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Medicare Fraud

The Medicare program is designed to give seniors and those with certain disabilities the ability to receive the health care they need at unusually low costs. Unfortunately, the Medicare reimbursement system is vulnerable to fraud by dishonest companies, doctors, and patients. Traditionally, there has been little oversight or verification of reimbursement claims submitted to Medicare, so it is relatively easy for people to exaggerate the cost of care; pass on benefits to unqualified recipients; or simply lie about what benefits a doctor provided. While numerous efforts by the FBI, Health and Human Services, and a special investigatory task force have helped to cut down on fraud, the first line of defense is that of honest patients who keep an eye out for deceptive action related to their Medicare account.

What Is Fraud?

In short, Medicare fraud is any action that attempts to get money from the Medicare system without a valid reason. This manifests itself in many different forms. Here are some of the most common:

Exaggerating costs ("upcoding")

When a doctor is preparing to provide a service like surgery for a Medicare beneficiary, he submits a reimbursement report to Medicare before the operation. The report uses a code system that indicates what procedures the doctor plans to perform and what equipment/medications will be required. After the report is submitted, any unexpected changes in the actual costs of the procedure do not affect the Medicare reimbursement. Thus, if the doctor does not end up needing to do as much repair as he planned, he gets to keep the leftover reimbursement money. Occasionally, doctors intentionally misrepresent their plans (called "upcoding") in order to ensure some extra money at the end of the process.

False billing

Equipment providers sometimes request reimbursement for medical items that they claim were given to a Medicare patient, when the patient actually never received them. They may also continue to bill Medicare for the use of rental equipment after the patient has returned it.

Unauthorized use of benefits

Criminals attempt to obtain access to the Medicare accounts of patients so that they can get benefits (usually prescription drugs). They do this either by conning innocent people into giving them their account information, or by rewarding people for ordering drugs and then passing them on illegally.

How Is Fraud Punished?

Medicare fraud is a white-collar crime punishable by prison time and heavy fines. Doctors who are caught committing fraud become ineligible for further inclusion in the Medicare system, in addition to whatever legal penalties they suffer.

What Does Fraud Look Like?

Medicare fraud can be as simple as a family member asking you to get your doctor to prescribe a medication you don't need so that the family member can use it recreationally. On the other hand, it can be perpetrated on a company-wide scale, as in the case of Columbia/HCA. This huge health care corporation settled with the federal government in 2001 after it became clear it would be convicted of widespread, pervasive Medicare fraud at all levels. The total amount Columbia/HCA had to pay to the government and Medicare agencies was $1.7 billion.

Usually, though, fraud takes place on a very small scale. Doctors hedge their cost predictions to make up for an unexpected expense in another area; equipment companies assume that even if they are caught billing Medicare for unused equipment, they can claim it was an honest mistake; and patients figure that they are too small to be on the radar of investigators. The total of all these "minor" infractions is an estimated $40 billion per year—money that is wasted instead of paying for qualified services.

Whom Does Fraud Affect?

Many offenders justify fraud by telling themselves and others that falsifying reports is the only way they can get the money they really need or deserve. In reality, fraud does far more damage than simply costing the federal government a few dollars it won't miss anyway. The billions of dollars in wasted funds each year mean that the Medicare system has to divert resources to combating the problem. That leaves less money for medical services, and also increases the amount that taxpayers and policyholders must pay. It creates the need for stricter oversight, more detailed reporting forms, and more time spent on each claim before reimbursements go out. In the end, fraud cripples Medicare and wastes money and time.

What Can I Do?

Inspect your own records and receipts to make sure that your doctor is filing for the correct reimbursement amounts. Never give your Medicare account information to anyone without knowing who they are and what agency they represent. Finally, contact Medicare if you suspect that you have seen fraudulent activity taking place. The toll-free number is 1-800-MEDICARE. Also, each state has Senior Medicare Patrol offices, where you can speak with an expert face to face about problems.

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