What Is Medicare Fraud

What Is Medicare Fraud?

Medicare fraud refers to intentionally deceiving Medicare in order to receive unauthorized payments or benefits. It is a serious crime that costs taxpayers billions of dollars each year and can put beneficiaries’ health at risk[1]. Some common examples of Medicare fraud include[1][2]:

• Billing for services or medical equipment that were never provided
• Billing for unnecessary services that are not medically needed
• Misrepresenting non-covered treatments as medically necessary
• “Upcoding” – billing for more expensive services than were actually performed
• Accepting kickbacks for patient referrals
• Waiving patient co-pays and overbilling Medicare
• Using a Medicare beneficiary’s identity to submit false claims
• Prescribing unnecessary medication to profit from reimbursements

Medicare fraud can be committed by doctors, hospitals, pharmaceutical companies, medical equipment suppliers, and even by beneficiaries themselves. Healthcare providers and organizations involved in fraud may face criminal charges, civil monetary penalties, exclusion from Medicare, and loss of medical license[1].

Major Types of Medicare Fraud

Some of the most common types of Medicare fraud include[1][2][3]:

Billing for Services Not Performed

This basic scam involves billing Medicare for services, tests, or equipment that were never actually provided. Examples include billing for phantom patients, fake diagnoses, fictitious appointments, and unnecessary ambulance rides.

Misrepresenting Non-Covered Treatments

Providers disguise treatments that Medicare does not cover, such as cosmetic procedures, as medically necessary covered services.

Upcoding Services

Billing for more complex and expensive services than were actually performed. For example, billing a basic doctor visit as an extensive medical evaluation.

Unbundling Charges

Breaking apart a procedure into multiple billable components instead of billing as a single service. This leads to higher reimbursements.

Kickbacks for Referrals

Doctors or clinics receive illegal kickbacks in exchange for referring patients to a particular hospital, pharmacy, or medical equipment supplier. This drives up unnecessary costs.

Identity Theft

Fraudsters steal Medicare beneficiaries’ personal information to illegally bill services or file fake claims under their names and numbers.

Prescription Drug Schemes

Doctors overprescribe medications for kickbacks from pharmaceutical companies, or prescribe unnecessary drugs and bill Medicare.

Home Health Care Fraud

Home health agencies bill for services that patients didn’t qualify for or never received. Agencies recruit patients for unnecessary care.

Major Medicare Fraud Laws

The government has passed strict laws to combat rampant Medicare fraud and abuse[4]:

False Claims Act (FCA)

This civil law imposes penalties on any person or company that knowingly submits false claims to the government for reimbursement. Violators face fines of $11,000 – $22,000 per false claim.

Anti-Kickback Statute (AKS)

AKS prohibits knowingly paying or receiving bribes, kickbacks, or other “remuneration” to induce referrals for federal healthcare program business. Violations are felonies punishable by fines up to $25,000 and five years in prison.

Physician Self-Referral Law (Stark Law)

This prohibits doctors from referring Medicare patients to facilities in which they or their family have a financial interest, unless an exception applies. Penalties include denial of payment, refunds of claims, and civil monetary penalties.

Exclusion Statute

This requires the exclusion of healthcare providers convicted of Medicare fraud from participating in federal health programs. Providers may be excluded permanently or for a period of years based on the offense.

Civil Monetary Penalties Law (CMPL)

The CMPL authorizes civil penalties for different fraudulent and abusive acts, such as paying kickbacks, violating the Stark Law, and billing for unnecessary services. Fines range from $15,000 – $70,000 per violation.

How to Prevent Medicare Fraud

Doctors, healthcare organizations, and beneficiaries can take steps to prevent fraud[1][5]:

• Carefully review Explanation of Benefits statements and Medicare Summary Notices for errors.
• Avoid using providers who offer free services, waive copays, or guarantee specific medical equipment in exchange for Medicare numbers.
• Protect Medicare card and number. Treat card like a credit card.
• Report suspicious claims or activities to 1-800-MEDICARE or Medicare’s fraud hotline.
• Exercise caution providing identifying info over phone, email, or door-to-door.
• Verify provider credentials and check for disciplinary actions.
• Implement compliance programs to ensure billing procedures adhere to regulations.
• Conduct internal audits to identify improper billing and claims.

Penalties for Medicare Fraud

Medicare fraud can lead to severe criminal, civil, and administrative punishments[1]:

Criminal Penalties:

• Felony conviction
• Imprisonment – sentences typically 1 to 10 years
• Fines from $10,000 to $250,000 per offense

Civil Penalties:

• False Claims Act – triple damages, fines of $11,000 – $22,000 per false claim
• Civil Monetary Penalties – fines from $15,000 – $70,000 per violation

Administrative Sanctions:

• Exclusion from Medicare and other federal health programs
• Loss of medical license
• Repayment of fraudulent claims

Recovering improperly paid funds is a top priority. Providers may have payments suspended pending fraud investigations.

The Costs of Medicare Fraud

Medicare fraud drains critical resources from taxpayers and the healthcare system[2]:

• The Centers for Medicare and Medicaid Services (CMS) estimates that fraud accounts for 10% of total healthcare expenditures, around $163 billion per year.
• Between $31 and $59 billion is lost specifically due to Medicare fraud annually.
• Fraudulent activities lead to higher healthcare costs and insurance premiums for consumers.
• Funds lost to fraud result in reduced access to care for beneficiaries.
• Patient health is put at risk when subjected to unnecessary treatments, services, and medications.
• Tax dollars lost to fraud could be used for other essential government healthcare programs and services.

How the Government Combats Medicare Fraud

Federal and state agencies are employing new technologies and increased collaboration to combat Medicare fraud[2][5]:

• CMS uses data analysis to identify and stop fraudulent billing patterns.
• The Department of Justice (DOJ) has increased prosecution of fraud cases.
• The Health Care Fraud Prevention and Enforcement Action Team (HEAT) allows agencies to share data to detect and prevent fraud.
• Medicare Fraud Strike Forces allow rapid response to fraud using data analysis and multi-agency collaboration.
• The Center for Program Integrity coordinates efforts to screen providers, monitor billing, and build fraud cases.
• Increasing use of screening technology, like fingerprinting, helps verify provider identities and credentials.
• Whistleblower rewards encourage insiders to report fraud.
• The Senior Medicare Patrol recruits retired professionals to educate beneficiaries on protecting themselves from fraud.