The Despicable Act of Medicare Fraud

One of the fastest growing crimes in the United States is Medicare fraud. The act of defrauding the Medicare system is generally described as any attempt by an individual or corporation health care reimbursement based upon services that were not actually rendered. Medicare has become an easy target for criminals because few safeguards are in place to protect against fraudulent claims. The original system was developed to pay bills quickly and smoothly, not to sift through all the claims for false claims. Medicare fraud costs the government an estimated $74 billion a year. Medicare can also take many different forms and include both the patient and the doctor depending on the type of scam.

The three most basic forms of Medicare fraud include:

  • Phantom Billing
  • Patient Billing
  • Up-coding and unbundling

These three forms of Medicare fraud were the first plans to be developed and are among the most often used today. Phantom billing occurs when a medical provider sends a bill to Medicare for procedures, services, and/or equipment that were either unnecessary or never actually performed. Patient billing occurs when the patient is involved in the scam in exchange for monetary kickbacks. A patient provides their medical provider with their Medicare number and the provider bills Medicare for any number of services to which the patient must admit receiving and/or needing. Up-coding refers to a practice by doctors of billing Medicare for expensive procedures they do not need.

In recent years, newer forms of Medicare fraud have come along. One of the growing scams includes fraud related to Durable Medical Equipment. One example of fraud related to DME’s includes billing Medicare repeatedly for the same piece of equipment without actually delivering the equipment to a recipient.

Another new form of Medicare fraud includes HIV/AIDS infusion injections. The shots are incredibly expensive, sometimes costing thousands of dollars for just one shot. Scam artists and crooked medical providers will recruit patients to receive an injection, when in reality all they are receiving is a saline solution injection. The individuals or groups then bill Medicare for the expensive HIV/AIDS infusion injection.

Medicare fraud is becoming a rampant problem in certain areas of the country, with South Florida leading the charge. Criminals in the Miami-Dade county area have become some of the greatest offenders in Medicare fraud, accounting for some $400 million in 2008. It’s not just crooked medical providers in the region causing problems, drug dealers have also gotten involved in the business of Medicare fraud. Drug dealers have become particularly involved in defrauding Medicare through HIV/AIDS infusion injections.

Criminals such as drug dealers have become involved in Medicare for one major reason, the treatment they receive from federal prosecutors when they are caught. Some drug dealers have reported that there is more money to be earned in defrauding Medicare than smuggling drugs. Given the lose or all together lacking guidelines governing Medicare, it is relatively easy to avoid capture. Lastly, when criminals are caught they are more likely to be treated as white collar offenders than drug dealers.

The worst case of Medicare fraud in U.S. history involved a massive scam perpetrated by Columbia/HCA beginning in 1996. The group was charged with providing doctors incentives for bringing in patients, falsifying diagnostic codes to increase payments from Medicare, and charging for unnecessary lab tests, among other things. Columbia/HCA wound up paying a total of $1.7 billion in criminal and civil charges as well as fines.

The administration of President Barack Obama has sought to tackle the problem of Medicare fraud with its new overhaul of health care in America. In January 2010 the government hosted a first ever meeting between leaders of health care’s private and public sectors in search of innovative ways to do away with fraud, waste, and abuse in the country’s health care system.