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Health Care Fraud

What's the Problem?

Health care fraud perpetrators steal billions of dollars each year from Federal and State governments, from American taxpayers, and some of our country’s most vulnerable citizens. Fraud drives up the costs for everyone in the health care system, in addition to hurting the long term solvency of the Federal health care programs, like Medicare and Medicaid, upon which millions of Americans depend.

Health care fraud can occur in many ways. One example is when an insurer (e.g., Medicare or a private health care insurance company) is intentionally billed for services or supplies that were never provided. Other examples of fraud include, but are not limited to the following:

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  • A health care provider bills for services or supplies (e.g., home health services, diabetic supplies, hospital visits, exams) that were never provided
  • A health care provider bills an insurer for services or treatments that are medically unnecessary and, in some cases, potentially even harmful to the patient (e.g. power wheelchairs, therapy sessions, ambulance transports)
  • Patients’ insurance numbers are stolen and sold to criminal organizations and then used to bill for health care services, supplies, or equipment that were not necessary or never provided
  • A health care provider is paid bribes to refer patients for services and treatments which may be medically unnecessary or substandard (e.g. mental health services, physical therapy)
  • An insured individual sharing their health insurance information with someone else so that the uninsured person can obtain health care services under the insured’s name.

Who's at Risk?

Health care fraud can endanger people’s health, increase time and money for health care providers to care for patients, and costs taxpayers billions of dollars. Medicare, for example, is at risk of losing billions of dollars to fraudulent claims every year. When health care fraud occurs, it drives the cost of health care up for everyone. Consumers pay higher premiums and companies pay more to cover their employees.

Can It Be Prevented?

Over the last two years, the Centers for Medicare & Medicaid Services (CMS), an agency within the U.S. Department of Health and Human Services (HHS), has implemented high-tech anti-fraud tools and put large-scale, innovative improvements in place as a result of the Affordable Care Act (ACA). The Medicare and Medicaid programs are moving beyond a “pay and chase” approach – paying the bad guys then tracking them down – to stopping fraud before the bills are paid. CMS is working with the private sector, law enforcement, and State Medicaid programs to share best practices in our fight against health care fraud.

HHS and the Department of Justice (DOJ) have also launched a joint effort to prevent fraud – the Health Care Fraud Prevention and Enforcement Action Team (HEAT). The creation of HEAT demonstrates a Cabinet-level commitment to fighting fraud at the highest ranks of the government. A key component of HEAT is the Medicare Strike Force which is comprised of interagency teams of analysts, investigators, and prosecutors who target emerging or migrating fraud schemes, including fraud by criminals masquerading as healthcare providers or suppliers. Since 2007, HEAT’s Medicare Fraud Strike Force, has charged more than 1,400 defendants who collectively falsely billed the Medicare program more than $4.6 billion. More information is available at the web site.

The Medicare Fraud Strike Forces are currently operating in nine cities: Baton Rouge, Louisiana; Brooklyn, New York; Chicago, Illinois; Dallas, Texas; Detroit, Michigan; Houston, Texas; Los Angeles, California; Miami–Dade, Florida; Tampa Bay, Florida.

The Bottom Line for Consumers

  • Never share your Health Insurance Number, except with your providers.
  • Never use another person’s Health Insurance card or allow anyone else to use yours.
  • Review your health insurance statements carefully to ensure all the details are correct. Look for charges for something you didn’t get; billing for the same thing twice; and services that were not ordered by your doctor.
  • Remember – a legitimate doctor or other type of health care provider won’t call and pressure you for personal information. Never give your personal information to anyone who calls you or comes to your home uninvited. Personal information includes things like your name, your Social Security number, your Health Insurance Number, your bank account and credit card numbers.
  • Don’t give out your personal information in exchange for a special offer.
  • Report suspected fraud to your insurer and the Office of the Inspector General (OIG) at 1-800-HHS-TIPS

Case Examples

  1. Mr. Smith lives by himself in Bethesda, Maryland. One evening, he receives a phone call from a woman who identifies herself as a Medicare representative. She tells Mr. Smith that she can save him hundreds of dollars each month on his diabetes supplies. The woman said she could take his order over the phone and asked for Mr. Smith’s Medicare number. Mr. Smith readily gives the information to her. A month later, Mr. Smith logs onto website to review his Medicare billing statement and sees that Medicare is being charged $7,000 for one month’s supply. Mr. Smith calls 1-800-Medicare to report the potential fraud. CMS, using sophisticated new technologies, confirms that Mr. Smith has been the part of a major fraud scheme, and, refers it to the HHS Office of the Inspector General, who coordinates with the HEAT Strike Force team to track down the criminals and prosecute them for health care fraud.
  2. Jane is a 27 year old mother of three living in Baton Rouge, Louisiana who was recently diagnosed with depression. As part of her treatment, her provider recommended that she attend 5 group therapy sessions for a period of 2 months at a local health clinic. After two months, Jane meets with her provider who compliments her on attending over 25 sessions in the last two months. Jane is confused by the compliment, and after talking to her further, it’s clear that not only has her depression gotten significantly worse, but she only attended one of the sessions that were recommended. Had her provider known that she had not been receiving her prescribed treatment, he would have developed a new treatment plan. The provider felt that Jane was a victim of insurance fraud and decided to report the incident to the OIG through the 1-800-HHS-TIPS hotline. A few weeks later, he read in the paper that seven people were arrested for health care fraud for billing Medicaid a total of $37.9 million in unnecessary services. Jane’s provider learned that the arrested individuals billed for more group therapy sessions than were provided. Four others who worked as therapists at the centers pleaded guilty to one count of conspiracy to commit healthcare fraud for purporting to provide group therapy and document patients' attendance.
  • Page last reviewed: June 12, 2013
  • Page last updated: June 12, 2013
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