HEALTH CARE FRAUD: AN INTRODUCTION TO A MAJOR COST ISSUE

Abstract

Fraud affects all businesses and industries, but when health care is viewed as a single industry including hospitals, physicians, insurers, pharmaceuticals, etc., fraud in this single industry assumes a monumental identity. Malcolm Sparrow of Harvard University affirmed that the order of magnitude of health care fraud is measured in the hundreds of billions, and provided a range of $100-$600 billion. While fraud is typically discussed in financial terms, some health care industry frauds have an element that is absent in most other industries, i.e., individuals’ health and lives may be affected. This paper provides a definitional understanding of health care fraud, defines specific frauds, and categorizes health care frauds into four types; describes the unique nonfinancial consequences of health care fraud; and discusses efforts to mitigate health care fraud. Readers should benefit from greater awareness of health care fraud, that could be helpful in developing more effective fraud control processes.