Type to search

The Cause of Health Care Fraud

Impact Welfare

The Cause of Health Care Fraud

The Cause of Health Care Fraud

The Healthcare industry is among the top 5 sectors along with sectors like real estate and finance, globally and in the US. However, although most people have heard about frauds related to real estate or finance, little is known about healthcare frauds.

What is health care fraud?

It is when either consumer or healthcare provider submits a wrong or misleading claim to get a greater sum of benefits. As one can see, in such frauds, both healthcare providers and consumers/patients may be involved.

Health care workers often carry out frauds like submitting false bills. They might falsify the diagnosis of the patient. Accepting kickbacks for patient referrals is common. Even billing a patient more than required or recommending non-essential diagnostic tests is a fraud.

On the other hand, consumers/patients may also engage in fraud. For example, they might claim services they never received. In addition, some may alter or forge bills.

The cause of health care frauds

Frauds in other industries are well-studied. Regretfully, fraud in healthcare remains a neglected subject. Greed may indeed explain it to a degree. However, that is not all. To prevent fraud, one needs to analyze the whole process scientifically. This would help devise better fraud prevention strategies.

The fraud triangle, as proposed by the Association of Government Accountants in the US, may help understand fraud:


Every fraud starts by exploiting certain deficiencies in the system. These deficiencies occur due to a lack of proper measures in place, poor enforcement of certain things. Thus, a person planning a fraud sees an opportunity that can be readily used. It may occur due to too much trust, lack of segregation of duties, or even poor management at certain places.


It remains a vital component in all frauds. It may be simply greed or pressure of repaying a debt. In some cases, life pressures may be too extensive, like in those with low socioeconomic status. However, it is worth knowing that such pressures are due to less clear reasons like illicit activities, substance abuse, and so on in many cases. Sometimes, a person may even opt for fraud due to high work pressures.


Most people need to overcome that ethical voice inside before committing fraud. They need to explain themselves, why their act is justified. Thus, most would come up with explanations like low salary. Some might say that everyone is doing it, so why not me.

There are some other factors, too. Some researchers have proposed a fraud diamond instead of a triangle. They say that there is a fourth element called capability. There is a need for a certain degree of expertise in any field to carry out fraud. Finally, it is worth knowing that there is a 10-80-10 Rule. According to this rule, 10% would never commit fraud. However, 80% of people are opportunistic, meaning they might commit fraud under certain circumstances when there is a right combination of opportunity, pressure, and rationalization. However, 10% population is actively looking for ways to commit fraud. Indeed, ”corruption signifies bad governance or no governance at all in organizations.”