The Cost of Medicare Fraud: Impact on Healthcare and Taxpayers

March 30, 2023

Medicare fraud is a problem that has been plaguing the entire healthcare system for years, straddling it with billions upon billions of waste and unneeded cost. it’s a civil and a criminal offense where individuals or organizations deliberately deceive Medicare, the national health insurance program in the United States, by filing false claims or receiving payments for services not provided. This fraudulent activity has led to significant financial losses to both the healthcare system and taxpayers.

Cost of Medicare Fraud

The cost of Medicare fraud is staggering. According to a report from the Centers for Medicare and Medicaid Services (CMS), identifiable improper payments made under Medicare Part A and B programs in 2020 amounted to roughly $31.6 billion. This represents 7.25% of the total Medicare payments made under these programs. The CMS defines improper payments as those made to the wrong person, for the wrong amount, or for services not rendered.

Medicare fraud can take many forms, including billing for services not provided, providing unnecessary services, and upcoding. Upcoding is when a healthcare provider bills for a more expensive service than what was actually provided. This can occur when a healthcare provider performs a less expensive procedure but bills for a more expensive one or claims he was with a patient for a significantly longer period of time than he actually was.

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The impact of Medicare fraud on the healthcare system

Medicare fraud has a significant impact on the healthcare system. When healthcare providers engage in fraudulent activities, they are diverting economic and labor resources from patients who actually need care. First, overbilling is stealing taxpayer’s money.  Second, by performing unneeded procedures or alternatively claiming to provide a standard of care that is not going on, you potentially are putting the patient at risk. Third, the resources spent on investigating and prosecuting Medicare fraud could be used to improve the quality of care provided to patients.

In addition, when healthcare providers engage in fraudulent activities, it undermines the trust between patients and healthcare providers. Patients who are victims of Medicare fraud may be less likely to seek medical care in the future, which can lead to serious health consequences.

The following are some of the more common types of fraud committed by dishonest providers:

  • Billing for services that were never rendered—by fabricating entire claims using genuine patient information, sometimes obtained through identity theft, or by padding otherwise legitimate claims with charges for procedures or services that did not occur.
  • Billing for more expensive services or procedures than were actually provided or performed, also known as “upcoding”—that is, billing for a more expensive treatment than was actually provided (which frequently necessitates the accompanying “inflation” of the patient’s diagnosis code to a more serious condition consistent with the false procedure code).
  • Performing medically unnecessary services solely to generate insurance payments—common in diagnostic-testing schemes such as nerve conduction and genetic testing.
  • Misrepresenting non-covered treatments as medically necessary covered treatments in order to obtain insurance payments—this is common in cosmetic-surgery schemes, where non-covered cosmetic procedures like “nose jobs” are billed to patients’ insurers as deviated septum repairs.
  • Falsifying a patient’s diagnosis and medical record in order to justify unnecessary tests, surgeries, or other procedures.
  • Unbundling is the practice of billing for each step of a procedure separately.
  • Overcharging a patient for services that were prepaid or paid in full by the benefit plan under the terms of a managed care contract.

The impact of Medicare fraud on taxpayers

Medicare fraud has a significant impact on taxpayers. When Medicare is defrauded, taxpayers foot the bill. The money that is paid out for fraudulent claims is money that could be used to fund other important government programs or enhance the quality of healthcare.

Furthermore, the cost of investigating and prosecuting Medicare fraud is also borne by taxpayers. The Department of Justice (DOJ) and the Department of Health and Human Services (HHS) are responsible for investigating and prosecuting Medicare fraud. The cost of these investigations is significant and is ultimately paid for by taxpayers.

Preventing Medicare fraud

Medicare fraud is a serious problem that costs taxpayers billions of dollars each year. There are several ways to prevent Medicare fraud, including:

  • Protect your Medicare number: Do not share your Medicare number with anyone except your healthcare provider or a trusted family member. Be wary of unsolicited requests for your Medicare number and never give it out over the phone or email.
  • Review your Medicare statements: Review your Medicare statements regularly to make sure that you only have been billed for services you have received. If you notice any discrepancies or suspicious charges, report them to Medicare immediately.
  • Be cautious of offers for free services or medical equipment: Be wary of offers for free services or medical equipment, as they may be scams to obtain your Medicare number.
  • Report suspected fraud: If you suspect systemic Medicare fraud, report it immediately to a whistleblower law firm.  Each year through the False Claims Act billions of dollars of fraud are recovered for the taxpayers and hundreds of millions of dollars are given in whistleblower awards to individuals who blow the whistle the right way.   

Choosing the Best Whistleblower Law Firm for Your Case

Choosing a Medicare fraud whistleblower law firm is an important decision that requires careful consideration. A whistleblower under the False Claims Act, the statute that combats fraud against the government, is someone who through the use of a qui tam law firm properly files a claim illustrating the systemic defrauding of the federal government. When selecting a whistleblower law firm, it is important to find a law firm with a proven track record of success in whistleblower cases – either their direct or analogous experience in handling the same or a similar matter as to what you may want to blow the whistle on.  You should ask your potential whistleblower attorney hard questions and take advantage of any free, confidential consultations that the firm offers.