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Medicare Fraud & Abuse by Majolie Callan: Home



Fraud & Abuse

Medicare’s Fight Against Fraud

The ACA Fighting Fraud

The Affordable Care Act and Fighting Fraud

Here are some of the new tools the Affordable Care Act has put in the hands of fraud fighters:

  • Tough new rules and sentences for criminals: The law increases federal sentencing guidelines for health care fraud by 20-50% for crimes with over $1 million in losses.
  • Enhanced screening: Providers and suppliers who may pose a higher risk of fraud or abuse are now required to undergo more scrutiny.
  • State-of-the-art technology: The Center for Medicare & Medicaid Services now uses advanced predictive modeling technology to target suspect behaviors
  • New resources: The law provides an additional $350 million over 10 years to boost anti-fraud efforts.

What is Medicare?

Medicare is a Health Insurance Program for:

  • People age 65 or older.
  • People under age 65 with certain disabilities.
  • People of all ages with End-Stage Renal Disease (permanent kidney failure requiring dialysis or a transplant).

Medicare has Two Parts:

  • Part A (Hospital Insurance)

    Most people don't have to pay for Part A.

    Helps Pay For: Care in hospitals as an inpatient, critical access hospitals  (small facilities that give limited outpatient and inpatient services  to people in rural areas), skilled nursing facilities (not custodial or long-term care), hospice care, and some home health care.

    Cost: Most people get Part A automatically when they turn age 65.  They don't have to  pay a monthly payment called a premium for Part A because they or a spouse paid Medicare taxes while they were working.

  • Part B (Medical Insurance)

    Most people pay monthly for Part B.

    Helps Pay For: Doctors' services, outpatient hospital care, and some other medical services that Part A doesn't cover, such as the services of physical and occupational therapists, and some home health care.

    Cost:The standard Medicare Part B monthly premium is $104.90.


What is Medicare Fraud?

Fraud, waste, and abuse in medical care encompass a wide range of practices. To the fraudulent provider of health care services, fee-for-service reimbursement provides the opportunity for:

(1) Billing for services not provided;

(2) billing for a more expensive service than was actually provided;

(3) providing and billing for unnecessary services;

(4) paying kickbacks for referrals, including self-referrals; and

(5) duplicate billing.

Two fraudulent schemes involving falsifying records and overcharging include "upcoding" and "unbundling."

Upcoding involves switching primary and secondary diagnoses to substitute more costly procedures and services than were actually administered to the patient.

Unbundling involves improperly separately billing for procedures that should be billed for under one code.

Under managed care, fraudulent and abusive practices may include:

(1) Enrolling beneficiaries without their active consent;

(2) engaging in deceptive marketing practices to entice enrollment;

(3) denying medically necessary services; and

(4) failure to disclose appeal rights.

Types of Medicare Fraud

Types of Medicare Fraud


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Medicare Law


Medicare was enacted in 1965. Its current version can be found at 42 U.S.C. § 1395 et seq. The Medicare system was originally administered by the Social Security Administration, but in 1977 management was transferred to the Health Care Financing Administration (HCFA, since renamed the Centers for Medicare and Medicaid Services). 

Medicare is a federally funded system of health and hospital insurance for U.S. citizens age sixty-five or older, for younger people receiving Social Security benefits, and for persons needing dialysis or kidney transplants for the treatment of end-stage renal disease. Typically, Medicare beneficiaries can receive medical care through physicians of their own choosing or through health maintenance organizations and other medical plants that have contracts with medicare.

Medicare Fraud Statistics

Medicare and Medicaid made an estimated $23.7 billion in improper payments in 2007. These included $10.8 billion for Medicare and $12.9 billion for Medicaid. Medicare’s fee-for-service reduced its error rate from 4.4 percent to 3.9 percent. (U.S. Office of Management and Budget, 2008)

• Every $1 the U.S. government invests in combating Medicare and Medicaid fraud saves $1.55. (U.S. Department of Health & Human Services, 2009)

• Medicare paid dead physicians 478,500 claims totaling up to $92 million from 2000 to 2007. These claims included 16,548 to 18,240 deceased physicians.(U.S. Senate Permanent Committee on Investigations, 2008)

• Nearly one of three claims (29 percent) Medicare paid for durable medical equipment was erroneous in FY 2006. (Inspector General report, Department of Health and Human Services, 2008)

• Medicare and private health insurers pay up to $16 billion a year for needless imaging tests ordered by doctors. (American College of Radiology, 2004)

Other Medicare Stats

Medicare paid more than $1 billion in questionable claims for 18 categories of medical supplies that patients don’t appear to need. The study covered claims between January 2001 and December 2006. The claims included walkers for patients with purported sinus congestion, paraplegia or shoulder injuries. Hundreds of thousands of claims were made for diabetes-related glucose test strips for patients with purported breathing problems, bubonic plague, leprosy or sexual impotence. (U.S. Senate Permanent Subcommittee on Investigations, 2008).

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