A Glossary of Medical Fraud

By L.J. Davis

March/April 1995 Issue

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UPCODING

A doctor performs one medical procedure and charges the insurer for another, more profitable (or permissible) one. A variant of this popular fraud was described in a Senate report: A Texas medical equipment supplier billed Medicare nearly $1 million by charging $1,300 for orthotic body jackets designed to keep patients upright, but instead supplied wheelchair pads that cost between $50 and $100.

UNBUNDLING

The whole is sometimes worth less than the sum of its parts. A wheelchair broken down into its components--a wheel here, a seat there--with a separate bill for each, can mean a significant profit. According to a Senate report, a glucose monitoring kit may cost $12 in a drugstore; unbundled, the kit costs Medicare up to $250.

PHARMACY FRAUD

A corrupt pharmacist, often abetted by a physician and a patient, dispenses a generic drug rather than a brand-name drug and pockets the difference. Or, a pharmacist fills an insured prescription, buys it back at a discount from the patient, then sells it again. Or, a patient receives a drug with street value and peddles it, so everybody gets paid: the pharmacist, the prescribing physician, the patient-entrepreneur who sells the drug on the street, and the person who buys it, often for another resale. New York investigators have raided apartments piled high with thousands of prescription drugs.

PSYCHIATRIC SCHEMES

In the 1980s, the nation experienced an epidemic of clinical depression, as hospital chains filled their beds with teenagers, the overweight, and substance abusers. For insurance purposes, these people weren't young or heavy or addicted--they were depressed, whether they liked it or not. Private insurance companies estimate that psychiatric schemes cost them millions.

HOME HEALTH CARE

This rich field for the plow of fraud includes overbilling, billing for services not rendered, kickbacks, the use of untrained (i.e., inexpensive) personnel, and the delivery of unnecessary equipment, such as the ever-popular wheelchair, to people who don't need it.

GHOST PATIENTS, ETC.

There are doctors who work more than 24 hours a day and doctors who continue to treat patients after they're dead. In New York, investigators found corrupt podiatrists who issued prescriptions for orthopedic shoes to corrupt patients who took the prescriptions to corrupt shoestores, where they exchanged them for sneakers, high heels, and loafers. Nearly $30 million in insurance money vanished.

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