Examples of Medicare Fraud

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Mr. LeeMr. Lee was almost a victim of fraud...

Mr. Lee has Medicare. One evening he received a phone call from a woman who identified herself as a Medicare representative. She told Mr. Lee she could save him hundreds of dollars each month by signing him up for the new Medicare Prescription Drug Coverage. Mr. Lee pays over $300 in drug costs each month, so he was eager to join. When the woman said she could sign him up over the phone and asked for Mr. Lee's Medicare and checking account numbers, he gave them to her.

After sleeping on it, Mr. Lee realized he had made a mistake by giving out his personal information and contacted his local Senior Medicare Patrol. The SMP helped Mr. Lee contact his bank to close his account, and reported the crime to authorities.

Medicare fraud most commonly occurs in:

  • Billing for institutional facilities such as nursing homes, residential facilities, hospitals and hospices.
  • Billing for physician visits and services.
  • Billing for durable medical equipment such as wheelchairs, body jackets, incontinence supplies or diabetic supplies.
  • Improper marketing through phone calls, door-to-door sales and flyers.

Providers commit fraud when they…

  • Submit bills for services not provided, or unnecessary services. One common fraud is a "gang visit," when a provider visits a nursing home and bills for services as if they had treated a majority of its residents. Alternately, a provider may perform a service regardless of whether each resident needs it.
  • Upcode a service. This is when a provider charges Medicare for a more expensive service than was provided. For example, a provider may bill for surgery, when only a bandage was placed over a cut.
  • Unbundle services. This occurs when a provider submits separate bills for lab services that combine three or four tests, which are intended to be billed as one service. As a result, Medicare pays the provider more for each service than if the services were billed as a group.
  • Bill non-covered services as covered services. This occurs when a provider bills a service such as routine toenail clipping (non-covered service) as foot surgery (covered service).

Suppliers and recruiters commit fraud when they…

  • Bill for different equipment than what the beneficiary received.
  • Bill for home medical equipment after it is returned.
  • Solicit, offer or receive a bribe or kickback. Recruiters may stop Medicare beneficiaries on the street or make an at-home visit, offering money and promotional gifts as incentives to take “free” medical exams, after which they give the beneficiary a list of durable medical equipment they do not need.

Companies commit fraud when they…

  • Offer a Medicare drug plan that hasn’t been approved by Medicare.
  • Use false information to mislead beneficiaries into joining Medicare plans.
  • Do not follow Medicare marketing rules. For example, a company may not send out an advertisement mailing with the Medicare or Centers for Medicare and Medicaid Services (CMS) logo on it. They also cannot offer financial incentives to their insurance agents and brokers that would encourage them to maximize commissions by inappropriately moving, or churning, beneficiaries from one plan to another each year.

Beneficiaries commit fraud when they…

  • Let someone use their Medicare card to get medical care, supplies or equipment.
  • Sell their Medicare number to someone who bills Medicare for services not received.
  • Provide their Medicare number in exchange for money or a free gift. In some cases, beneficiaries may unknowingly commit fraud in this way.

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Updated Oct 19, 2011

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