What is a Health Insurance Fraud?

With medical costs on an ever-increasing upward spiral, investing in a health insurance scheme is the best and soundest way of safeguarding yourself from the meteoric costs incurred owing to hospitalisation, treatment, consultation fees, and medication. Greater adoption of health insurance policies by the masses has also translated into a dramatic rise in medical insurance fraud. Here, we must note that while not all cases of medical insurance fraud are intentional, they do tend to have negative consequences for both the policyholder, as well as the insurer. Over the course of this article, we shall investigate the various types of health insurance fraud cases, as well as the consequences of the same.

Types of Health Insurance Frauds

  • Deliberate and Opportunity Fraud:

Deliberate Fraud refers to the case wherein a policyholder deliberately, or on purpose, makes a claim by showcasing an accident or loss which is covered by the policy in question. Opportunity Fraud refers to a case wherein the policyholder over-exaggerates a genuine claim, or furnishes wrong details pertaining to pre-existing disease, to get the claim approved.

 

  • External and Internal Fraud:

External Fraud refers to a case wherein external parties like the policyholder, medical service providers, beneficiaries, or vendors attempt to dupe the company by making a false claim. Internal Fraud refers to a case wherein the policyholder or the company in question is duped by the manager or the agents.

 

  • Policyholder’s Fraud:

With increasing awareness and knowledge of the inner workings of insurance policies, policyholders themselves have started reaping benefits from medical insurance scams. Policyholder Frauds can be divided into three categories:

 

  • Eligibility Fraud:

This kind of medical insurance fraud refers to the case wherein the policyholder provides fake information pertaining to his/her pre-existing diseases, employment status, and/or details pertaining to the dependent. It can refer to cases wherein the policyholder submits a claim for a dependent not covered in the policy, or if an employee provides false employment status information to claim benefits, he/she is not eligible for.

 

  • Application Fraud:

This kind of medical insurance fraud refers to the case wherein the policyholder dupes the insurance company by providing information that is false – relating to pre-existing diseases and other vital information.

 

  • Claim Fraud:

This kind of medical insurance fraud refers to the case wherein the policyholder files for a claim that he/she is not legally entitled to. These cases often involve ‘fraud rings’ – where the consulting physician, policyholder, and insurer work in collusion. Another case of Claim Fraud can arise when a policyholder purchases multiple health insurance policies and enjoys settlements from all of them.

Consequences of Committing a Health Insurance Fraud

If you are found guilty of participating in health insurance fraud cases in India, you are liable to face the following consequences:

 

  • You can lose all benefits of the policy you have subscribed to.

 

  • Your fraudulent claims will be rejected.

 

  • You will have to bear the burden of your medical expenses yourself.

 

  • You stand to lose the chance to be treated at the range of network hospitals covered by your choice of policy.

 

How Insurers Are Fighting Medical Insurance Fraud

Here is how medical insurers in India are lobbying to fight against medical insurance fraud:

 

  • Establishment of a standard set of guidelines pertaining to organizing clinics and medication for major illnesses and diseases.

 

  • Creation of a database of all fraudulent cases, and dissemination of details of the same.

 

  • The creation of an ‘Extortion Anticipation Unit’ that will conduct field surveys to verify cases suspected of fraud.

 

  • Developing a ‘whistleblower’ policy that will incentivise individuals to report cases of fraud to the insurers.

Conclusion

Medical insurance fraud is a serious offense in India and can make you liable to incur the above-mentioned penalties if caught in this malpractice. Before purchasing a health insurance policy, make sure you read and understand the fine print pertaining to every single clause of the policy so that you do not knowingly/unknowingly commit a medical insurance scam.

 

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FAQs on Health Insurance Fraud

  • ✔️What are the various types of Health Insurance Fraud in India?

    The various types of Health Insurance Fraud in India include Deliberate and Opportunity Fraud, External and Internal Fraud, and Policyholder’s Fraud.

  • ✔️What are the three types of Policyholder’s Fraud?

    The three types of Policyholder’s Fraud include – Eligibility Fraud, Application Fraud, and Claim Fraud.

  • ✔️What are the consequences of committing Health Insurance Fraud?

    The consequences of committing Health Insurance Fraud include – losing all policy benefits, rejection of fraudulent claims, bearing the burden of medical expenses yourself, losing access to network hospitals and difficulty to renew health insurance, or even purchasing a new one.