Insurance Fraud and Abuse

General Information

Fraud is a significant concern of the entire insurance industry. HM Insurance Group takes a proactive approach to detecting and investigating potential insurance fraud and abuse, which includes taking action to deal with fraudulent activity against the company.

To respond to and resolve any allegations of fraud, HM Insurance Group has a Special Investigation Unit. As the detection, prevention and elimination of fraud, abuse and other over-utilization is essential to maintaining an insurance system that is affordable to current and future policyholders, HM is dedicated to educating all of its employees regarding the problem of fraud.

Awareness programs educate employees that fraud results in lost revenues which directly impact the company’s ability to price our products competitively. HM expects all employees to conduct themselves appropriately in the execution of their responsibilities.

HM Insurance Group also wants members of the community and policyholders to be aware of the detrimental effects fraud has on everyone covered by insurance. Keeping everyone’s eyes open to violations may help keep costs down in the future. Anyone who is aware of fraud regarding HM Insurance Group policies can contact the fraud hotline at 888-842-5699, send us an email or use our secure online form.


Fraud Prevention

We Fight Health Care Fraud, Waste, and Abuse

Health insurance fraud is a quiet crime — no blaring sirens or masked gunmen. The only victims are the American taxpayers, and most of us don’t even realize we are being ripped off, say, by a provider billing for services that were never rendered.

Technically, fraud is any intentional deception or misrepresentation made to result in some unauthorized benefit. Realistically, it is expensive. 

According to the Coalition Against Insurance Fraud, the insurance industry consists of more than 7,000 companies that collect over $1 trillion in premiums each year, and insurance fraud has a $308.6 million annual cost to U.S. consumers and businesses.

The insurance industry contributes more than 7,000 companies that collect over $1 trillion in premium each year. The massive size of the industry contributes significantly to the cost of insurance fraud by providing more opportunities and bigger incentives for committing illegal activities (FBI.gov2022).

Insurance fraud has a $308.6 billion annual cost to U.S. consumers and businesses, according to the Coalition Against Insurance Fraud. The new yearly cost of insurance fraud estimate is the first time in 27 years the figure has been updated. For the first time, the new figure extends beyond property & casualty insurance to include fraud in lines ranging from life and health to workers’ compensation and auto theft. (Coalition Against Insurance Fraud)

Cost Breakdown by Line:

Property & Casualty      $45B

Workers’ Comp               $34B

Premium Avoidance      $35.1B

Health Care                     $36.3B

Medicare & Medicaid    $68.7B

Disability                          $7.4B

Auto Theft                        $7.4B

Life                                    $74.7B

Annual cost estimates for 2022, according to research from the Coalition Against Insurance Fraud and Colorado State University Global.

Equally troubling are health care waste and health insurance abuse. Health care waste occurs when information is provided to a health insurance company that results in higher payments than the person or business is entitled to receive. One example is overutilization of services: if a provider prescribed all patients to receive an X-ray every time they have an appointment.

Health insurance abuse occurs when there isn’t any intent to deceive for monetary gain (which is fraud), but there is instead overutilization and/or inefficient use of resources. An example is billing improper codes or billing services as separate that should be bundled under the same code. The result can lead to higher health insurance premiums or greater government spending.

Financial Investigations and Provider Review

We are proactive in investigating and detecting potential health care fraud, waste, and abuse. Our Financial Investigations and Provider Review (FIPR) unit was created to investigate all cases of fraud, waste, and abuse that impact us financially or impact the health and welfare of our members.

FIPR supports our company’s mission of providing affordable, quality health care by ensuring that provider reimbursements are appropriate and by investigating and resolving suspected incidents of insurance fraud, waste, or abuse externally or internally. FIPR accomplishes this by deploying a variety of techniques:

  • Utilizing data analysis to identify aberrant claims
  • Applying claim coding reviews and other investigative techniques to assess the appropriateness of provider payments
  • Pursuing recoveries as necessary

Successful fraud prevention requires the identification, investigation, and resolution of potential fraud occurrences by means of the following:

  • Fraud referrals from members, employees, and providers
  • Active relationships with law enforcement personnel who receive information from FIPR to support criminal investigations
  • Continual analysis of health care claim patterns
  • Investigation of red flags like high claim utilization on a given day or provider billings that greatly exceed the normal billing pattern of comparable providers

Types of Fraud Investigations

Here are some of the types of fraud we pursue actively and examples of each.

  • Provider Fraud — billing for services not provided or billing for a more costly service than one performed, billing each stage of a procedure as it was separate, issuing kickbacks, billing for non-covered services or making a false diagnosis, setting up phony clinics to generate false claims
  • Subscriber Fraud — allowing someone else to use your insurance card, using an insurance card that has been canceled, placing ineligible dependents on your plan, asking a provider to falsify a report to receive a non-covered procedure, asking a provider to waive a copayment, forging receipts to get reimbursement from the insurer
  • Pharmacy Fraud — misrepresenting information on an enrollment application, placing ineligible dependents on your plan
  • Group Fraud — ghost employees or nonexistent employees, subscribers who are not employees, part-time employees, ineligible dependents