This week I’d like to write about a problem that costs taxpayers billions of dollars each year – Medicare fraud and abuse. Medicare paid out $644 billion in payments for services and medications in 2019, accounting for 14% of the federal budget. The Office of Management and Budget (OMB) reports that approximately 15.9% of those payments were “improper,” meaning the services were not necessary, did not meet Medicare guidelines, or were downright fraudulent (a decrease from 17.9% in 2018).
Medicare fraud refers to individuals or companies who obtain payments from Medicare under false or illegal pretenses. The OMB has been making a concerted effort to limit Medicare fraud with a goal of less than 10%, but Medicare is an easy target since it is such a complex program. It’s like playing the lottery for those who are intent on defrauding the government, but with a much higher chance of a payoff.
There are three major categories of Medicare fraud: phantom billing, false patient billing, and upcoding (also known as up-billing).
Phantom billing involves a provider billing Medicare for equipment or procedures that were not necessary or were never provided. Billing for medical equipment falls under this category. I see this type of fraud frequently when companies bill Medicare for equipment or services my patients never requested or that I did not prescribe.
The most common thing I see is medical equipment companies (usually based in Florida) calling my patients at home to offer a service or medical device, then fishing for information from the patient in order to provide additional services. I still have not figured out how these companies obtain my patients’ telephone numbers.
For example, a patient may have diabetes. The company calls the patient offering to provide diabetes supplies that can be billed to Medicare. The caller may then ask another question such as, “do you suffer from back pain?” The patient frequently answers yes (since most seniors suffer from back pain) and thinks nothing of it.
The equipment company then faxes a certificate of medical necessity to the person’s doctor asking to approve the diabetic supplies (indicated) and a heating pad and/or brace for the patient’s back pain. (often not indicated). Medicare may be billed hundreds of dollars for these unneeded items. The equipment providers are counting on busy physicians signing the form without investigating if their patients actually requested/need these items. If the doctor investigates and refuses to sign, the company will often continue to fax requests or call the physician badgering him or her to approve the service.
The second category of fraud is false patient billing. This involves providers billing for services that were never provided or that were not necessary. Sometimes Medicare patients will even participate in this scam by selling their Medicare billing information to the fraudulent company so it can bill Medicare for fake services or equipment.
The last major fraud category is upcoding or up-billing. This occurs when a provider of services uses a billing code that will result in a higher level of payment from Medicare than what was delivered to the patient or that may lead to the need for additional services.
So, what should you do if you suspect Medicare fraud? If it’s a billing issue from your doctor’s office or hospital, it’s best to check with the billing office first. Due to the complexity of the Medicare rules, it’s not unusual for physician offices to make billing mistakes. If you note a repeated pattern of inappropriate billing, you should contact the Medicare company that paid the claim. The contact information should be on the Medicare Summary Notice (MSN). You can also contact the Medicare fraud hotline at 1-800-HHS-TIPS or e-mail them at
If a company contacts you to offer services, make sure you ask them specifically what the services are and always get the name of the company and the full name, complete address and telephone number of the person contacting you. Don’t answer any questions that are not directly related to your primary medical problem. Never give out personal information, including your Medicare number, bank information, or credit card information. If you do order services, make sure to give your doctor a heads up to be looking for a request for approval.
I would suggest you visit where you can learn more about how to fight Medicare fraud.