The Growth of Medicare Fraud and Abuse

While the majority of American individuals and businesses are honest, Medicare fraud and abuse is on the rise. Learn more about this growing epidemic of health care system abuse and its affect on honest Medicare users.

How Does Medicare Fraud and Abuse Occur?

Medicare fraud involves a range of dishonest practices that include making or instigating false health care claims, offering, receiving, or paying kickbacks for items or services reimbursed by Medicare, and making illegal referrals for certain health services. Medicare abuse is any practice that results in unnecessary costs to Medicare. Both practices are dishonest and costly to the American health care system.

There are three main types of Medicare fraud and abuse:

  • Phantom billing: when a medical provider bills Medicare for medical procedures, medical tests, or medical equipment that was never provided or not necessary.
  • Fraudulent patient billing: when a patient involved in a scam gives his or her Medicare number in exchange for kickbacks and lies to Medicare about medical treatment or services received.
  • Upcoding and unbundling scams: when health care providers use a billing code showing that a patient requires more expensive procedures than they received or needed in order to inflate health care bills.

Medicare fraud and abuse cases were among the biggest health care scams of 2016, according to Health Care Finance. The high-profile cases include:

  • April 15: An indictment says that a Chicago couple used their health care business to defraud Medicare out of $45 million.
  • July 22: The University of Pittsburgh Medical Center and three associated facilities paid $2.5 million to settle allegations they had filed false Medicare claims.
  • July 29: The owner of more than 30 nursing and assisted living facilities, a hospital administrator, and a physician’s assistant were charged in connection with a $1 billion Medicare fraud scheme.
  • November 18: Marie Neba of Texas was convicted in a $13 million Medicare fraud scheme.

How does Medicare fraud and abuse impact honest Medicare beneficiaries?

Medicare is funded through taxes paid by Americans. When the system is used fraudulently, taxpayers are slugged with higher health care fees and higher taxes.

Even Medicare users who no longer pay income taxes are hurt when Medicare is abused, though. Fraud puts a strain on the Medicare system, which may lead to cuts to the services it covers.

What is Being Done to Combat Medicare Fraud and Abuse?

The U.S. Department of Health & Human Services established the Medicare Fraud Strike Force, part of the Health Care Fraud and Abuse Control Program, to stamp out Medicare abuse. Originally, this group needed to wait for fraud to occur to investigate and recover fraudulently obtained funds.

However, since 2010, it has used cutting-edge anti-fraud technology to improve its operations model and shift its focus to fraud prevention. This is vital because recovery efforts cost millions of dollars every year. For example, while the U.S. government recovered $1.7 billion in fraudulent payments in 2011, Forbes reported that recovery efforts cost $208 million.

Since 2007, the Medicare Fraud Strike Force has charged more than 3,000 Americans responsible for defrauding the Medicare system of more than $10.8 billion, according to the Centers for Medicare and Medicaid Services.

The government and private health care providers also are working more closely to combat fraud as part of the Healthcare Fraud Prevention Partnership.

How can I help?

It’s important to be vigilant when receiving medical treatment. While most health care providers are honest, the following situations are signs you may be involved in a Medicare scam:

  • You’re asked for your Medicare number in exchange for free services or goods.
  • You’re told your medical tests will become cheaper if you get more tests.
  • Medicare is billed for treatments or conditions you haven’t had.
  • You’re offered non-medical transportation and housekeeping as Medicare-approved services.
  • Medicare is billed for things you don’t qualify for, like a power wheelchair, a scooter, or home health services when you don’t live in your home.

If you suspect a person or business is scamming Medicare, you have a responsibility to report it. Medicare users can report suspected fraud or abuse using the following channels:

  • Call the Centers for Medicare and Medicaid Services hotline at 1-800-MEDICARE (1-800-633-4227) or 1-877-486-2048 for teletypewriter (TTY) service
  • Call the Office of Inspector General hotline at 1-800-HHS-TIPS (1-800-447-8477) or 1-800-377-4950 (TTY)
  • Make an online report via
  • Mail your concerns to:
    U.S. Department of Health & Human Services
    Office of Inspector General
    Attn: OIG Hotline Operations
    P.O. Box 23489
    Washington, DC 20026

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