A recent report from The George Washington University School of Public Health and Health Services, in Washington, D.C., challenges the notion that fraud is a problem only in public health insurance markets and finds that fraud is a systemwide problem affecting private and public health insurance alike.

The report, released by the school's Department of Health Policy, finds that some of the most striking examples of fraud come from fraud committed directly by the private insurance industry itself. In 2007, when the U.S. spent nearly $2.3 trillion on health care, and public and private insurers processed more than 4 billion health insurance claims, fraud was estimated to reach as much as 10 percent of annual health care spending.

At that rate, losses of more than $220 billion in 2007 alone would have been enough to cover the uninsured, the report says. The National Health Care Anti-Fraud Association (NHCAA) has estimated conservatively that 3 percent of all health-care spending—or $68 billion—is lost to health care fraud.

The George Washington University report finds that no segment of the health-care industry or geographical area is immune from fraud. It's estimated that 80 percent of health-care fraud is committed by providers, 10 percent by consumers, and the balance by others, such as insurers and their employees, it says. It identifies fraudulent billing, kickbacks, "up-coding" services, and bundling as common examples of fraud. Avoidance of sick and high-need members, along with the systematic misrepresentation of the cost of care to group plan sponsors, represent major examples of fraud in the private insurance industry, it says.

The report also notes a distinction between fraud and improper payments. Fraud is a misrepresentation of the truth or concealment of material facts, it says. Improper payments, on the other hand, tend to involve technical questions associated with verification of claims or related matters. The report also describes recent efforts to improve fraud detection and recovery.

"The evidence presented in this analysis should put to rest the notion that the problem of fraud is limited to public programs. Because fraud can arise in any sector of the health industry, comprehensive efforts to both detect and deter fraud systemwide are essential to national health reform,"" says Sara Rosenbaum, who chairs the university's Department of Health Policy.

The George Washington University Medical Center has provided medical care in the Washington, D.C., metropolitan area since 1824.