Skip to main content

Learn what Medicare fraud is—and how you can watch out for it

Medicare fraud is a felony that costs taxpayers billions annually. Learn how to identify Medicare fraud and what to do when you catch it.

What is Medicare fraud? | Penalties | Medicare fraud examples | How to identify Medicare fraud | How to report Medicare fraud | What happens when you report Medicare fraud | Healthcare fraud prevention

In its simplest form, Medicare fraud is when someone obtains healthcare benefits from the program by lying or cheating. But it can also involve billing for services that were never provided or charging more than the allowable amount for a service. While scams involving Medicare fraud and abuse can take many different forms, all of them aim to take advantage of the system in some way and steal taxpayer money.

“Medicare fraud occurs across the board—from doctors, hospitals, labs, to even beneficiaries who sell their numbers or give their cards to others,” says Charles Clarkson of the Senior Medicare Patrol of New Jersey.

What is Medicare fraud?

The Centers for Medicare & Medicaid Services (CMS) defines fraud as “the intentional deception or misrepresentation that the individual knows to be false or does not believe to be true” and that is made “knowing that the deception could result in some unauthorized benefit to himself or herself or some other person.”

Medicare fraud is a huge problem for the government, costing American taxpayers around $60 billion every year. Medicare fraud is trending to reach $1.5 trillion by 2028.

In 2020, the improper payment rate under Medicare was 6.27%. This equals nearly $26 billion in improper payments. However, this is a decrease compared to the improper payment rate in 2019, which was 7.25%. Medicaid fraud has an improper payment rate of 14.90%. 

Health Payer Intelligence stated The CMS paid more than $160 million to Medicare Advantage claims for medications that were already paid for by Original Medicare.  

Medicare is a great program with many resources, which sometimes causes criminals to take advantage of the system. There are two main ways that this happens: selling identification numbers and stealing identification numbers.

A provider committing fraud could attempt to use a stolen Medicare number to order services or durable medical equipment—like a knee brace—without the beneficiaries’ knowledge. Or providers might intentionally bill for services or items not provided so that they may collect the funds.

Penalties for Medicare fraud and abuse

Medicare fraud is illegal and considered a felony. Anyone who commits it could face criminal, civil, or administrative consequences including jail time, fines, or penalties—like loss of medical licenses or exclusion from participating in any federal healthcare programs.

Medicare fraud hurts everyone. “Medicare fraud steals tax dollars that are coming out of every American’s paychecks,” said federal investigator Shimon Richmond in a video for AARP. “It steals from a program that is providing services that every American hopefully will be able to take advantage of or may need at some time.” It’s passed along to citizens in the form of higher taxes to cover the program and can result in decreased services for participants as plan administrators cut programs to cover rising costs.

Medicare fraud examples: How to identify Medicare fraud

For providers, Medicare fraud examples could be:

  • Falsification of patient records
  • Misrepresenting information on healthcare claims
  • Soliciting or paying bribes for referrals for services reimbursed by Medicare
  • Providing unnecessary or excessive tests
  • Unbundling
  • Double billing
  • Waiving cost-sharing in the form of copays, coinsurance, or deductibles
  • Phantom billing, or Billing for services not delivered

When committed by providers, Medicare fraud can include any act that involves the misuse or manipulation of protected health information for personal gain. Including billing patients with false claims,” up-selling” unnecessary services to pads bills, billing for missed appointments or paying for referrals of Medicare patients.

Medicare sets reimbursement rates for certain groups of procedures that should be performed together. Medical providers may unbundle the components and bill each one separately to increase their profits. This is called Unbundling. 

For beneficiaries, Medicare fraud examples could be:

  • Letting others use your Medicare card
  • Helping a doctor file false claims by having unnecessary tests
  • Altering a prescription or selling the drugs to others 
  • Providing incorrect information to qualify for Medicaid

How to identify Medicare fraud

One way to identify Medicare fraud is by keeping a record every time you visit your doctor or health provider. This includes the date that services were received as well any equipment used during those visits. Check for mistakes in providers, services rendered, or dates of services. Were you at the doctor’s that day? Did you get that test?

If the statement doesn’t match your records, it could be an honest billing error. A quick phone call to your provider could clear the error. Or it’s possible the Medicare program was billed for a service you did not receive. 

Fraud could be billing for services or supplies that were not provided. Abuse or waste could be a doctor excessively charging for services or supplies. Misusing codes, or “uncoding”, to increase the reimbursement amount from Medicare is another form of abuse. This could include upcoding or improper billing.

What are red flags for Medicare fraud?

Red flags for Medicare fraud include being offered services for free in exchange for your Medicare card number, being pressured into buying services that are more expensive, or being charged for durable medical equipment you have not yet received. Another big red flag is when someone claims they represent the government. A Medicare provider does not represent the government.

How do people commit Medicare fraud?

Beneficiaries commit Medicare fraud schemes by allowing someone to use their Medicare card to receive care or supplies. Or they could sell their Medicare number to allow the provider to bill for services not rendered. Another way people commit Medicare fraud is by accepting money or a “gift” in exchange for their Medicare number. 

How to report Medicare fraud

If you find out that Medicare is being improperly charged for an item or service, use the info below to report the suspected fraud or abuse.

Medicare parts Contact
Provider fraud or abuse under Original Medicare (Part A and Part B) 1-800-MEDICARE (1-800-633-4227) or The U.S. Department of Health and Human Services – Office of the Inspector General
Provider fraud or abuse in a Medicare Advantage Plan or a Medicare drug plan 1-800-MEDICARE (1-800-633-4227) or The Investigations Medicare Drug Integrity Contractor (I-MEDIC) at 1-877-7SAFERX (1-877-772-3379)

Before calling, or creating a complaint, make sure you’ve gathered all the information you can find about the service you’re questioning—date, provider, amount, your name, your Medicare number, and the reason you think Medicare should be billed.

When you call or submit the claim, have the following ready:

  • Your name and Medicare number
  • Your provider’s name
  • The service or item in question
  • The amount that Medicare-approved and paid
  • Your Medicare Summary Notice

What happens when you report Medicare fraud?

Filing false payment claims to Medicare can attract fines up three times greater than any loss incurred by this program plus $11,000 per claim filed.

While a particular intent is not necessary in most cases; reckless behavior will result in imprisonment if discovered after the fact during an investigation into chargebacks related to Medicare fraud and abuse.

Under the False Claims Act (FCA), the government may pay a reward of up to 30% to people who report fraud. “In the past five years, the federal government has paid more than $1.85 billion to healthcare whistleblowers,” according to The Employment Law Group.

Which governmental agency is responsible for monitoring Medicare fraud?

In partnership with other law enforcement agencies and health insurance groups, the Federal Bureau of Investigation (FBI) is the primary agency for investigating health care fraud for insurance programs.

The Department of Health and Human Services Office of Inspector General (HHS-OIG) has also long been focused on fraud schemes within Medicare and Medicaid programs as well as public health programs like the IHS which includes Indian healthcare services.

Laws that govern Medicare fraud and abuse

  • False Claims Act: The civil FCA protects the government from being sold or overcharged for items and services. 
  • Anti-Kickback Statute: The Anti-Kickback Statute is a law that prevents you from paying any form of remuneration to reward patient referrals. This includes cash, meals, and hotel stay as well as excessive compensation
  • Exclusion Statute: This law applies to entities and individuals convicted of certain criminal offenses, which means they’re not allowed to participate in any federal healthcare programs.
  • The Physician Self-Referral Law: Commonly known as the Stark Law, this law prohibits physicians from making referrals for designated health services to an entity in which they have a financial interest or where their family members work. Penalties against violators include fines and exclusion from all federal healthcare programs.

How to prevent Medicare fraud

1. Protect your private medical information.

Don’t share your Medicare number, medical records, or Social Security number with anyone except healthcare providers, who need it for billing purposes. You should “treat your Medicare card like it’s a credit card,” according to medicare.gov, meaning that you don’t want other people to steal your account number and use it for their own medical care. Clarkson recommends leaving your Medicare card at home unless you know you’ll need it. “You should only take it with you when you’re going to a doctor or a hospital,” he says.

2. Educate yourself.

Learn about how your Medicare plan works—what can be billed to Medicare, what can’t be billed to Medicare, covered services, and healthcare costs. Find out why your physician or another vendor is recommending certain services.

3. Be wary and ask questions.

If it seems too good to be true, it probably is not on the up-and-up. Money or gifts in exchange for free medical care could be a sign of fraudulent activity or dishonest healthcare professionals. If a provider offers to bill for a service that isn’t typically covered, find out how—or why—it’s paid. It could be a false claim for a different service.

4. Keep careful health records.

Track when you visited the doctor’s office, and what tests you had at each visit. Write notes on what happened at each visit in a medical journal. When your statement arrives, check to make sure all the details are correct. If you fill a prescription drug (Part D), make sure it’s for the correct medication and number of pills, and report any problems to the pharmacist.

5. Don’t fall for Medicare scams.

Medicare doesn’t send representatives to your home, so if a door-to-door salesman stops by your apartment or house, you’re right to be suspicious. Representatives will only call you if you’re already a member of the plan, or if you’ve left a message. If you’re unsure if a call is fraud, you can always hang up and call back on the Medicare customer service hotline at 1-800-MEDICARE.

RELATED: Health insurance scams to avoid

While it is important to be aware of the different types of Medicare fraud and abuse, remember that you are not alone. If you suspect that someone is committing Medicare fraud or abuse against your loved one, report it immediately. The sooner we can address the issue, the less damage will be done.