Consider this hypothetical situation: Your new Medicare card arrives in your mailbox. Not long after, you receive a phone call from someone claiming to represent Medicare or the federal government. 

Caller: “We just need your Social Security number to activate your new card. We need your bank account information to sync your card with your bank. You’ll need to mail in your old card now that you have your new one.”

The caller might even threaten to cancel your benefits unless you comply.

The above scenario is just one example of a recent type of Medicare scam. Let’s take a deeper look at Medicare fraud, including the types of scams to be aware of and how you and your loved ones can stay safe.

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The many faces of illegitimate Medicare spending

Illegitimate Medicare spending can be divided up into four categories: Fraud, scams, abuse and waste.

Medicare fraud and scams are intentional, dishonest acts. Abuse and waste can sometimes be the result of honest mistakes or neglectful acts with no harm intended, but the effects can be just as damaging: 

• Medicare fraud is when doctors, pharmacists and other health care providers knowingly and purposely claim reimbursement for which they are not entitled, thereby illegitimately collecting money from Medicare.
• Medicare scams, like the one described above involving Medicare cards, are when individuals pose as health care providers to gather and use a Medicare beneficiary’s personal information to receive health care or money they are not entitled to. Scams can also be carried out by Medicare beneficiaries who exploit the Medicare system for personal gain.
• Medicare abuse occurs when a health care provider unknowingly or unintentionally seeks a payment from Medicare that they are not entitled to. One example of Medicare abuse is when a doctor makes a mistake on a billing invoice and inadvertently asks for a non-deserved reimbursement.
• Medicare waste involves the overutilization of services that results in unnecessary costs to Medicare. 

It’s been estimated that Medicare and Medicaid fraud amounts to around $100 billion annually. And Medicare’s payment error rate was cited at more than 7 percent, or roughly one out of every 14 claims.²

Types of Medicare fraud and scams  

There are many different ways in which illegitimate Medicare spending may be carried out: 

• Double billing
  This type of Medicare fraud involves deliberately charging twice for a service or product that was only performed or supplied once.
• Phantom billing
  This involves billing for a test or procedure or other medical service that was never actually performed. This is one of the most common forms of Medicare fraud
• Upcoding
  Upcoding is altering the codes assigned to specific billable services to reflect a higher level service than what was actually performed. This type of scam is carried out to receive a fraudulently higher Medicare reimbursement than what is required.
• Unbundling
  This involves taking a comprehensive service and separating it into several specific services in order to bill for each one independently. This leads to a higher reimbursement total.
• Kickbacks
  Kickbacks occur when a provider accepts payment on behalf of a pharmaceutical company or medical device supplier in exchange for recommending or prescribing patients to use the product.
• Unnecessary services
  Performing an unnecessary medical service in order to receive Medicare compensation is a common form of Medicare fraud.
• False price reporting
  This occurs when false price information is submitted to Medicare regarding the true cost of a product or service.
• Inadequate medical documentation
  This involves a failure to maintain proper documentation for all products or services rendered.
• Ineligible beneficiaries
  Some Medicare scams involve providing care and filing a claim on behalf of a patient who is not an eligible beneficiary of Medicare.
• Off-label promotion of pharmaceuticals
  This type of fraud involves marketing or promoting a pharmaceutical drug for use in a way that is not detailed or recommended on the FDA approved packaging label for the drug.  
• Unlicensed providers
  Another form of Medicare fraud comes in the form of filing a Medicare claim on behalf of a health care provider that is not licensed by Medicare.

It isn’t always health care providers who commit Medicare fraud, however. Additional examples of Medicare scams include: 

• A person without Medicare coverage offering money or goods to a Medicare beneficiary in exchange for their Medicare number in order to use their Medicare benefits.
• A sales person offering a prescription drug plan that is not on Medicare’s list of approved Part D plans.
• An insurance company using false information or deceptive sales tactics to sell a Medicare Part C or Part D plan.
• An attempt to get a person to sign up for Medicare Part B through an entity other than the Social Security Administration, which is the only place you are supposed to enroll in Part B.

Tips for staying safe from Medicare fraud

Medicare officials will never correspond with you via phone or email, unless they are responding to a request you made for them to do so. In other words, Medicare will never call you out of the blue. This is very important to remember as you look to keep yourself safe from Medicare fraud, scams and abuse.

Official communication from Medicare is by mail only, and a Medicare representative will never come to your door. Also, there is no such thing as a Medicare Part A or Part B “sales representative.”

There are some additional things you can do and keep in mind to protect yourself from Medicare fraud:

• If you receive a new Medicare card in the mail, shred your old one. Also, be aware that Medicare will not contact you to verify information or to activate the card. There is nothing you need to do upon receiving your new card except keep it in a safe place. 
• Use a calendar to track all health care treatment you receive, including details about what kind of tests and services were performed and when. Crosscheck this information with your Medicare statements to make they are accurate.
• Be suspicious of any health care provider who tells you that a service or item isn’t covered by Medicare but that they “know how to bill Medicare” so that the program will pay.
• Be suspicious of any health care provider who aggressively pushes a product or service you feel is unnecessary or has suitable alternatives.
• Do not accept medical supplies from a door-to-door salesman claiming to represent Medicare. Medicare does not send representatives to homes to sell anything.
• Never lend your Medicare card or give out your Medicare number to anyone.
• Be suspicious of anyone offering free tests or screenings who “just needs to see your Medicare card.”

Medicare fraud laws

Fortunately, several laws are designed to combat Medicare fraud. Familiarize yourself with the following laws to better identify and understand Medicare fraud and abuse.

False Claims Act

The False Claims Act protects the government from being sold substandard goods or services or from being overcharged. It holds people accountable who knowingly submit or cause to be submitted a false or fraudulent Medicare claim.

Civil penalties can include fines and damage reimbursement, while criminal penalties may include imprisonment.

Anti-Kickback Statute

The Anti-Kickback Statute makes it illegal to solicit, receive, offer, pay or reward referrals for items or services that are reimbursable by a federal health care program such as Medicare.

Criminal penalties for violating the law can include fines and/or imprisonment.

Physician Self-Referral Law

Also known as the Stark Law, this prohibits a doctor from referring a patient to a health care service in which the doctor or an immediate family member has an ownership or investment interest and may benefit financially from the referral.

Violations can include fines and exclusion from participation in federal health programs such as Medicare.

Criminal Health Care Fraud Statute

This umbrella law prohibits the defrauding of health care programs and the receipt of money or property owned by a health care benefit program in connection with the delivery of or payment for health care benefits, services or items. Many examples of Medicare fraud and abuse fall under this broad law, and violations can include fines and/or imprisonment.

Medicare fraud examples

Here are a few real-life examples of Medicare fraud to help illustrate the epidemic. Each of  the five cases below are from court proceedings during a span of fewer than three months in 2018, giving you an idea of how rampant Medicare fraud can be.

• Three Tennessee employees of a medical supply company were convicted of fraud after falsifying medical records to show able-bodied patients as being eligible for the company’s Medicare-covered wheelchairs, with kickbacks to doctors who helped facilitate the scheme. One of the employees was sentenced to 84 months in prison.
• A nurse in Texas was found guilty of fraud after billing Medicare for home health services that were never performed and falsifying patient assessment forms to make patients appear sicker than they were in order to command higher rates of reimbursement. The man faces up to 10 years in prison for each of the six counts of fraud.
• A former health care executive in Texas admitted to her role in a $60 million Medicare fraud scheme that included overdosing hospice patients in order to maximize profits. She faces up to 10 years in prison.
• A Kentucky cardiologist faces up to 10 years in prison for implanting unnecessary pacemakers and charging the procedure to Medicare and other health insurance plans.  
• A doctor in Illinois was indicted on fraud charges for allegedly pocketing nearly $1 million in payments from Medicare and a private insurer for treatment he never administered. The doctor, who used patient names to file claims for doctor visits that never occurred, faces the possibility of multiple years in prison if convicted.

What to do if you suspect Medicare fraud

If you suspect that Medicare fraud or abuse has taken place, there are several government agencies you can contact that are committed to fighting these types of crimes. Not only is it the right thing to do, reporting Medicare fraud can even pay handsome rewards.

Any instance of suspected fraud or abuse can be reported to at least one of the following:

• Centers for Medicare and Medicaid Services
  Report fraud online or by calling 1-800-MEDICARE (1-800-633-4227).
• Senior Medicare Patrol Program
  Locate your state’s Senior Medicare Patrol (SMP) Program.
• Office of the Inspector General
  Report fraud online or by calling 1-800-447-8477.
• State Attorneys Generals
  Find and contact your state attorneys general.
• State Departments of Insurance
  Locate your state Department of Insurance.

Local law enforcement may also be contacted about suspected Medicare fraud or abuse. 

Identifying Medicare fraud and abuse helps to maintain the integrity of the program, keep costs down and prosecute criminals. As a Medicare beneficiary, it is your duty to do your part in helping to combat Medicare fraud for the benefit of all.