What is Medicare and Medicaid Fraud?

Medicare and Medicaid fraud refer to illegal practices aimed at getting unfairly high payouts from government-funded healthcare programs.

Key Takeaways

  • Medicare and Medicaid fraud can be committed by medical professionals, healthcare facilities, patients, and others who pretend to be one of these parties.
  • Common examples of fraud include billing for services that weren't provided, performing unnecessary tests, and receiving benefits when you're not eligible.
  • The Medicaid Fraud Control Units, or MFCUs, operate in 49 states and the District of Columbia to provide investigation and oversight related to potential fraud.
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Medicare Vs. Medicaid

Understanding Medicare and Medicaid Fraud

Medicare and Medicaid fraud can be committed by medical professionals, healthcare facilities, patients or program participants, and outside parties who may pretend to be one of these parties.

There are many types of Medicare and Medicaid fraud. Common examples include:

  • Billing for services that weren't provided, in the form of phantom billing and upcoding.
  • Performing unnecessary tests or giving unnecessary referrals, which is known as ping-ponging.
  • Charging separately for services that are usually charged at a package rate, known as unbundling.
  • Abusing or mistreating patients.
  • Providing benefits to which the patients or participants who receive them are not eligible, by means of fraud or deception, or by not correctly reporting assets, income, or other financial information.
  • Filing claims for reimbursement to which the claimant is not legitimately entitled.
  • Committing identity theft to receive services by pretending to be someone who is eligible to receive services.

The Challenges of Fighting Medicare and Medicaid Fraud

Medicare and Medicaid fraud are a multibillion-dollar drain on a system that is already expensive to maintain. The departments that oversee these programs have internal staff members who are charged with monitoring activities for signs of fraud. In addition, there are also external auditors who are responsible for reviewing suspicious claim patterns.

These entities that provide investigation and oversight related to potential fraud include the Medicaid Fraud Control Units, or MFCUs, which operate in 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Most MFCUs operate as part of the Attorney General’s office in that state, and must be independent and separate from the state’s Medicaid office.

In an effort to help prevent fraud that is related to identity theft, Medicare implemented a new program in the spring of 2018. Beginning in April 2018, Medicare participants started to receive new ID cards that include a Medicare Number instead of the participant’s Social Security number.

Detecting and preventing fraud is an important priority for the people and departments that oversee these critical programs. The wasted funds that are lost to fraud and other illegal tactics represent resources that could be used to support participants who really need assistance.

The CARES Act of 2020

On March 27, 2020, President Trump signed into law a $2 trillion coronavirus emergency stimulus package called the CARES (Coronavirus Aid, Relief, and Economic Security) Act. It expands Medicare's ability to cover treatment and services for those affected by COVID-19. The CARES Act also:

  • Increases flexibility for Medicare to cover telehealth services.
  • Authorizes Medicare certification for home health services by physician assistants, nurse practitioners, and certified nurse specialists.
  • Increases Medicare payments for COVID-19-related hospital stays and durable medical equipment.

For Medicaid, the CARES Act clarifies that non-expansion states can use the Medicaid program to cover COVID-19-related services for uninsured adults who would have qualified for Medicaid if the state had chosen to expand. Other populations with limited Medicaid coverage are also eligible for coverage under this state option.