Claim severity due to fraud is a huge problem for insurance carriers. Although there are many factors contributing to the rise of auto injury medical claim costs — including more expensive pharmaceuticals and costlier treatment options that inflate paid losses — fraud is clearly one expense that carriers can and should address.

One specific area of medical claim abuse has appeared in PIP and/or “no-fault” states where the ability to bill more high-cost procedures has provided a lucrative opportunity for fraud. New York, Pennsylvania, Michigan, Minnesota, and Florida exhibit greater claim severity compared to the overall experience in the U.S., with particular sectors of medical care such as radiology and other diagnostics on the rise. These procedures are performed not only more frequently but also earlier in the treatment cycle. As a result, costs are rising higher than overall medical inflation.

Expensive procedures performed earlier in the care cycle can consume more of the claim dollar — money better spent on patient care. In the case of radiology procedure abuse, the frequency of computed tomography (CT) scans in recent years paints a picture of unsavory medical billing practices at work. An examination of claim data reveals a marked up tick in the number of CT scans in PIP states compared to previously common magnetic resonance imaging (MRI). A careful examination of the necessity of these procedures in so many auto medical claim cases in these particular states leads one to believe that some care providers are taking advantage of an opportunity to make more money. By digging deeper, we see that the frequency with which these CT scans occur as a result of provider referrals suggests medical billing fraud.