Fight Fraud, Waste & Abuse
What is Healthcare Fraud, Waste and Abuse?
Fraud is knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any healthcare benefit program or to obtain (by means of false or fraudulent pretenses, representations, or promises) any of the money or property owned by, or under the custody or control of, any healthcare benefit program.
Waste is the overutilization of services, or other practices that, directly or indirectly, result in unnecessary costs to the Medicare program. Waste is generally not considered to be caused by criminally negligent actions, but rather the misuse of resources.
Abuse includes actions that may, directly or indirectly, result in: unnecessary costs to the Medicare program, improper payment, payment for services that fail to meet professionally recognized standards of care, or services that are medically unnecessary. Abuse involves payment for items or services when there is no legal entitlement to that payment, and the provider has not knowingly and/or intentionally misrepresented facts to obtain payment. Abuse cannot be differentiated categorically from fraud, because the distinction between “fraud” and “abuse” depends on specific facts and circumstances, intent and prior knowledge, and available evidence, among other factors.
Intent is the key distinction between fraud and abuse. An allegation of waste and abuse can escalate into a fraud investigation if a pattern of intent is determined.
How does Fraud, Waste and Abuse Affect You?
Fraud, waste and abuse diverts significant resources away from necessary health care services, which results in paying higher co-payments and premiums, and other costs. Fraud can also impact the quality of care you receive and even deprive you of some of your health benefits.
Studies show that billions of dollars are lost each year to healthcare fraud in the United States. Laws are in place to prevent healthcare fraud and abuse, and to punish those who commit this crime. Insurance companies such as Sparrow Advantage also investigate and try to prevent fraud.
Who Can Commit Fraud?
There are many types of healthcare fraud, which can be committed by individuals, medical providers, employers, and others. The primary goal of fraud is to profit financially, or to obtain medical care without valid insurance.
Examples of Individual Fraud
- Using someone else’s ID card or loaning your ID card to someone not entitled to use it
- Providing false statements on an enrollment application, such as adding spouse or dependent information to obtain coverage, or concealing information about past medical history or preexisting conditions
- Visiting different doctors to obtain multiple prescriptions
- Exaggerating a claim
- Providing false information in order to receive medical coverage or services
- Failing to report other insurance, or to disclose claims that were a result of a work-related injury
Examples of Provider Fraud
- Billing for services that were not provided to the patient
- Providing services that are not medically necessary for the purpose of maximizing reimbursement
- “Upcoding” – billing for a more costly service than was actually provided
- “Unbundling” – billing each step of a test or procedure as if it were separate, instead of billing the test or procedure as a whole
- Submitting claims with false diagnoses to justify tests, surgeries or other procedures that are not medically necessary
- Waiving member copays or deductibles
- Accepting kickbacks for member referrals
How We Are Fighting Fraud
Sparrow Advantage fights fraud and helps protect the monies our members spend on healthcare through a dedicated department called the Special Investigations Unit (SIU). The SIU uses the latest fraud-detection software, fraud hotlines, audits, data analysis and other tools to identify and investigate improper, deceptive and fraudulent billing.
Identify – Sparrow Advantage employees are trained in how to identify possible fraud and abuse and will refer these issues to the SIU for investigation.
Detect – SIU staff perform investigations and conduct activities to verify medical necessity, appropriateness of services, proper billing, eligibility for coverage, and more.
Prevent – Claim management tools assist with the identification of inconsistent and illogical relationships among claims data. State-of-the-art data mining tools are used to identify providers and members who may be involved in fraud.
How You Can Help
- Ask your doctor questions and make sure you know and understand the procedures and services performed.
- Be cautious when using websites – do not enter personal information such as Social Security number, Medicare number, credit card number, etc., unless you are sure it’s secure.
- Refuse to accept any packages received from an unknown pharmacy or other source
- Review your Explanation of Benefits (EOB) when you receive it in the mail. Check to be sure you received the services listed. Are the dates correct? Are there charges that seem wrong to you?
- Report any suspicious activity or questionable services:
Call our toll-free Compliance & Ethics Hotline at
This number is available 24 hours a day seven days a week. You may leave your name and telephone number or choose to remain anonymous.
In writing – Sparrow Advantage, ATTN: Compliance SIU Dept., P.O. Box 7119, Troy, MI 48007
All reports are investigated and involve the appropriate federal and state agencies when necessary.