What You Need To Know About Medicare Fraud

Updated: Jul 17, 2022

In July of 2017, the U.S. witnessed the largest healthcare fraud takedown this nation has ever seen. By the time this joint effort conducted by the Department of Health and Human Services Office of the Inspector General (OIG) and state and federal law enforcement agencies was done, more than 400 defendants were charged in a court of law and accused of participating in some type of fraudulent Medicare and/or Medicaid scheme.

Senior Bills Medicare

What is perhaps most staggering is the amount of money alleged to be falsely billed by this collection of once-trusted medical professionals and agencies. The total? Somewhere around $1.3 billion.

“Medicare fraud” is actually a blanket term encompassing different fraudulent activities related to the Medicare system.

The large sums of money being scammed out of elderly people is part of the reason why Medicare Fraud Strike Force Teams across the country spend their days trying to shut down these types of dishonest healthcare professionals. In some cases, they net extremely positive results.

For instance, as of mid-2018, there were already 11 court cases involving the Strike Force Teams where healthcare professionals committing fraudulent activities have either pleaded guilty to, been convicted of, or received a sentence for committing some form of healthcare fraud.

What are these individuals doing that makes them guilty (or allegedly guilty) of Medicare fraud? There is a number of potential answers.

“Medicare fraud” is actually a blanket term encompassing different fraudulent activities related to the Medicare system. Here are a few of the most common, as reported by the National Health Care Anti-Fraud Association (NHCAA)

The Healthcare Provider Bills Medicare For Services The Patient Never Received.

For example, in May 2018, the Department of Justice (DOJ) reported that a healthcare professional from West Bloomfield, Michigan was charged with, among other things, falsifying medical records and signing false documents to give the appearance that certain medical services were provided when they were not.

Healthcare Provider Bills Medicare For More Expensive Services Than The Ones The Patient Received.

Medical Business Associates explains that this is called upcoding and consists of the healthcare professional or agency entering a billing code for a higher priced procedure than the one actually performed on the patient.

Performing Services Not Medically Necessary In An Effort To Pad Billing.

The NHCAA says that this type of fraud tends to be more common in “nerve-conduction and other diagnostic-testing schemes.” Furthermore, Healthcare Finance suggests that this is a major issue costing our country approximately $200 billion per year.

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Overprescribing Medically Unnecessary Medications To Patients.

Related to performing of unnecessary services, the OIG also reports some healthcare professionals overprescribe medications as a form of fraud. This is exactly what one medical professional in Texas did, leading to fraudulent Medicare billing in an amount exceeded $1.2 million. Even worse, some of the patients victimized by this scheme died as a result (drug overdose).

Misrepresenting Unnecessary Procedures As Medically Necessary.

According to NHCAA, this form of Medicare fraud is seen most often in the cosmetic surgery space, such as when a medical professional bills a nose job as a deviated septum repair in an effort to make it look as though the procedure needed to be performed when, in reality, it didn’t.

Falsifying A Diagnosis To Obtain Payment For Additional Tests And/Or Treatments.

In some cases, a diagnosis must be rendered before Medicaid will pay for additional medical tests. So, with this type of fraud, the healthcare official will falsely diagnose patients so he or she can order these additional tests and collect on them via the billing process. The same can occur with regard to treatments because certain treatments aren’t likely to be approved (and paid for) unless a diagnosis is made first.

Billing For Each Individual Step Of A Procedure As If It Occurred In Separate Sessions.

Medical Dictionary says that this is called “unbundling” and refers to a fraudulent practice in which healthcare providers break their services down so they appear as individual components versus one continuous diagnosis test or treatment plan, thus resulting in a higher payment by the Medicare system.

Unbundling refers to a fraudulent practice in which healthcare providers break their services down so they appear as individual components versus one continuous diagnosis test or treatment plan.

Waiving Unqualifying Medicare Copays And Deductibles.

According to the American Journal of Managed Care, the only time that it is lawful to waive a patient’s copay or deductible is when financial hardship can be proven. The patient is required to provide documentation of this hardship via his or her income, assets, expenses, cost of living, family size, and the amount owed in medical bills. If this does not occur and hardship is not determined, then it is considered fraudulent to waive these types of payments.

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Receiving Kickbacks.

Kickbacks refer to money received by a healthcare provider in return for referring patients to other healthcare facilities. An example of this was reported by the DOJ in February 2018 when a 70-year-old Miami-area man received five years in prison for his role in a fraudulent healthcare scheme totaling $63 million. In return for pleading guilty, this particular defendant admitted that during a roughly 6.5-year timeframe, he received kickbacks for referring certain Medicare patients to a particular behavioral healthcare center.

While there are other types of fraud that can be committed against the Medicare system, these are some of the most common. But what effect does Medicare-based fraud have on our nation as a whole?

Sure, it may not seem like this is a huge problem, especially with only 15 total Strike Force cases in the news through half of 2018, but it’s important to realize that many of these investigations involve millions upon millions of dollars. Furthermore, this is money that has essentially been stolen from the U.S. government, which also means that it has been stolen from every tax-paying citizen.

Every dollar they fraudulently take is a dollar that can’t be spent elsewhere to help U.S. citizens live a better life.

For instance, the DOJ reports that in June 2018 four physicians and a CEO from Michigan and Ohio were charged in a scheme that included a number of healthcare frauds and kickbacks. The total amount of money taken was approximately $200 million.

To give a better idea of how this amount could impact our society as a whole, funding for all of the Violence Against Women Act (VAWA) and related programs for the entire year of 2018 is $215 million, according to the National Network to End Domestic Violence. Based on the actions of these five individuals alone, they could have essentially wiped out this entire domestic violence division by taking the amount of money they did.

This doesn’t even account for the countless other healthcare providers who have either been charged or convicted of taking their unfair share of payments from the Medicare system. Put simply, every dollar they fraudulently take is a dollar that can’t be spent elsewhere to help U.S. citizens live a better life. There are individual effects of Medicare fraud, too.

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For starters, it’s simply maddening to think that individuals who commit these types of offenses are bringing in much more than the typical, hard-working family earns just to survive. For instance, Money reports that the median real income is $54,635 for households in Michigan and $57,259 for a household in Ohio.

This type of fraud inevitably translates into higher premiums and out-of-pocket expenses for consumers, as well as reduced benefits or coverage.

Based on these numbers, the physicians and CEO in the previously discussed case fraudulently received roughly 727 times that amount (which was calculated using $200 million divided by the five defendants, equaling about $40 million each). And they did so solely by billing the government’s healthcare system for services not rendered and taking kickbacks along the way.

The NHCAA adds that these fraudulent activities hit individual Americans financially as well. How? Because, added together, this type of fraud “inevitably translates into higher premiums and out-of-pocket expenses for consumers, as well as reduced benefits or coverage,” according to the NHCAA. In other words, the losses that occur due to these fraudulent activities have to be made up for somewhere. Sadly, that ‘somewhere’ is often from the individuals receiving coverage.

The NCHAA further says that Medicare fraud can result in negative physical consequences for patients as well. This occurs when healthcare professionals and agencies perform unnecessary or unsafe medical procedures just to increase their billing amounts. Depending on the procedures, the damage to the individuals involved can be devastating.

In an article published by CNN, Dr. Sei Lee, associate professor of geriatrics at the University of California-San Francisco, shares that medical professionals can end up doing more harm than good when running cancer tests on older patients—those unlikely to benefit from being diagnosed with a slow-growing tumor.

Dr. Deborah Korenstein, chief of general internal medicine at New York’s Memorial Sloan Kettering Cancer Center added to the piece, indicating that this harm oftentimes appears as a result of testing that leads to “anxiety, invasive follow-up procedures and harsh treatments.” Admittedly, the doctors in this article aren’t accused of committing Medicare fraud, but the effects of being subjected to unnecessary medical testing and treatments is still the same.

What can you do to protect yourself from the various types of Medicare fraud? One of the first things involves protecting your card.

According to Medicare.gov, you should always “treat your Medicare card like it’s a credit card.” In other words, don’t give the number out to just anybody, because there’s a chance it could be used to open up a fraudulent claim.

Medicare is so intent on stopping the frauds committed against the system that they even offer a 10 percent or $1,000 reward for sharing this type of information.

Granted, it isn’t possible to hide your number from your healthcare provider because he or she will need it for billing purposes. However, you don’t want to give it out to anyone else, even if they offer you something of value (like money or a free gift) in exchange for free medical care.

But what if someone calls you saying they’re from Medicare and then requests your personal information over the phone? Medicare.gov says there are only two instances in which this agency will ever call you and request this type of information:

  1. The first is if they’re from a Medicare plan that you’re already a member of, which automatically rules out anyone who calls you about a plan that you’re not currently on.
  2. The other is if you called them and left them a message and they are calling you back.

Other than these two instances, if you get a phone call from someone claiming to be from Medicare and asking for your number, don’t give it out as this is likely a scam. Some may even threaten to cancel your benefits if you are unwilling to give up the information, but don’t fall for this. Instead, if there is ever a question about the validity of the call or caller, just hang up and call Medicare directly at (800) 633-4227 to let them know what happened. If they were the ones that called, they can connect you with the correct person or department.

It’s also important to realize that between April 2018 and April 2019, all Medicare recipients will receive new identification cards. These red, white, and blue cards will automatically be sent to you at the address listed on your Social Security account, so there is no need to call and request it. Also, the number on the card is different than your Social Security Number, which better protects your identity.


If you’re already on a Medicare plan, this new card will not change your coverage or benefits. However, Medicare.gov does suggest that you keep your old identification cards if you’re in a Medicare Advantage Plan (HMO or PPO) because your healthcare provider may ask to see it too. Other than that, once you get the new card in the mail, which is a paper card so it is easier for your healthcare providers to copy, you can destroy your old one.

There are other things you can do to avoid being a victim of Medicare fraud.

Medicare.gov suggests that you always take the time to ask questions about your medical care and how it relates to your specific Medicaid plan. Don’t be afraid to inquire about how much Medicaid is going to be billed for any testing the doctor wants to run or for the prescriptions he or she prescribes. You have every right to know this information.

Don’t be afraid to inquire about how much Medicaid is going to be billed for any testing the doctor wants to run or for the prescriptions prescribed.

Additionally, if your healthcare provider ever mentions knowing how to bill your Medicaid policy so it pays when it shouldn’t, consider this a red flag. By taking this type of action, he or she is committing fraud against your plan.

Medicare.gov also recommends learning as much about Medicare as possible so you are aware of what types of services and procedures can be billed under your policy and which ones cannot. If you’re not sure and want to find out, perform an online search to find you the information you want.

Another way to keep from being a victim of Medicare fraud is to double-check your Medicare statements when you receive them. This requires taking a moment to compare the dates of your doctor’s appointments and/or medical tests with those listed on the form. Keeping track of them on a calendar makes this process easier because all you have to do is check one against the other. Also, double-check the diagnoses listed on the statement to ensure those are correct as well.

While these are just a few of the things you can do to better protect yourself from becoming a victim of Medicare fraud, Medicare.gov says there are some things you don’t want to do. These include not letting anyone talk you into medical services you don’t need, not accepting medical supplies from anyone who comes to your door to sell them to you, and not letting anyone review your medical records beyond your normal healthcare providers.

Performing these actions can help prevent any type of Medicare fraud that occurs against you as the patient. Yet, despite your best efforts, you may someday have suspicions of fraud or learn that your medical records have been compromised. What should you do then?

If you believe that you are a victim of Medicare fraud or if you have unequivocal proof, the first thing you want to do is report it to the authorities. Medicare.gov shares that there are three ways to do this:

Take a few preventative actions and report any suspected fraud immediately.

  1. Call Medicare.gov at (800) 633-4227
  2. Call the Office of the Inspector General at (800) HHS-TIPS (800-447-8477)
  3. File an online report with the Office of the Inspector General

Regardless of which option you choose, you will need certain information handy before you can file a report. 

  • Your name and Medicare number
  • Allegedly fraudulent provider’s name and identifying information
  • The item or service you’re questioning and the date it was allegedly provided or performed
  • The amount paid by Medicare
  • The reason(s)
  •  why you believe it shouldn’t been covered

Medicare is so intent on stopping the frauds committed against the system that they even offer a 10 percent or $1,000 reward (whichever is less) for sharing this type of information. 

To be eligible to receive the reward, the suspected fraud of course must be confirmed. Additionally, the individual or organization involved cannot already be under investigation for this type of offense, and the fraud has to lead to the recovery of a minimum of $100 in Medicare money. Obviously, you also cannot have been involved in the fraud or the recipient of another fraud-based award under any other qualifying government program.

Medicare fraud is a big business, especially with the many types of fraud that exist. However, as long as you take a few preventative actions and report any suspected fraud immediately, then you’re doing your part to put an end to dishonest healthcare providers intent on earning more than they deserve.