A PROJECT REPORT ON

“A STUDY ON HEALTH INSURANCE FRAUD IN INDIA”

Semester VI

IN FULFILLMENT OF THE REQUIREMENT

FOR THE AWARD OF
BACHELORS IN COMMERCE – BANKING & INSURANCE

SUBMITTED BY
SRADHA MAHENDRA BARIYA

ROLL NO:
08
UID :
20105006

UNDER THE GUIDANCE OF

MISS. VIJAYA SUNDER

S.I.E.S COLLEGE OF COMMERCE AND ECONOMICS [AUTONOMOUS]

 CERTIFICATE

This is to certify that Sradha Mahendra Bariya of B.com Banking & Insurance
Semester VI (academic year 2022- 2023) has successfully completed the project on A
Study on Health Insurance Fraud In India under the guidance of Miss.Vijaya Sunder.

MISS. VIJAYA SUNDER MRS. SHAILASHRI UCHIL

(Project Guide) (Course co-coordinator)

DR. NINA ROY CHOUDHURY

(External Examiner) (Principal)

Place: Mumbai
Date: 16-03-2023
 DECLARATION

I, Sradha Mahendra Bariya , student of B.com (Banking and Insurance) Semester VI

academic year (2022-2023) hereby declare that I have completed the project on “A Study
on Health Insurance Fraud In India”.

Signature
____________________________
Name: Sradha Mahendra Bariya.

Roll No: 08

Place: Mumbai

Date: 16-03-2023
 ACKNOWLEDGEMENT

I would like to thank the University of Mumbai, for introducing b.com (B&I)
Course, thereby giving its students a platform to be abreast with changing business
Scenario, with the help of theory as a base and practical as a solution.
I am indebted to our principal Dr Nina Roy Choudhury for providing necessary
Facilities required for completion of the project.
I take this opportunity to thank our co-ordinator Miss. Shailashri uchil for her support
And guidance. I would sincerely like to thank her for all her efforts.
I would like to express my sincere gratitude towards my project guide Miss vijaya Sunder
whose guidance and care made the project successful.
 INDEX

SR. No PARTICULAR PAGE NO

1 INTRODUCTION
1.1 MEANING AND DEFINITION
1.2 IMPORTANCE

2 LITERATURE REVIEW

3 RESEARCH METHODOLOGY

4 DATA ANALYSIS AND

INTERPRETATION

5 5.1 FINDING
5.2 CONCLUSION
5.3 SUGGESTIONS

6 BIBLIOGRAPHY

7 APPENDIX
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ABSTRACT
The menace of fraud is growing across all sectors of the industry, prevalent
globally at every level. The firms end up incurring huge costs in fraud detection
and prevention. The service industry, like that of the insurance industry, gives
financial protection for the risks covered; the greed for monetary benefits in the
form of fraudulent claims or earning higher brokerage for the intermediaries is an
incentive for making easy money and thus committing fraud.The Insurance
Regulatory & Development Authority of India (IRDAI), defines the term ‘fraud’,
as “an act of or omission intended to gain dishonest or unlawful advantage”.
Insurance fraud creates a problem not only for honest policyholders but also for
insurance companies. Insurance companies suffer a loss of 0% to 15% of their
business revenue according to one study. The fraudulent health insurance claims
have risen to 35% for some insurers as stated by another study. Frauds can be
committed by executives within the company, intermediaries, or policyholders.
This article aims to study the various kinds of fraud prevalent in the health
insurance sector and the ways to mitigate the same. The paper also delves into the
impact of fraud on the profitability of the insurers; the higher insurance premium
for policyholders and the lack of trust generated between the insured and the
insurer due to frauds committed by few. The framework given by the regulator, for
monitoring insurance fraud has also been discussed.

KEYWORDS:
Health insurance, Fraud, Hospitalization, policy holder, claims, collaboration,
credentials, policy, Eligibility, opportunity, Intermediary, premium.
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CHAPTER 1
INTRODUCTION

There are many hazards and risks in the world. Risks can take many different forms,
including those related to the unpredictability of bad things happening to people's lives,
wellbeing, resources, and property, among other things. While it's not always possible to
prevent bad things from happening, the financial industry has developed products that
protect people and organizations from such disasters by compensating them with
financial assets. A financial asset known as protection lessens or eliminates the cost of
disaster or the effect caused by many types of risks. Insurance has developed as a means
of compensating people for loss and uncertainty in order to protect their interests from
disaster and vulnerability. It might very well be portrayed as a tool to weaken or
eliminate social interactions.
In addition to sheltering individuals and businesses from a variety of anticipated hazards,
insurance makes a significant contribution to the nation's overall financial development
by ensuring that interactions are secure. By enhancing financial assets, the protection
firms strengthen monetary foundations and reduce vulnerabilities. Also, it strengthens
how businesses operate and produces long-term financial resources for mechanical
developments.
In addition to other things, the insurance industry also boosts the quality of savings
among individuals and provides jobs for millions of people, especially in countries like
India where savings and employment are important. There is a significant possibility of
insurance fraud because of all these advantages. In India, there were over 45,000 crores
worth of insurance frauds committed in 2019. Fraudulent health insurance claims can
range from 15% to 35%, and overall, insurance firms often lose 10% to 15% of their
revenue. The remaining 10% of insurance scams include deliberate, intentional mishaps
that are organized. Most occurrences of fraud in life insurance happen when the insured
sum is between $20,000 and $1.2 million.
A scenario when an insured or medical provider company provides the insurer with false,
misleading, or fraudulent information with the goal of obtaining unfair benefits from
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insurance for the policyholder or provider-offering source is considered health insurance

fraud. Such fraud results in significant losses for the corporations that supply the
coverage, but it can also affect the medical insurance benefit for real clients. Also,
compared to metro centers, "semi-city and rural areas" have seen more occurrences of
health insurance fraud.
India has made significant progress in terms of health improvement over the past 50
years. Yet, India continues to lag well behind many quickly emerging nations, including
China, Vietnam, and Sri Lanka, in terms of health metrics (Satie et al 1999). When a
health care system is sponsored by the government, the standard and Services'
accessibility has long been a big challenge. In India, the private health sector has
experienced tremendous growth. Most of the gaps between what the government provides
and what people need are filled by the private sector. Yet, with the spread of various
medical technology and an increase in prices generally, the cost of care has also increased
significantly, making it unaffordable for a significant portion of the population. The
public and the government have begun looking Many health funding methods are
available to manage issues brought on by the expanding complexity of the private sector's
expansion, rising healthcare costs, and shifting epidemiological patterns of diseases.
The Government of India's new economic strategy and process of liberalization, which
have been in place since 1991, cleared the path for the nation's insurance industry to be
privatized. The management and strategy of health insurance, which remained
significantly underdeveloped and a minor component of the product portfolios of India's
nationalized insurance companies, are about to undergo a major shift. The Indian
Parliament recently enacted the Insurance Regulatory and Development Authority
(IRDA) Bill, which is a key first step in measures that would have a big impact on the
health industry.
a privatized insurance industry and a constitution By maximizing the benefits of
competition in terms of reduced costs and greater levels of customer satisfaction, IRDA
hopes to improve the performance of the nation's state insurance sector. However the
ramifications of the
It's unclear how private insurance companies will enter the health industry. The latest
policy changes will have wide-ranging effects and have a significant impact on the
expansion and development of the health industry. The rise of this industry raises a
number of difficult concerns that want careful consideration. This further emphasize the
pressing necessity for policy development and evaluation. Privatization and the
expansion of health insurance could have a negative impact on health care, especially if
poorly managed .Health insurance as it is different from other segments of insurance
business is more complex because of serious conflicts arising out of adverse selection,
moral hazard, and information gap problem.
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1.1 MEANING AND DEFINITION.

MEANING OF INSURANCE:
Insurance is a way to manage your risk. When you buy insurance, you purchase
protection against unexpected financial losses. The insurance company pays you or
someone you choose if something bad happens to you.
DEFINITION :
Insurance is a means to spread the loss caused by particular risk, over a number of people
against some amount called premium.
HEALTH INSURANCE
Health insurance is a type of insurance that pays for a policyholder’s medical and surgical
costs. It either pays the care provider for the covered person directly or reimburses the
expenses incurred as a result of illness or injury.
DEFINITION:
Health insurance is defined as insurance against the risk of incurring medical expenses
among individual.

1.2 FEATURES OF HEALTH INSURANCE

The main features of a modern health insurance plan are:
 Health Insurance Coverage

The expenses that can arise during a medical emergency are fully covered by
insurance policies. As part of a single policy, it covers ambulance costs as well as
hospitalization and post-hospitalization fees. A health insurance policy also
provides coverage for serious conditions including cancer, kidney failure, and
stroke.

 Renewal discounts

A No Claim Bonus is provided to the person insured in the following year if no

claim has been made against the policy in the previous year. This bonus can be in
the form of a high discount of the premium or the sum assured can be increased.
Some insurers also provide a free check-up if there is a good record of no-claim
bonuses.
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 Co payment

Co-payment is an option provided by most insurers that helps to decrease the

yearly premium. A percentage of the total expenses is paid by the insured while
the insurance company pays the balance.

 Health Insurance Tax benefits

One of the less well-known feature of health Insurance benefits, is that under
section 80D of the Income Tax Act, 1961, health insurance policies entitle you to
receive tax benefits. The premium paid for a health insurance policy is tax-
deductible, both for your own policy or for your family members.

 Flexibility

An insurance policy gives the insured person a lot of options. After a given
amount of time, insurance purchasers can lower their premium or completely alter
the length of their policy. A change in your lifestyle, such as a change in your
marital status, will allow health insurance providers to modify the conditions of
your insurance plan .You can create a safety net with health insurance to shield
you from monetary difficulties in the event of a medical emergency. It is a wise
investment to ensure your future financial security.

1.3 IMPORTANCE OF HEALTH INSURANCE

 Lifestyle-related ailments are common these days.
 Healthcare is becoming increasingly expensive.
 It is difficult for a family to quickly arrange for huge amounts of money required for
treatment.
 Most of the savings of a family are in the form of fixed assets, which cannot be
liquidated quickly.
 For instance, most insurers now offer individual policy and family floater plans. You
get to protect yourself with an individual plan, but with a family floater plan, you can
ensure the health of your entire family.

1.4 TYPES OF HEALTH INSURANCE

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Health Insurance Plans Suitable For

Individual Health Insurance Individuals

Family Health Insurance Family (self, spouse,

children and parents)

Senior citizen Health Citizens above 65 years of

Insurance age.

Critical Illness Insurance For those who are suffering

from critical diseases.

Group Health Insurance For a group of employees in

an organization.

1. Individual Health Insurance

You can buy a personal health insurance plan to cover your parents, your spouse, your
kids, and yourself. These insurance plans frequently pay for a wide range of medical
costs, including hospitalization, childcare operations, hospital room rent, and more. Each
member of an individual health insurance plan has their own amounts insured. Let’s say
you have an individual plan with a sum insured of INR 8 lakhs for yourself, your spouse,
and both of your parents. A maximum of Rs. 8 lakhs can be claimed by each of you from
your health insurance per policy year.
2. Family Floater Health Insurance
A family floater plan enables you to insure all of your family members under a single
policy, and each person receives a portion of the total sum insured. As the quantity
insured is shared, these plans are often less expensive than individual insurance. Prefer
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buying a family floater plan for you and your spouse with an 8 lakh rupee sum
guaranteed. You are limited to only INR 8 lakhs in claims each policy year. You and your
spouse might each make claims totaling INR 2 lakhs, or you could each make claims
totaling INR 6 lakhs. Family floater plans are frequently suited for young nuclear
households.
3. Senior Citizens Health Insurance
These health plans were created expressly with senior citizens' medical needs and
requirements in mind. The majority of policies for senior citizens provide extra coverage,
including some mental benefits as well as domiciliary hospitalization. These policies
could cost more than standard insurance policies and necessitate a comprehensive
medical examination in advance because older people are more prone to have health
problems.
4. Critical illness Insurance
Many disorders that are influenced by way of life are on the rise. Long-term treatment
and management costs for conditions like cancer, stroke, kidney failure, and cardiac
illnesses can be very high. This is the main motivation behind the development of critical
sickness insurance coverage. These can be acquired either independently as their own
plan or as an add-on or rider to your current health insurance policy. If a critical condition
is diagnosed, these policies frequently pay claim payouts as a single lump sum payment.
They provide coverage for extremely particular issues.
5. Group Health Insurance
Group health insurance plans, as opposed to individual and family floater plans, can be
obtained by a group manager for a large number of people. For instance, a company may
buy group insurance for all of its workers, or a building secretary can do the same for all
of the building's tenants. Although these plans are cost effective, they frequently only
cover the most fundamental medical conditions. These policies are frequently bought by
employers as an additional benefit for workers.

1.5 ADVANTAGES & DISADVANTAGES

ADVANTAGES
i. Cashless Hospitalization

Most of the time, you can benefit from cashless hospitalization if you have a
health issue and are admitted to one of the network hospitals. Your hospital's
medical expenditures will be paid by the general insurance company. As a result,
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you won't have to pay for the expensive therapy out of pocket. You can use this
facility to submit a reimbursement claim in the event that you are admitted to a
hospital that is not in your insurance network.

ii. Network Hospital

The hospitals with which insurance companies have a contract in order to offer
their clients cashless treatment services are known as network or tie-up hospitals.
The patient does not have to pay the hospital's medical bills during cashless
hospitalization. They offer services that are free and cashless. These hospitals have
agreements with the insurance company, and they are responsible for paying the
hospital's medical bills.

iii. No Claim Bonus

The increase in sum insured at renewal time offered by the insurance company for
no claims filed during the prior policy year is known as the no claim bonus or the
renewal bonus. The insurance companies' maximum renewal bonus or no-claim
incentive would not be more than 100% of the basic sum insured. A few health
insurance companies offer renewal bonuses ranging from 10% to 50% for each
year without a claim. The amount covered at the time of renewal would be larger
the higher the renewal bonus percentage each year. The greatest health insurance
plan is one that offers a no-claims bonus or a renewal incentive of up to 100% for
each year without a claim.

iv. Add-ons or Riders

You can purchase a critical illness or accident cover add-on to make sure that your
policy covers such exclusions as well.

v. Financial Protection

If you unexpectedly die/ permanent disability happens due to an accident having a

health insurance policy will cover you and your family with financial protection.

vi. Peace of Mind

Having a health plan eliminates the need for you to worry about healthcare
expenses and allows you to choose the best medical care for yourself and your
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family. Best care can also give good recovery, allowing you to get back to your
healthy life.

vii. Affordable Healthcare

The two factors that are most usually compared when choosing the best health
insurance plan are coverage and premium. The primary error people made was
comparing the coverage to the premium collected by the insurance providers.
Before purchasing a health insurance policy, it is important to carefully review all
of its terms and conditions, including those pertaining to inpatient hospitalization,
Ayush treatment, and other issues .So, before purchasing the policy, take into
account all the relevant factors because a simple analysis of the premiums charged
by various insurance companies for various health insurance policies can only lead
to disappointment when it comes to the payment of claims. Get a health insurance
coverage on PolicyBachat, compare rates from many providers, and receive
inexpensive premiums.

DISADVANTAGES
i. Pre-Existing Exclusion

Those who already have diseases would be a disadvantage as well. They must
go through a waiting period, which is usually four years long. For any pre-
existing condition to be covered by an insurer, you normally have to wait four
years. For senior citizens who already have medical conditions, this poses a
significant challenge. This is especially true considering that pre-existing
illnesses don't just refer to conditions for which you may currently be receiving
treatment. It covers illness for which there were warning indications or
symptoms 48 months previous to the first premium being paid.

ii. Waiting Period

In the Waiting period you must wait for a specified amount of time before you
make a claim. But you cannot claim some or all benefits of the health insurance
from your company. The initial waiting period or 30 day waiting period is the
time where the customer has to wait before making a claim under the health
insurance policy. Any accident-related claims are exempt from this waiting
period rule. This is also added to prevent people from taking health insurance
only at the time of illness.
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iii. Increase in Premiums

Your age has a significant impact on your health insurance policy's premiums.
If you acquire a health policy when you are 30 years old vs when you buy one
after turning 50, the premium amount may fluctuate significantly. By
increasing the premium, the insurers take on more risk. This is the reason
behind the recommendations to purchase health coverage when you're young.

iv. Co-Pay

Co-pay is the way of making customers liable and participating in the claim
settlement process. Co-pay is the amount of claim which is to be borne by the
insured customer at the time of claim settlement. Most of the health insurance
policies have a co-pay condition if there are senior citizens included in the
policy. Higher the co-pay amount selected by the customer lower would be the
health insurance premium.

COMPAINES PROVIDING HEALTH INSURANCE IN INDIA.

a. Public Sector Health Insurance Companies:-

 The New India Assurance Co. Ltd

 Oriental Insurance
 National Insurance Company
 United India Insurance Company
 Life Insurance Corporation of India.

b. Private Sector Health Insurance Companies:-

 Apollo DKV Insurance Company Ltd.

 Aviva Life Insurance
 Bajaj Allianz General Insurance Co. Ltd.
 Birla Sun Life Insurance
 HSBC Health Insurance.
 ICICI Lombard General Insurance Co. Ltd.
 Max New York Life Insurance.
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 MetLife India Assurance Company.

 Reliance Health.
 Star Health and Allied Insurance Company Limited.
 Tata AIG.
 United Healthcare.

1.6 HEALTH INSURANCE FRAUDS

Fraud : It is the deliberate act of deceiving someone in order to gain an advantage, often
financial, or to cause harm to another person. It involves making false representations,
concealing or omitting important information, or manipulating facts in a way that
misleads or deceives someone.
Health insurance fraud can be explained as a situation where an insured or medical
service provider furnishes fraud, false or misleading information to the insurer with the
intention to attain unfair benefits from a policy for the policy holder or service providing
sources.
Such fraud results in significant losses for insurance service providers, but it may also
have an impact on the benefit of health insurance for loyal clients. In addition, "semi-
urban and rural areas" have seen more instances of health insurance than metropolises.
Essential Components of Health Insurance Fraud
The essential components of fraud include intention to deceive, derive Benefits from
Insurance Industry, preparation of exaggerated or inflated Claims or medical bills and
malafide intention to induce the firm to pay more Than it otherwise would. Devising
innovative methods and tactics including Pressure tactics, favoritism, Nepotism, etc. form
a part of fraud, which is a Hazard growing by leaps and bounds since the last decade.

Frauds by Healthcare Provider or its employees include preparation of bogus Claims by

fake physicians, billing for products or services not rendered, Exaggerated claims
submission, billing prepared for higher level of services, Modifications or alterations
made in submission of claims, change in Diagnosis of the patient, fake documentation,
and fraud committed by the Employees of a hospital or any other Healthcare product /
service provider in Order to make a quick buck.

1.7 CLASSIFICATION OF HEALTH INSURANCE FRAUD

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The Insurance fraud are classified as hard fraud or soft fraud.

 Hard Fraud : Hard fraud occurs when someone deliberately plans or invents a
loss, such as auto theft or fine etc. that is covered by their insurance policy in order
to receive payment for damages.

 Soft Fraud : Soft fraud, is far more common than hard fraud. It is sometimes also
referred to as opportunistic fraud.

1.8 TYPES OF FRAUD COMMITTED BY PARTIES

IRDA guidelines classify various Insurance fraud as :
 Policyholder Fraud or claims Fraud : Fraud against the insurer in the purchase
or execution of an insurance product, including fraud at the time of making a
claim.
 Intermediary Fraud : Fraud perpetuated by an intermediary against the insurer
and policyholders.
 Internal Fraud : This type of fraud is committed by the insurer an staff member.

1.9 SEVERAL TYPES OF HEALTH INSURANCE FRAUDS INCLUDE:

 Opportunity Fraud

This term refers to any information that is misleading or incorrect. This typically
occurs on the part of the policyholder to make sure that the insurance policy's
underwriting is done in their favor.

 Deliberate Fraud

It is a specific form of accident or loss that the insurance covers and is intentionally
disclosed in order to receive the benefit.

 External Fraud

It is a type of fraud that is done by beneficiaries, vendors, policyholders, or

companies.

 Internal Fraud
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This fraud is committed against a company or a policyholder by the employees of the

insurance company such as executives, managers, or agents.

 Fraud committed by policyholder

A consumer today is well educated enough to understand the benefits and conditions
of insurance plans in order to take advantage of them through engaging in dishonest
behavior. Claim fraud, eligibility fraud, and application fraud are some of the most
typical frauds.

 Claim Fraud

It is one of the frauds that is currently practiced the most. It occurs when a
policyholder submits a false claim in order to receive a benefit under the policy. It is
thought to be claim fraud. Unattested accidents, unseen injuries, insureds, and
physicians conspiring to perpetrate fraud are a few types of claim fraud. In addition to
this, some healthcare professionals engage in claim fraud by charging insurers for
services that are not really rendered but are covered by their health insurance plan. To
receive claim payments from all of the insurance companies, some policyholders
purchase numerous health insurance plans without disclosing any information to the
insurance companies.

 Eligibility Fraud

The policyholders are engaging in this fraud by providing incorrect or faulty

information regarding their eligibility. They provide false information regarding their
family history, employment status, and any illnesses they may already have.

 Application Fraud

The policyholders commit this fraud by submitting false information on the

application on the illnesses they have, claims they have made, etc., in order to receive
the additional health benefits.

HEALTH INSURANCE FRAUD EXAMPLES :

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1. Treatment of uninsured persons, but billing for insured persons covered in the
health policies.
2. Billing for Doctor Fees for his unnecessary visits to the patients in the Hospital.
3. Billing for services not rendered.
4. Unwarranted procedures, excessive investigations, expensive medicines.
5. The extended length of stay keeping in view the high sum insured in the policy.
6. Documents submitted are of doubtful nature.
7. Claims for disease or injury which seems to be pre-existing.
8. Collecting treatment cost from the innocent patients with misrepresentation that all
amounts will not be admissible in an insurance policy.
9. Filing claims for treatments that are not medically necessary.
10. Intermediary takes the premium but does not pass it to the Insurance Company.
11. Intermediary inflates the premium and passes the correct premium to the insurance
company and keeps the difference.

1.9 CHALLENGES OF HEALTH INSURANCE FRAUD

Health insurance fraud is a significant problem that poses numerous challenges for
healthcare providers, insurers, and law enforcement agencies.

Some of the key challenges of health insurance fraud include:

 Difficulty In Detecting Fraud

Health insurance fraud can be challenging to detect, as fraudsters often employ

sophisticated methods to avoid detection. This can include falsifying medical
records, billing for services that were never provided, or even using the
identities of real patients to submit fraudulent claims.

 Cost

Health insurance fraud is estimated to cost the industry billions of dollars each
year, which ultimately results in higher premiums for policyholders. Healthcare
providers and insurers must invest significant resources into fraud detection
and prevention, which can be costly.

 Legal complexity
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Prosecuting health insurance fraud can be legally complex, as it often involves

multiple jurisdictions and laws. It can be challenging to coordinate efforts
between various law enforcement agencies, insurers, and healthcare providers,
which can lead to delays and difficulties in bringing fraudsters to justice.

 Impact on patient care

Health insurance fraud can also have a significant impact on patient care.
Fraudulent activities can divert resources away from legitimate medical needs,
leading to longer wait times, reduced access to care, and ultimately poorer
health outcomes for patients.

Overall, health insurance fraud is a complex and multifaceted problem that requires a
coordinated effort from insurers, healthcare providers, and law enforcement agencies
to address effectively.

1.10 LEGAL STATUS OF HEALTH INSURANCE FRAUD IN INDIA

Health insurance fraud is a criminal offense in India and is punishable under various
sections of the Indian Penal Code (IPC), the Prevention of Corruption Act, and the
Insurance Act.
Under the IPC, health insurance fraud falls under the category of cheating (Section 415),
forgery (Section 463), and criminal breach of trust (Section 405). Depending on the
nature and severity of the fraud, the accused can face imprisonment ranging from a few
months to several years, along with a fine.
The Insurance Regulatory and Development Authority of India (IRDAI) is the regulatory
body responsible for monitoring and regulating insurance activities in India. IRDAI has
also issued guidelines to insurance companies to prevent and detect fraud, and has set up
a dedicated fraud monitoring cell to investigate and prosecute cases of insurance fraud.
In addition to the legal consequences, health insurance fraud can have serious financial
consequences for the accused, including loss of reputation, loss of license to practice, and
civil liability. Therefore, it is important to report health insurance fraud promptly and
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take steps to prevent it from happening in the first place. Section 25: A person is said to act
fraudulently if he acts with the intent to defraud but
not otherwise.

 Section 191: Giving false document “Whoever, being legally bound by an oath or by an
express provision of law to state the truth, or being bound by law to make a declaration
upon any subject, makes any statement which is false, and which he either knows or
believes to be false or does not believe to be true, is said to give false evidence”. Issuing
or signing a false certificate “Whoever issues or signs any certificate required by law to
be given or signed, or relating to any fact of which such certificate is by law admissible
in evidence, knowing or believing that such certificate is false in any material point,
shall be punished in the same manner as if he gave false evidence”.

 Section 198: Using as true, a certificate that is known to be false “Whoever corruptly
uses or attempts to use any such certificate as a true certificate, knowing the same to be
false in any material point, shall be punished in the same manner as if he gave false
evidence”.

 Section 199: False statement made in declaration which is by law receivable as evidence
“Whoever, in any declaration made or subscribed by him, which declaration any Court
of Justice, or any public servant or other person, is bound or authorized by law to
receive as evidence of any fact, makes any statement which is false, and which he either
knows or believes to be false or does not believe to be true, touching any point material
to the object for which the declaration is made or used, shall be punished in the same
manner as if he gave false evidence”.

 Section 205: False personation for purpose of act proceeding in suit or prosecution
“Whoever falsely personates another, and in such assumed character makes any
admission or statement, or confesses judgment, or causes any process to be issued or
becomes bail or security, or does any other act in any suit or criminal prosecution, shall
be punished with imprisonment of either description for a term which may extend to
three years or with fine, or with both”.
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 Section 415: Whoever, by deceiving any person, fraudulently or dishonestly induces the
person so deceived to deliver any property to any person, or to consent that any person
shall retain any property, or intentionally induces the person so deceived to do or omit to
do anything which he would not do omit if he were not so deceived, and which act or
omission causes or is likely to cause damage or harm to that person in body, mind,
reputation or property, is said to "cheat".

 Section 463: Relates to forgery. "Whoever makes any false documents or false
electronic record or part of a document or electronic record, with intent to cause damage
or injury, to the public or to any person, or to support any claim or title, or to cause any
person to part with property, or to enter into any express or implied contract, or with
intent to commit fraud or that fraud may be committed, commits forgery."

 Section 464: Making a false document

A person is said to make a false document or false electronic record who
dishonestly or fraudulently (a) makes, signs, seals or executes a document or
part of a document; (b) makes or transmits any electronic record or part of any
electronic record; (c) affixes any digital signature on any electronic record; (d)
makes any mark denoting the execution of a document or the authenticity of the digital signature.
With the intention of causing it to be believed that such document or part of
document, electronic record or digital signature was made, signed, sealed,
executed, transmitted or affixed by or by the authority of a person by whom or
by whose authority he knows that it was not made, signed, sealed, executed or
affixed.

 Section 468: Forgery for the purpose of cheating. “Whoever commits forgery, intending
that the document or Electronic Record forged shall be used for the purpose of cheating,
shall be punished with imprisonment of either description for a term which may extend
to seven years, and shall also be liable to fine”.

 Section 471: Using as genuine, a forged document or electronic data. “Whoever

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18

fraudulently or dishonestly uses as genuine any document or electronic record which he

knows or has reason to believe to be a forged document or electronic record, shall be
punished in the same manner as if he had forged such document or electronic record”.

 Section 477 A: Relates to falsification of accounts. This may be an applicable section in

some cases of health insurance fraud. "Whoever, being a clerk, officer or servant or
employed or acting in capacity of a clerk, officer or servant, wilfully and with intent to
defraud, destroys, alters, mutilates or falsifies any book, electronic record, paper,
writing, valuable security or account which belongs to or is in the possession of his
employer or has been received by him for on behalf of his employer or wilfully, and
with intent to defraud, makes or abets the making of any false entry in, or omits or alters
or abets the omission or alteration of any material particular from or in, any such book,
electronic record, paper, writing, valuable security or account, shall be punished with
Page 53imprisonment of either description for a term which may extend to seven years, or with

fine, or with both."

 Applicability of Section 17 in The Indian Contract Act, 1872

"Fraud" means and includes any of the following acts committed by a party to a contract, or
with his connivance, or by his agent, with intent to deceive another party thereto of his agent, or
to induce him to enter into the contract:-
The suggestion, as a fact, of that which is not true, by one who does not believe it to be true
(across entities)
The active concealment of a fact by one having knowledge or belief of the fact (across
entities)
A promise made without any intention of performing it (intermediary/ sales staff)
Any other act fitted to deceive (across entities).
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1.11 WAY TO PREVENT HEALTH INSURANCE FRAUD

FROM THE SIDE OF INSURED

 Strong internal controls

Insurers should implement strong internal controls to prevent fraud. This may
include measures such as automated fraud detection systems, regular audits, and
employee training.

 Pre-authorization requirements

Insurers can require pre-authorization for certain procedures, medications, or

medical equipment. This helps to ensure that the treatment is medically necessary
and reduces the likelihood of fraudulent claims.

 Claims data analysis

Analyzing claims data can help identify patterns and anomalies that may indicate
fraudulent activity. Insurers should have software systems in place that analyze
claims data in real-time, enabling them to detect and investigate suspicious claims.

 Verification of medical necessity

Insurers should verify the medical necessity of treatments before authorizing them.
This involves reviewing medical records and consulting with medical
professionals to ensure that the treatment is appropriate for the patient's condition.

 Verification of provider credentials

Insurers should verify the credentials of healthcare providers before entering into
agreements with them. This includes verifying that they are licensed and have the
appropriate training and experience to provide the services they are offering.

 Collaboration with law enforcement

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Insurers should collaborate with law enforcement agencies to identify and

prosecute fraudsters. This may involve sharing information about fraudulent
activity or providing testimony in court.

 Education and awareness:

Insurers should educate their employees, policyholders, and healthcare providers

about the risks of healthcare fraud and how to prevent it. This may include training
sessions, online resources, and outreach programs.

FROM THE SIDE OF INSURED

 Understand your policy

It’s important to fully understand the coverage provided by your health insurance
policy. This can help you identify any fraudulent activity that may occur, such as
claims for services you didn’t receive.

 Protect your personal information

Protect your personal information, including your health insurance ID card and
social security number, from being stolen or used fraudulently. Only share your
information with trusted healthcare providers and insurance companies.

 Be aware of “free” services

Be cautious of “free” services offered by healthcare providers or insurers, as they

may be attempting to lure you into a fraudulent scheme.

 Verify billing statements

Verify the accuracy of billing statements from healthcare providers and insurers,
and question any charges that seem suspicious or inaccurate.

 Report suspected fraud

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Report suspected fraud to your insurance company or to the appropriate

authorities. You can do this by contacting the fraud hotline or submitting a fraud
complaint online.

 Keep track of your medical records

Keep track of your medical records, including bills and receipts, to ensure that you
are not being charged for services you did not receive.

 Review your Explanation of Benefits (EOB)

Review your Explanation of Benefits (EOB) from your insurance company to

ensure that the services billed were actually received by you. If you notice any
discrepancies, contact your insurer immediately to report the issue.
1.12 Health Insurance in India: Current Scenario
The health care system in India is characterized by multiple systems of Medicine, mixed
ownership patterns and different kinds of delivery structures. Public sector ownership is
divided
between central and state governments, Municipal and Panchayat local governments.
Public
health facilities include Teaching hospitals, secondary level hospitals, first-level referral
Health Insurance in India: Current Scenario
The health care system in India is characterized by multiple systems of Medicine, mixed
ownership patterns and different kinds of delivery structures. Public sector ownership is
divided between central and state governments, Municipal and Panchayat local
governments. Public health facilities include Teaching hospitals, secondary level
hospitals, first-level referral hospitals (CHCs or rural hospitals), dispensaries; primary
health centres (PHCs), sub-centres, and health posts. Also included are public facilities
for selected occupational Groups like organized work force (ESI), defence, government
employees (CGHS), railways, post andtelegraph and mines among others. The private
sector (for profit and not for profit) is the dominant sector with 50 per cent of people
seeking indoor care and around 60 to 70 per cent of those seeking ambulatory care (or
outpatient care) from private health facilities. While India has made significant gains in
terms of health indicators- demographic, infrastructural and epidemiological.
This is coupled with spiraling health costs, high financial burden on the poor and erosion
in their incomes. Around 24% of all people hospitalized in India in a single year fall
22
22

below the poverty line due to hospitalization (World Bank, 2002). An analysis of
financing of hospitalization shows that large proportion of people; especially those in the
bottom for income quintile borrow money or sell assets to pay for hospitalization (World
Bank, 2002) This situation exists in a scenario where health care is financed through
general tax revenue, community financing, out of pocket payment and social and private
health insurance schemes. India spends about 4.9% of GDP on (Regional Overview in
South-East Asia) health (WHR, 2002). The per capital total expenditure on health in
India is US$ 23, of which the per capita Government expenditure on health is US$
4.Hence, it is seen that the total health expenditure is around 5% of GDP, with
breakdown of public expenditure (0.9%); private expenditure (4.0%). The private
expenditure can be further classified as out-of-pocket (OOP) expenditure (3.6%) and
employees/community financing (0.4%). It is thus evident that public health investment
has been comparatively low. In fact as a percentage of GDP it has declined from 1.3% in
1990 to 0.9% as at present.
Furthermore, the central budgetary allocation for health (as a percentage of the total
Central budget) has been stagnant at 1.3% while in the states it has declined from 7.0% to
5.5%.hospitals (CHCs or rural hospitals), dispensaries; primary health centres (PHCs),
self-centred, and health posts. Also included are public facilities for selected occupational
Groups like organized work force (ESI), defence, government employees (CGHS),
railways, post and telegraph and mines among others. The private sector (for profit and
not for profit) is the
dominant sector with 50 per cent of people seeking indoor care and around 60 to 70 per
cent of
those seeking ambulatory care (or outpatient care) from private health facilities. While
India has
made significant gains in terms of health indicators- demographic, infrastructural and
epidemiological.
This is coupled with spiraling health costs, high financial burden on the poor and erosion
in their
incomes. Around 24% of all people hospitalized in India in a single year fall below the
poverty
line due to hospitalization (World Bank, 2002). An analysis of financing of
hospitalization shows
that large proportion of people; especially those in the bottom for income quintiles
borrow
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23

money or sell assets to pay for hospitalization (World Bank, 2002) This situation exists in
a
scenario where health care is financed through general tax revenue, community
financing, out of
pocket payment and social and private health insurance schemes. India spends about
4.9% of
GDP on (Regional Overview in South-East Asia) health (WHR, 2002). The per capita
total
expenditure on health in India is US$ 23, of which the per capita Government
expenditure on
health is US$ 4.Hence, it is seen that the total health expenditure is around 5% of GDP,
with
breakdown of public expenditure (0.9%); private expenditure (4.0%). The private
expenditure
can be further classified as out-of-pocket (OOP) expenditure (3.6%) and
employees/community
financing (0.4%). It is thus evident that public health investment has been comparatively
low. In
fact as a percentage of GDP it has declined from 1.3% in 1990 to 0.9% as at present.
Furthermore, the central budgetary allocation for health (as a percentage of the total
Central
budget) has been stagnant at 1.3% while in the states it has declined from 7.0% to 5.5.
1.13 `TRIGGERS OF HEALTH INSURANCE FRAUDS
It has been observed that frauds pertaining to health insurance usually possess some sort of
common trends or patterns. There are certain parameters that can be employed as a trigger to
detect false claims or practices which have been enlisted below:
Policy and claim history related triggers
1. Claims from a policy with only one member at minimum sum insured amount.
2. Multiple claims with repeated hospitalization (under a specific policy at different
hospitals or at one hospital of one member of family and different hospitals for other
24
24

members of family), multiple claims towards the end of policy period, close proximity of
claims.
3. Claims made immediately after a policy sum insured enhancement.
4. Claims from a member with history of frequent change of insurer or gap in previous
insurance policy.
5. Claims for policy with evidence of significant over/under insurance as compared to
insured are income/life-style.
6. Claims from a non-traceable person or where courier/cheque has been returned from
insured’s documented address.
7. Second claim in the same year for an acute medical illness/surgical minor illness in the
same policy period for main claim.
8. Claims from members with no claim free years, i.e. regular claim history.
Provider location related triggers
9. Claims from a hospital located far away from insured’s residence.
10. Claims from a hospital already identified on a watch list or black listed hospital.
11. Claims on hospital stationary without landline phone number, registration number, pin
code or doctor’s qualification stated.
12. Claims submitted that cause suspicion due to format or content that looks “too perfect’’
in order. Pharmacy bills in chronological order or claim documents with color
photocopies. Perfect claim file with all criteria fulfilled with no deficiencies.
13. Claims with visible tempering of documents, overwriting in diagnosis/treatment papers,
discharge summary, bills etc. same handwriting and flow in all documents from first
prescription to admission to discharge. Bills generated on a word document or documents
without proper signature, name and stamp.
14. Claims without supporting pre-post hospitalization papers/bills.
15. Claims with apparent discrepancy in diagnosis and line of treatment: irrelevant
investigations for a particular ailment, mismatch in ICD and CPT code/procedure
description, line of treatment/procedure inconsistent with insured’s profile/gender/age or
25
25

season.
16. Claims with incomplete/poor medical history- complaints/presenting symptoms not
mentioned, only line of treatment given, supporting documentation vague or insufficient.
17. Claims without signature of insured.
18. Reimbursement claim from a network hospital.
19. Claims with missing information like post-operative histopathology reports,
surgical/anesthetist notes missing in surgical cases.
20. Claims with similar format/pattern/clinical details in discharge card/bill from a particular
provider.

CHAPTER 2

LITERATURE REVIEW

 Vipula Rawte had proposed the individual implementation of Evolving

Clustering Method and Support Vector Machine. They had chosen Evolving
Clustering Method (ECM) for clustering because the data is dynamic i.e. the
claims are dynamic and new data is generated continuously and Support
Vector Machine (SVM) is used for classification.

 Rashmi Dutta Baruah, Plamen Angelov and Diganta Baruah had

implemented the clustering system. In that system the evolving clustering
approach attempts to meet the following three key requirements of data
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26

stream clustering: (i) fast and memory efficient (ii) adaptive (iii) robust to
noise. But the disadvantage of this system is that Clusters of new diseases
are formed but duplicates are not detected.

 Sriram Ravindran, Chandan Gautam, Aruna Tiwari have implemented

Extreme Learning Machine and Evolving Clustering Method. The problem
of recognizing a user from the passphrase is performed using ELM and
ECM-ELM. Stable accuracies were obtained from ECM-ELM. Accuracies
were good but need to be improved.

 Lijuan Liu, Bo Shen, Xing Wang3 had introduced the theoretical basis of
support vector machine, summarize the research status and analyze the
research direction and development prospects of kernel function. The kernel
function is used in Support Vector Machine to resolve the errors occurred
during classification of datasets .

 Janmenjoy Nayak, Bighnaraj Naik* and H. S. Behera had performed a

survey on Support Vector Machine. The main aim of this paper is to deduce
the various areas of SVM with a basis of understanding the technique and a
comprehensive survey, while offering researchers a modernized picture of
the depth and breadth in both the theory and applications.

 Jing Li & Kauai-Ying Huang & Jionghua Jin & Jianjun Shi, 2007- had done
research on fraud healthcare claims. This paper is the first to provide a
comprehensive survey of published research results in health care fraud
detection. They made efforts to classify the fraudulent behaviors, identify
the sources and characteristics of health care data, provide key Steps in data
preprocessing, and summarize and compare existing statistical methods.

 K. Selva Kumar and Dr. S. Vijay Kumar (2013) in their article, “Attitude of
policy holders in the direction Of administration of general insurance
companies with orientation to Madurai region” This research reveals That
23% insurance holders belongs to low level of attitude, 46% to medium
27
27

level of attitude and 31% to high Level of attitude. There is an important

relationship between demographic variables like ages, sex, education, Etc.

 R. Amsaveni and S. Gomathi (2013) made an attempt to find out health

insurance policy holder Satisfaction, to recognize the reason for preferring
policy to protect themselves and stay away from potential Risk. The major
problems faced by the respondents are improper communication and less
number of hospitals Covered by the health insurance companies .The health
insurance industry has changed rapidly in the changing economic
environment throughout the World. The overall Insurance Industry
contributes about seven percent GDP of our economy. The increased Rate of
market competition due to liberalization and privatization forced health
insurers to be competitively Serving in a better way to the customers. In that
point view to huge untapped market, the concept of health Insurance was
introduced by the IRDA. Health insurance is a new and an emerging model
of channel of Distribution adopted by insurance players to increase the
market share and insurance penetration.

 Ramamoorthy and Dr. Senthil Kumar ,2013: This study is conducted with
the purpose of to understand The growth of Indian health Insurance Industry
and to measure the customer awareness, satisfaction and Perception towards
health insurance products. The various concepts related to health insurance
have been Discussed in this paper. Health insurance is accelerating the
growth of Insurance business, decrease cost, Low awareness of health
insurance among customers. This paper concludes that there is lots of scope
and Growth opportunity available for health insurance in the Indian
Insurance market.

 Panchal . N ,2013: People will purchase the health insurance if awareness is

increased, and if nominal Premium is charged in India.

 Choudhary Maheshkumar. L,2013: The rural population are more vulnerable

to risks such as illness, Injury, accident and death because of their social and
economic situation. There is need to provide financial Protection to poor
families for the same. Health insurance could be a way of removing the
financial barriers And improving accessibility to quality medical care by the
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28

poor and also an effective social security Mechanism. Awareness regarding

health insurance is increasing; Education, socio-economical status and
Occupation were determinants responsible for opting health insurance.

 R. Amsaveni and S. Gomathi (2013) made an attempt to find out mediclaim

policy holder Satisfaction, to recognize the reason for preferring Mediclaim
policy to safe guard themselves And stay away from future risk, majority of
the respondents have taken personal scheme to Employees. The major
problems faced by the respondents are lack of timely communication And
limited list of hospitals covered by the health insurance providers.

 J. Jaypradha (2012) in the article, “Problems and prospects of health

insurance in India” Highlighted that the health insurance sector in India has
registered 30% growth rate in 2008-09. The penetration of health insurance
in India had risen to 4.8%, in 2008 from 1.2% in 1999-2000. The average
medical expenditure of an Indian household is 6.7% of the annual Income.

 Ravikant Sharma (2011) in his paper, “A Comparison of Health Insurance

Segment- India Vs. China” seeks to compare both the economies India and
China on health insurance aspect .Both economies have huge potential of
health insurance and 45% of world’s population lives In both the countries.
 P. Jain et al., (2010) in his paper, “Problems faced by the Health Insurance
Policyholders of Different Public and Private Health Insurance Companies
for Settlements of their Claims ”Measure the problem faced by customers.
The objectives were to study reason for refusal of Claim, satisfaction level of
customer and problems faced by them in getting their claim.

 Ramesh Bhat and Falan Reuben (2001) in their article, “Analysis of claim
and Reimbursements made under mediclaim policy of general insurance
corporation of India” Analyses 621 claims and reimbursements data relating
to policy beginning year 1997-98 and 1998-99 of Ahmadabad. They found
that number of policies and premium collected have Grown 30% during
1998- 00 and 50% during 1999-2000.

 R. P. Ellis et al., (2000) in the article, “Health insurance in India- Prognosis

and Prospects” Tries to review a variety of health insurance system in India,
their limitation and role of the General insurance corporation as an important
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29

insurance agency. They focused the need for a Competitive environment.

This paper recommends improvement in delivery of health care And its
financing, efficient functioning of the ESIS and CGHS and amending the
mediclaim System and alteration in exclusion clause.

CHAPTER 3
RESEACH METHODOLOGY

3.1 TITLE : A STUDY ON HEALTH INSURANCE FRAUD IN INDIA.

3.1 OBJECTIVE OF STUDY

 To Study the concept and structure of Health Insurance in India.

 To analyze the growth of Health Insurance sector in India

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30

 To examine fraud in Health Insurance sector.

 To identify the essential area for improving this sector

3.2 DATA COLLECTION METHODS :

The study is based on primary and secondary data which has been collected. Data can be
classified in to two types :

3.3.1 PRIMARY DATA

Primary data is the original data collected by researcher himself for specific purpose. The
main purpose of collection of primary data was to prepare questionnaire.
For this project Interview is conducted with miss Hemlata M. Sasane an financial advisor
of LIC branch ulhasnagar.
SECONDARY DATA
Secondary data is not an original data, it is collected by somebody else for some other
purpose. The secondary data consists of published data collected through
 Books
 Magazines
 Newspapers
 Websites
 Journals
 Research papers

3.3 SCOPE OF THE STUDY

 Identifying the types of health insurance fraud.

 Estimating the prevalence and costs of health insurance fraud

 Detecting and preventing health insurance fraud

 Understanding legal and regulatory frameworks for health insurance fraud.

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31

 Data collection and analysis.

 Personal Interview.

 Evaluation of existing prevention and detection strategies.

3.2 LIMITATIONS OF THE STUDY

 The scope of a study is limited to only Health Insurance Fraud in India.

 As it’s a personal interview the Study is limit to only one respond.

 Respondent may give biased answer for required data.

 The study is limited to month of march 2022

CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

PART 1: PRIMARY DATA

1 . How do you detect health Insurance Fraud?

 Some common technique use to detect fraud include secondary data tracking ,
information and technology specialist provision. It is also detected using techniques
32
32

such as putting sticker verification and approval process in place , leveraging

technology to better identify potential cases of frauds.

4 . what causes health insurance fraud and how it can be prevented ?

 Health insurance fraud can be caused by various factors such as greed, financial
need, and opportunity. Additionally, prevention should be prioritized over cure
when tackling healthcare fraud . This can involve measures such as putting stricter
verification and approval processes in place. It is also important for healthcare
providers to maintain accurate records and ensure that they are billing only for
services that were actually provided.
3. Who investigate health insurance fraud ?
 various organizations and agencies are involved in investigating health insurance
fraud, such as law enforcement agencies, regulatory bodies, and insurance
companies themselves.

4. How one can report the insurance fraud ?

 There are various ways to detect health insurance Stroud The one can contact to the
health insurance provides. The Health and Human Services Office of the Inspector
General.

5. How do health insurance industry recover the losses occur due to health insurance
fraud?
 The health insurance industry recovers losses due to health insurance fraud by
investigating and identifying fraudulent claims, recovering overpayments, and
prosecuting offenders. Additionally, some states have laws that allow insurers to recover
damages from individuals who commit fraud.

6. What are your current fraud rates ?

 According to various sources, health insurance fraud rates in India range from

10% to 35%. Insurance companies typically lose between 10% to 15% of their
business due to fraudulent claims .A recent survey estimates that the number of
false claims in the industry is approximately 15% of the total
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33

7. What information is typically required in your patient claims ?

 When submitting a health insurance claim, patients typically need to provide information
such as their personal details (name, address, date of birth), policy number, the date of
service, the name and address of the healthcare provider, a description of the services
provided, and the total amount charged for those services. The patient also need to
submit the medical report or receipts.

8. What is the most important problem that you think we should address and the
prevention of the problem?

 The most important problem that should be addressed in health insurance fraud is the
prevention of fraudulent activities. We can prevent this issue by educating the public
about health insurance fraud and its consequences can help prevent fraudulent activities.
It is important to address this issue as it not only leads to financial losses but also affects
the quality of healthcare services provided to patients.

9. How do you generally begin an health insurance fraud investigation ?

 The investigation begins with identifying suspicious claims or patterns of behavior that
suggest fraudulent activity. Once a suspicious claim is identified, the insurance company
may conduct an initial review to determine if there is enough evidence to warrant a full
investigation. If there is sufficient evidence, the insurance company may assign the case
to a special investigation unit (SIU) for further investigation . The SIU may then conduct
interviews with individuals involved in the claim, such as healthcare providers or patients,
and review medical records and other relevant documentation to gather additional
evidence.

10. What is the penalty for someone convicted of health insurance fraud ?

 If someone is convicted of health insurance fraud, the penalty can vary depending on the
severity of the offense and the state in which it was committed. Is punishable by up to
five years in state prison and 50,000 fine.  In some cases, individuals may receive longer
prison sentences and higher fines.

11. Who pays for insurance fraud?

 The cost of insurance fraud is ultimately borne by the policyholders. Insurance companies
may pass on the costs of fraud to their customers in the form of higher premiums. When
fraudulent claims are paid out, it reduces the amount of money that insurance companies
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34

have available to pay legitimate claims, which can result in higher premiums for all
policyholders.

12. Is insurance fraud really a serious problem ?

 Yes, insurance fraud is a serious problem that affects the entire healthcare system.

Insurance fraud not only leads to financial losses but also affects the quality of healthcare
services provided to patients.

13. If I report health insurance fraud can I be held liable for the reporting ?

 No, you cannot be held liable for reporting insurance fraud. In fact, there are laws in place
to protect whistleblowers who report fraudulent activities.

14. Is there a reward for reporting health insurance fraud ?

 Yes, there are rewards for reporting health insurance fraud. Person who report health
insurance fraud may be eligible to receive a percentage of the proceeds recovered by the
government as a result of their report.

15. What information is needed to support an insurance fraud complaint ?

 When reporting insurance fraud, it is important to provide as much information as

possible to support the complaint. The specific information needed may vary depending
on the type of fraud being reported and the agency or organization receiving the report.
However, generally, individuals should provide details such as the name and contact
information of the person or company suspected of committing fraud, a description of
the fraudulent activity, and any supporting documentation such as medical records or
receipts.

PART 2 : SECONDARY DATA

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35

HOW INSURANCE COMPANIES ARE DEALING AGAINST FRAUD

36
36

1 The strictest guidelines and standards are

put in place for prescribing medications for
serious diseases.

2 An active ‘extortion unit’ is formed which

participates in inspections to verify the
validity of cases.

3 More efficient and transparent systems are

being developed to cut down the
unnecessary time delay between the
policyholder and insurance firm.

HEALTH INSURANCE FRAUD FALLS UNDER VARIOUS CATEGORY

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37

MEASURES USED BY INDUSTRY TO PREVENT HEALTH INSURANCE

FRAUD

CHAPTER 5
5.1 FINDINGS
 Health insurance fraud in India is about 38%

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38

5.2 CONCLUSION

Although insurance emerged in our country more than a century ago, there is still little
Awareness about insurance, its advantages, product details etc. The situation is worse in
respect Of health insurance. In recent years, after the industry was opened up, there
seems to be better Awareness about health insurance and products. The awareness
campaigns led by IRDA and Entry of Third-Party Administrators and brokers have also
helped in creating awareness about Health insurance products and their benefits.

For instance, with regard to coverage for dental care, the coverage gives a favourable
Reimbursement for individuals who have gone for routine dental care checkups and
treatment. The routine checkups though are taken to be a palliative measure to prevent
serious future Complications, the overindulgence of the insured results in augmented
financial participation Causing overuse of basic service or the most expensive
procedures.

The worst things of all, some of the procedures undergone may ignore the purpose of
coverage, And may also include procedures, which are purely for cosmetic enhancement.
Therefore, it is Necessary that while providing health insurance coverage, it is mandatory
to control the Activities of health care service providers and their beneficiaries- the
purchasers of insurance.

The interactions between them are purely subjective and therefore open up avenues for
Indulging in unwarranted gains (fraud). Health care professionals and institutions being
on a Higher plane or status than the patient allow the health provider to be in a better
position to Influence the insured. Such indulgence prevents insurance business from
surviving to meet the Needs of an insured with a real need of health insurance to pay for
an emergency health care Service.

The Law of Contract defines Fraud (under section 17 of the Act) as “The active
concealment ofa fact by one having knowledge or belief of the fact”. It also states that the
mere silence of the Facts likely to affect the willingness of a person to enter into contract
is not fraud, unless the Circumstances of the case are such that, regard being had to them,
39
39

it is the duty of the person Keeping silence to speak, or unless his silence is, in itself,
equivalent to a speech. Therefore, for Avoiding fraud insurers ought to work closer with
other insurers, brokers, police, etc, in getting Access to information about their potential
customers. In UK, the ABI does an excellent job of Liaising with the police and other
organizations on behalf of the insurance industry. It is very Effective at transferring
information to insurance companies, and acting as a focal point for Information.

Health insurers should understand that quality underwriting is the sine qua non for the
Development of a healthy insurance business. Indian insurers need to regain control of
their Health business, which is one of the fastest-growing segments in the market .They
need to Commit resources not merely to develop the health insurance portfolio but also
the detection of Frauds.

5.3 RECOMMENDATIONS AND SUGGESTIONS

Health insurance fraud is a serious problem in India, and it can take many forms,
including falsifying claims, providing unnecessary treatment or services, and billing for
services not provided. Here are some suggestions and recommendations to prevent health
insurance fraud in India:

Create awareness:
It’s important to educate people about health insurance fraud and its consequences.
People need to know how to identify fraud, how to report it, and the penalties for
committing it.

Develop a fraud prevention plan:

Health insurance companies need to develop a comprehensive plan to prevent fraud. This
plan should include measures like pre-authorization of medical services, frequent audits
of claims, and monitoring of high-risk providers.
40
40

Use technology:
Technology can help in the prevention and detection of health insurance fraud. Health
insurance companies can use data analytics and artificial intelligence to identify patterns
of fraud and flag suspicious claims.

Strengthen regulations:
The government needs to strengthen regulations to prevent health insurance fraud. This
can include stricter licensing requirements for providers, increased penalties for fraud,
and improved oversight of insurance companies.

Encourage whistleblowers:
Whistleblowers can play an important role in identifying health insurance fraud. The
government should encourage and protect whistleblowers who report fraud.

Collaborate with other stakeholders:

Collaboration between health insurance companies, providers, and government agencies
can help prevent health insurance fraud. This can include sharing data and information
about fraudulent activities.

Conduct investigations:
Health insurance companies and government agencies should conduct thorough
investigations into suspected fraud cases. This can help identify the perpetrators and
prevent future incidents.

In summary, preventing health insurance fraud in India requires a multi-faceted approach

that involves creating awareness, using technology, strengthening regulations,
encouraging whistleblowers, collaborating with other stakeholders, and conducting
investigations.
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BIBLIOGRAPHY
ARTICLES/JOURNALS/BOOKS
1. Kapadiya, Khyati, et al. “Blockchain and AI-Empowered Healthcare Insurance
Fraud Detection: An Analysis, Architecture, and Future Prospects.” IEEE Access
10 (2022): 79606-79627.

2. Settipalli, Lavanya, and G. R. Gangadharan. “WMTDBC: An unsupervised

multivariate analysis model for fraud detection in health insurance claims.” Expert
Systems with Applications 215 (2023): 119259.

3. Gupta, Rohan Yashraj, Satya Sai Mudigonda, and Pallav Kumar Baruah. “A
comparative study of using various machine learning and deep learning-based
fraud detection models for universal health coverage schemes.” International
Journal of Engineering Trends and Technology 69.3 (2021): 96-102.

4. Kapadiya, Khyati, et al. “Blockchain and AI-Empowered Healthcare Insurance

Fraud Detection: An Analysis, Architecture, and Future Prospects.” IEEE Access
10 (2022): 79606-79627.

5. Pandey, Pallavi, Anil Saroliya, and Raushan Kumar. “Analyses and detection of
health insurance fraud using data mining and predictive modeling techniques.”
Soft Computing: Theories and Applications: Proceedings of SoCTA 2016,
Volume 2. Springer Singapore, 2018.

6. Suseel, Mr Raichel, and Ms. Nimisha Rastogi. “Prevalence of Fraud in the Health
Insurance Sector: An Overview.” Management And Finance Bulletin 1.1 (2022):
17-31.

7. Sumalatha, M. R., and M. Prabha. “Mediclaim fraud detection and management

using predictive analytics.” 2019 International Conference on Computational
Intelligence and Knowledge Economy (ICCIKE). IEEE, 2019.
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8. Villegas-Ortega, José, Luciana Bellido-Boza, and David Mauricio. “Fourteen

years of manifestations and factors of health insurance fraud, 2006–2020: a
scoping review.” Health & justice 9 (2021): 1-23.

9. Sowah, Robert A., et al. “Decision support system (DSS) for fraud detection in
health insurance claims using genetic support vector machines (GSVMs).” Journal
of Engineering 2019 (2019)

10. Dua, Prerna, and Sonali Bais. “Supervised learning methods for fraud detection in
healthcare insurance.” Machine learning in healthcare informatics (2014): 261-
285.

ELECTRONIC SOURCES

1. https://www.policybachat.com/articles/advantages-and-disadvantages-of-
health-insurance

2. https://www.researchgate.net/publication/
340808551_A_Study_of_Health_Insurance_in_India

3. https://www.lawordo.com/insurance-frauds-project/

4. https://www.insurancesamadhan.com/blog/health-insurance-frauds-in-
india/

5. https://repository.law.miami.edu/cgi/viewcontent.cgi?
article=1915&context=umlr

6. https://www.policybazaar.com/health-insurance/individual-health-
insurance/articles/health-insurance-frauds-in-india/

7. https://www.outlookindia.com/outlookmoney/insurance/health-insurance-
frauds-types-impact-and-ways-to-fight-it-3353
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8. https://www.indiafirstlife.com/downloadPDF/Anti-Fraud-Policy/Anti-
Fraud-Policy_22-01-2014.pdf

APPENDIX

QUESTIONNAIRE

1. How do you detect health insurance fraud?

2. What causes Health Insurance Fraud and How it can be prevented?

3. Who investigate Health Insurance Fraud?

4. How can one report the Health Insurance Fraud?

5. How do Health Insurance industry recover the losses occur due to Health
Insurance Fraud?

6. What are your current Fraud rates?

7. What information is typically required in your patient claims?

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8. What is the most important problem that you think we should address and the
prevention of the problem?

9. How do you generally begin an Health Insurance Fraud investigation?

10. What is the penalty for someone convicted of Health Insurance Fraud?

11. Who pays for Health Insurance Fraud?

12. Is Health Insurance Fraud is really a serious problem?

13. If I report Health Insurance Fraud can I be held liable for the reporting?

14. Is there a reward for reporting Health Insurance Fraud?

15. What information is needed to support an Health Insurance Fraud complaint?

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VISITING CARD