse, the best course of action is to contact the Office of the Inspector General at (800) HHS-TIPS or by reporting online.
Does HIPAA prevent healthcare fraud and abuse?
Although HIPAA laws are not in place solely for fraud prevention (they play a more key role in protecting patient privacy), HIPAA compliance standards can help deter some types of fraud.
Interested in a Master of Legal Studies?
Healthcare fraud and abuse remain serious and ever-prevalent problems across the healthcare field. From billing for services not rendered to upcoding and unbundling charges, these dishonest and illegal acts are affecting the integrity of the industry while costing patients and medical facilities many headaches.
If you are interested in working in healthcare fraud prevention or want to learn more about how to prevent fraud in healthcare, it may be time to pursue your online Master of Legal Studies degree. At the University of Miami School of Law, we are proud to offer this program with a dedicated online Master of Legal Studies healthcare track curriculum that covers crucial and applicable topics such as healthcare fraud and abuse, ethical foundations of risk compliance, and legal regulation of medical billing and coding.
Ready to learn more or apply? Reach out to request more information or complete your online application for enrollment today.
Sources
https://www.ussc.gov/research/quick-facts/health-care-fraud
https://admissions.law.miami.edu/academics/MLS/
https://admissions.law.miami.edu/academics/mls/curriculum/#healthcare
https://www.phillipsandcohen.com/upcoding-unbundling-fragmentation
https://www.justice.gov/opa/pr/davita-pay-over-34m-resolve-allegations-illegal-kickback
https://www.asha.org/practice/reimbursement/false-claims-act-fca/
https://oig.hhs.gov/compliance/physician-education/fraud-abuse-laws/
https://www.ncbi.nlm.nih.gov/books/NBK559074/
https://hcahealthcare.com/util/forms/ethics/policies/legal/false-claim-state-policies/LLIN001-a.pdf
https://oig.hhs.gov/fraud/report-fraud/
https://www.justice.gov/archives/jm/criminal-resource-manual-976-health-care-fraud-generally
