Fraud and Abuse

Published 02/07/2018

The Centers for Medicare & Medicaid Services (CMS) and Palmetto GBA are dedicated to saving taxpayers dollars through the prevention and early detection of fraud and abuse. The taxpayer dollars lost to health care fraud and abuse are the financial resources that should be used to pay for services that keep beneficiaries in good health. We work with CMS, the Federal Bureau of Investigations (FBI), the Office of the Inspector General (OIG), the Medicaid Fraud Control Unit, and the United States Attorney's Office in dealing with these issues.

The term "abuse," as applied to the Medicare program, describes incidents or practices of providers that are inconsistent with the accepted sound medical, business or fiscal practices. These practices may, directly or indirectly, result in unnecessary costs to the program, improper payment or payment for services that fail to meet professionally recognized standards of care or which are medically unnecessary.

The type of abuse to which Medicare is most vulnerable is over-utilization of medical and health care services. Abuse takes such forms as, but is not limited to:

  • Unbundled or exploded charges (e.g., the billing of a multi-channel set of lab tests to appear as if individual tests had been performed)
  • Claims for services not medically necessary, or not medically necessary to the extent furnished (e.g., a battery of diagnostic tests is given where, based on diagnosis, only a few are needed)
  • Breaches of assignment agreements that result in beneficiaries being billed for a disallowed amount on the basis such charges exceeded the allowed charge (e.g., beneficiaries being billed for more than the 20 percent coinsurance)
  • Improper billing practices which include:
    • Knowingly submitting bills to Medicare instead of third-party payers which are primary insurers for Medicare beneficiaries
    • Violations of Medicare participation agreements by physicians or suppliers

Although these types of practices may initially be categorized as abusive, under certain circumstances, they may constitute fraud.

Fraud is an intentional deception or misrepresentation that an individual makes, knowing it to be false and that could result in some unauthorized benefit. The most frequent kind of fraud arises from a false statement or misrepresentation that is material to entitlement or payment under the Medicare program. The violator may be a participating provider, a beneficiary or some other person or business entity.

Fraud in the Medicare program takes such forms as, but is not limited to:
  • Billing Medicare for services or supplies that were not provided. This includes billings for "no shows" (e.g., billing Medicare for services which were not actually furnished because the patient failed to keep their appointments).
  • Altering claim forms to obtain a higher payment amount
  • Deliberately applying for duplicate payments (e.g., billing both Medicare and the beneficiary for the same service, or billing both Medicare and another insurer in an attempt to get paid twice)
  • Soliciting, offering, or receiving a kickback, bribe or rebate (e.g., paying for a referral of patients in exchange for ordering of diagnostic tests and other services)
  • A provider completing Certificates of Medical Necessity (CMNs) for patients not personally and professionally known by the provider
  • Misrepresenting the services rendered (upcoding or the use of procedure codes not appropriate for the item or service actually furnished), amounts charged for services rendered, identity of the person receiving the services, dates of service, etc.
  • Billing non-covered services as covered services (e.g., routine foot care billed as a more involved form of foot care to obtain payment)
  • Claims involving collusion between a provider and a beneficiary, or between a supplier and a provider resulting in higher costs or charges to the Medicare program
  • Use of another person's Medicare card in obtaining medical care
  • Repeated violations of the participation agreement or assignment agreement
  • False provider disclosures of ownership in a clinical laboratory
  • Supplier completion of prohibited portions of the CMN
  • Split billing schemes (e.g., billing procedures over a period of days when all treatment occurred during one visit)
  • Billings based on 'gang visits' (e.g., a physician visits a nursing home, walks through the facility and bills for 20 nursing home visits without rendering any specific service to individual patients)
  • Billing for services with inappropriate modifiers

Was this article helpful?