Combating fraud with health insurance

It’s a double blow to the health insurance industry. Along with a slow rate of development, it is also dealing with an increasing number of fraud cases. About 60% of Indian insurance firms report a sharp rise in fraud, particularly in the life and health insurance markets, according to Deloitte’s Insurance Fraud Survey 2023. The study, which was carried out in the second quarter of the fiscal year 2023, is based on in-depth interviews with senior management and important stakeholders from top private insurers. Insurers suffer financial losses as a consequence of these fraudulent acts, which raise policyholder rates and erode their confidence.

In the Indian health insurance sector, fraud refers to a variety of dishonest tactics that take advantage of weaknesses in the system. These include upcoding, a form of fraud in which healthcare providers submit false billing codes to insurance companies in order to receive inflated reimbursements, and unbundling, which involves billing for procedures separately that are typically covered by a single procedure. They also include inflating charges for services rendered and billing for medically unnecessary services. False claims are submitted by policyholders or providers for non-existent services.

The founder and chairman of MDIndia Health Insurance, Brij Sharma, claims that policyholder fraud comprises giving misleading information or hiding pre-existing diseases in order to get greater coverage, while identity theft involves exploiting stolen information for medical treatments. Furthermore, policy stacking—the practice of buying numerous plans to get double reimbursement—occurs, as does collaboration between policyholders and providers, as well as the use of fictitious documents.

Worldwide reports of insurance fraud are made for a variety of reasons. Fraud is a problem in India because of the country’s complicated healthcare system, little regulatory monitoring, economic constraints, and ignorance. Because procedures and reporting processes vary between India and Western nations, it is difficult to compare fraud rates between them. Healthcare fraud is estimated to cost the US economy tens of billions of dollars annually, according to organizations such as the National Health Care Anti-Fraud Association (NHCAA).

Resolving the issue

Since there are many parties involved at different stages of the healthcare system, it may be difficult to identify those who are accountable for fraudulent acts in the Indian health insurance market. For instance, policyholders may conspire with providers to file fraudulent claims or purposefully supply misleading information. Healthcare professionals may conspire with patients or participate in dishonest billing practices. Insurance brokers and agents may also assist fraud in order to boost fees. Insurance firms are accountable for preventing fraud, but they may prioritize profits above warning signs.

Regulatory bodies supervise the sector, however, their ability to enforce laws may be restricted. Healthcare fraud has a huge effect, which is eventually carried by the insured population. Increased expenses for healthcare, poor patient treatment, and a decline in public confidence in the healthcare system are the outcomes. Such scams may be significantly reduced by enforcing rigorous regulations, which insurance companies and third party administrators (TPAs) will enforce strictly. As premiums rise, policyholders are ultimately responsible for covering the costs of these scams. In order to prevent fraud, insurance firms in India are putting artificial intelligence to use in fraud detection, conducting in-depth investigations, working with stakeholders, encouraging an ethical culture, and providing rewards for reporting fraud. This multifaceted strategy attempts to discourage fraudulent activity, safeguard sincere policyholders, and bolster defenses against fraud.

Insurance companies use detection algorithms, audits, investigations, and cooperation with law enforcement to fight fraud. “Deterring fraud and maintaining the integrity of the sector also need increasing knowledge and encouraging ethical behavior. TPAs are essential for preventing fraud. To recognize and stop these kinds of claims, we use sophisticated software and algorithms. We have created these skills via years of expertise and millions of data points,” says Brij Sharma, whose MDIndia Health Insurance is among the top TPAs in India.

Low quantities

India has a low penetration rate of health insurance because of its narrow reach and low level of knowledge. 52.04 crore people were enrolled in health insurance during the 2021–2022 fiscal year. The majority are protected by government-funded health insurance programs. Approximately four crore people have individual health insurance plans.

Points to Remember

Examine and contrast various policies. To locate the health insurance plan that best fits your wants and budget, do in-depth study and evaluate many alternatives.

Examine the tiny print. To understand your rights and responsibilities, carefully read the policy’s terms, including the coverage limitations, exclusions, and claim processes.

Give precise details To prevent claim rejections later on, provide correct medical history and information.

Steer clear of unwanted offers. When making judgments, be wary of insurance offers that seem unusually low-cost, and make sure the suppliers are reputable.

Maintain documentation Keep thorough records of all correspondence and outlays associated with your insurance coverage.

Examine the statements and bills. Examine medical bills and settlements for accuracy and report any inconsistencies right away.

Report any questionable behavior. Notify your insurance provider or the appropriate authorities of any suspected fraud, and provide documentation for their review.

Keep yourself informed and alert. Keep yourself informed on fraud prevention strategies and industry trends to avoid falling victim to fraud.