New Healthcare Fraud Scheme Borrows Name of an Old Scheme

“Patient dumping” used to refer to the practice of a hospital or other care facility kicking a patient out of their facility if that patient’s resources dried up. At that point, the healthcare facility was not likely to obtain any further compensation for their efforts at treating the patient, and these facilities needed to make room for new patients who needed treatment – and who could pay for it.

Within the past few weeks, the Centers for Medicare and Medicaid Services (CMS) have asked healthcare providers about a new healthcare fraud scheme that also goes by the name “patient dumping.” In this particular scheme, health care providers like doctors’ offices and urgent care centers entice patients who would otherwise qualify for Medicare or Medicaid to sign up for private health insurance policies. In some alleged instances, the third party enticing the patient may even agree to pay for the patient’s insurance premium in order to secure the patient’s participation in the scheme. In this way, patients are “dumped” into private health insurance plans that they would not otherwise be able to afford.

What Benefit Do the Third Party “Enticers” Receive?

The ones enticing the patients to jump into private health insurance plans are (allegedly) doctors’ offices and other health professionals. These individuals and businesses are paid for procedures and services according to contracts that have been signed between the professional and insurance carriers as well as Medicare and Medicaid. However, Medicare and Medicaid do not pay the same amount for certain services and procedures as do private insurers. By moving patients from Medicare or Medicaid and “dumping” them into a private policy, these medical professionals are able to receive higher payments for performing the same services.

Is This Truly Fraud?

Whether this new form of “patient dumping” qualifies as healthcare fraud depends on one’s definition of a “fraudulent scheme,” but the Centers for Medicare and Medicaid assert that the practice is illegal, even if it is not technically fraudulent. A spokesperson for CMS insisted that it was illegal for any individual to attempt to entice a person who qualifies for Medicare or Medicaid to use a different health insurance program or to dissuade a qualified Medicare or Medicaid applicant from signing up.

The practice – if indeed it exists and is being committed – threatens to raise the health insurance costs for other patients. As additional patients become enrolled in private health insurance plans and begin using the benefits of such policies, the insurance company’s profits stand to go down. The only way an insurance company in this predicament could regain its former profits would likely be through raising premiums across the board. It can also hurt the patients themselves if they are unable to afford premium payments and the third party who made such payments in the past refuses to continue making them.

The Government Plans Its Next Steps

Right now, the CMS is merely asking for information about the practice of “patient dumping” so that it can obtain additional information. However, one can expect that new CMS program guidelines designed to deal with this practice will not be far behind.