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Fraud & Risk Management

5 Types of Healthcare Fraud Everyone Should Know About


Health care fraud can take many forms. It’s a growing problem that costs the U.S. government billions of dollars in fraudulent claims every year. According to the National Health Care Anti-Fraud Association, health care fraud costs the United States roughly $68 billion each year, or about 3% of the country’s $2.26 trillion in healthcare spending. Other estimates put the figure at as much as 10% of yearly healthcare spending, or $230 billion.

All types of fraud are illegal and morally wrong, but some are worse than others. Here are some of the most common types of healthcare fraud, along with examples of each.

Kickback Schemes

Kickbacks are illegal payments given to professionals to influence their prescribing decisions. It happens all the time — but this book is about what happens when it doesn’t. When a kickback scheme goes undetected, it can have devastating consequences for everyone. Patients pay higher costs for prescription drugs and get fewer choices in treatments. Physicians risk their careers because of medical errors that could have been avoided through better decision-making. And taxpayers foot the bill for billions of dollars in wasteful spending on Medicare and Medicaid programs.

Medically Unnecessary Services

The practice of performing unnecessary medical procedures on patients is called “overutilization.” It can be expected to occur in any system where consumers or their insurers pay for the services they receive. In health care, overutilization happens when people are treated with medicine or procedures that are not likely to benefit them or that they do not need. It is a waste of money and resources, but it can also be harmful to patients. Overutilization occurs because of several factors, including financial incentives, the failure to recognize limitations in expertise, and the application of inappropriate standards.


The practice of billing for more expensive services than were provided is known as upcoding. Upcoding occurs when a healthcare provider bills a third-party payer (e.g., an insurance company) for a more costly procedure or service than was performed. It’s one of the biggest medical fraud scams in the United States and costs taxpayers billions each year. It’s tolerated because it benefits everyone involved: Doctors and hospitals bill insurers for more expensive procedures, which allows them to collect higher reimbursements and increase profits.


Diversion is a common practice within the pharmaceutical industry. Pharmaceutical companies have been accused of using illegal marketing tactics, such as promoting drugs for uses not approved by the FDA. They also send doctors on lavish trips and pay them to promote their drugs, a form of kickback or bribery. The term “diversion” refers to the fact that these companies are diverting drugs from their original purpose (treating disease) and directing them towards other uses (enhancing beauty, improving sexual performance, etc.). The drugs may also be diverted from one country to another.

Double Billing

Double billing is a phenomenon in the healthcare industry where two or more medical providers (typically doctors) bill the same service to a patient. This is a form of fraud, but it is also an ethical dilemma if it appears to the patient that they received two units of service for one. There are different forms of double billing, and each has its own unique set of ethical problems. The simplest form is billing procedures that are not performed but have been billed as if they were. Another form is when a physician double bills for the same procedure performed on multiple patients.

Healthcare fraud is a serious problem in the United States that costs billions of dollars each year. Though there are many different types of healthcare fraud, we’ve provided some common examples below to help you understand what this type of crime looks like and how it can be avoided. If you want to know more about medical fraud and how to combat it, please don’t hesitate to contact us today!

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