Medically Unnecessary Prescriptions Cause Millions in Insurance Losses

October 15, 2019

Four people, including two doctors, appeared in court in October 2019 on charges they defrauded New Jersey state health benefits programs and other insurers of $4.5 million by submitting fraudulent claims for medically unnecessary prescriptions. A fifth individual, a physician’s assistant, has pleaded guilty to participating in the health care fraud conspiracy.

From January 2014 through April 2016, the conspirators recruited individuals in New Jersey to obtain very expensive and medically unnecessary compounded medications from a Louisiana pharmacy.

The conspirators learned that certain compound medication prescriptions – including pain, scar, antifungal, and libido creams, as well as vitamin combinations – were reimbursed for thousands of dollars for a one-month supply.

The conspirators recruited public employees and others covered by the Pharmacy Benefits Administrator to fraudulently obtain compounded medications without any evaluation or determination by a medical professional that the medications were medically necessary.

The defendants paid individuals to agree to receive prescription medications from the Compounding Pharmacy.

Fraud Schemes

This type of fraud is common and included in the recent white paper from Alessa entitled Battling Health Insurance Claims Fraud.

This white paper outlines common schemes and case studies to help your organization prevent or uncover fraud ahead of it being paid out.

Schemes such as these involve kickbacks and billing anomalies that pay doctors who are involved in the fraud. Kickbacks are payments or non-monetary gifts or rewards used to entice medical professionals into using specific medical services. This could be a cash kickback for using a specific clinic or service when not required.

Here’s how you can detect and prevent that scenario.

  • Review vendor transactions to detect unusual concentrations of activity with a few providers
  • Review year-to-year comparisons in transactions for significant increases with providers or where costs of materials or services are out of line
  • Flag for potential cases of overbilling
  • Review vendor addresses to employee addresses to look for matches

Reporting Fraud

Fraud is not a victimless crime. We all pay for fraud through higher premiums or lost services because governments or insurance providers have to spend part of their budgets toward these fraudulent claims.

If you suspect fraud, report it. In the United States, the FBI is tasked as the primary agency for investigating federal or private health insurance fraud. Patient-driven fraud can mean others needing treatment are unable to receive it, while conspirator fraud may mean some patients do not get the full and necessary treatment they deserve.

CaseWare RCM offers a solution called Alessa to help screen transactions and ongoing business between caregivers and insurance company staff. This solution can help you detect and prevent fraudulent claims.

Please download our white paper for more information. To schedule a demonstration or to answer your questions, please feel free to contact us anytime.

About Anu Sood

Anu Sood (LinkedIn | Twitter) is the Director Marketing at CaseWare RCM and is responsible for the company’s global marketing strategy. She has over 20 years of experience in product development, product management, product marketing, corporate communications, demand generation, content marketing and strategic marketing in high-tech industries.

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