Health Insurance Companies Need Help Stopping Phantom Billing

When a health insurance company receives claims from a medical provider, those claims are checked both electronically and with human eyes to make sure they are accurate and legitimate. But sometimes inaccurate or fraudulent claims slip through. An example are claims filed under what is known as phantom billing.

 

Phantom billing has been an especially serious problem for health insurance carriers since the onset of the COVID pandemic. Originally, scammers were more likely to target Medicare and Medicaid. But once the national emergency was declared over, they began turning their attention to private carriers. Those carriers are now asking for help to stop phantom billing. And who are they asking? Consumers.

 

Phantom billing is pretty simple in principle. A scammer bills an insurance company for services that were never performed or received. The billing party doesn't even have to be a legitimate medical facility or clinician. It can be anyone who has a decent understanding of medical coding and billing.

 

A phantom billing scam was recently uncovered in Chicago thanks to an observant consumer and a local news station. The consumer received an explanation of benefits (EOB) form in the mail. Because EOBs are not bills, he could have easily discarded it without taking a look. But instead, he read the document thoroughly.

 

He soon realized his insurance company had been billed for services he never received. Furthermore, the biller was ostensibly a diagnostic testing company that his doctor's office did not use. The consumer reported it to a local TV station so that its investigative reporters could do their thing.

 

Reporters tracked down the biller and found two addresses. There were no diagnostic labs at either address. One address turned out to be a property whose owner agreed to receive mail on behalf of the scam company for a small monthly fee. But the company had not set up any kind of business on the property.

 

It turns out that the diagnostic testing company doesn't really exist as a business. Either its owner or someone else within the organization knows enough about medical coding and billing to submit claims accurate enough to fool insurance carrier personnel.

 

The insurance company covering the man who got the investigation rolling acknowledged they had paid the fraudulent claims. After determining for themselves that the biller was illegitimate, they stopped all payments to it. That is the good news. The bad news is that these types of scams are going on all over the country.

 

So, how can consumers help? By paying attention to EOBs. An EOB is similar to an invoice in that it lays out all the medical services received and how much an insurance carrier was billed. If you get an EOB in the mail, you should be able to determine pretty easily whether it is legitimate.

 

You either visited the biller's facility or you didn't. You either received treatment, got tested, or were otherwise assisted, or you weren't. If you ever receive an EOB detailing a medical visit or services that do not match your own experience, report it to your insurance company.

 

Without consumer involvement, phantom billing is hard to stop. As long as scammers use legitimate medical billing codes and submit bills according to carrier standards, it is very difficult for insurance company personnel to identify a phantom bill. On the other hand, aware consumers can alert their insurance companies to potential fraud. That is all a carrier needs to launch an investigation. When they discover phantom bills, they immediately stop payment.