California Medical Provider Networks

Audits by the state of California found a repeated pattern of underutilization at Western Dental Services, with procedures that typically require multiple visits performed all at once and using inferior quality materials, compressing the cost of treatment also providing a substandard level of medical service for patients. The state found that the underutilization fraud stemmed from Western Dental’s method of compensating dentists in its provider network.

According to the General Accounting Office, 1 out of every 10 dollars in health care is lost to fraud, more than 100 billion a year. A report prepared by the California Research Bureau, at the request of the California State Senate, titled; 'Fraud and Abuse in the Health Care Market of California', found that while the media’s coverage of workers’ compensation fraud focuses on false claims fraud for workers seeking treatment for non-existent injuries and unscrupulous medical providers billing insurers for services that were never performed, it largely ignores the problem of insurance fraud in the private sector that accounts for more than 60 percent of health care expenditures.

The report highlights three distinct types of insurance fraud:

• False statement
This form of fraud occurs when false information is supplied for an individual or collective gain and can be utilized by all participants in the workers’ compensation insurance system: an employee, employer, health care provider or insurance company.

• Bribery and Self-Referrals
In this case patients are channeled to a specific medical provider in exchange for a kickback or patients are referred to a treatment facility that is owned by the referring party.

• Underutilization
The final type of fraud is repeated poor quality of care. Underutilization refers to a systematic pattern of substandard medical treatment.