How to Spot Medicare Fraud

Feb 20, 2018 by

Photo by JD Mason on Unsplash

You probably know someone who has been a victim of Medicare fraud—or maybe you’ve been a victim yourself. The Centers for Medicare and Medicaid Services (CMS) estimates that Medicare fraud costs taxpayers about $80 billion a year. When you consider that Medicare spending is less than $700 billion a year, that figure is stunning.

According to the Center for Public Integrity, the payment error rate for Medicare Advantage is 10%, and for Original Medicare, it’s just over 11%. How many of the errors are due to fraud and how many are due to unintentional mistakes isn’t clear. However, Medicare auditors believe the vast majority are due to fraudulent claims.

The problem is so bad, in fact, that the CMS recently invested in state-of-the-art analytics technology to identify Medicare fraud. The new Fraud Prevention System, or FPS, analyzes Medicare claims before they are paid to look for patterns of fraud and abuse.

Medicare fraud hurts everyone involved in the Medicare program. It hurts beneficiaries because billions of dollars are taken out of the program that aren’t used to care for seniors. It hurts Medicare providers, because they have to spend resources to comply with fraud prevention guidelines that could go to providing healthcare services. And it hurts taxpayers because those dollars are wasted and must be replaced at the expense of other necessary programs.

You can help prevent or minimize Medicare fraud if you know what to look for—and what to avoid. Here’s what you need to know about fraud and abuse in the Medicare program.

What is Medicare fraud?

Medicare fraud generally takes one of the following forms:

  • Phantom/ghost billing. This occurs when a provider bills for services that were not performed during a patient visit. It can also happen if a supplier bills for durable medical equipment that wasn’t, or is no longer, used by the beneficiary. The Medicare enrollee is almost always unaware of the fraud. For example, if you had a routine office visit with your doctor, but he billed Medicare Part B for the visit plus several tests or procedures that weren’t necessary or weren’t performed, it would be considered phantom billing.
  • Fraudulent billing. This happens when a provider or supplier uses a fraudulently obtained Medicare ID number to bill for services. An example of this is when a company calls and offers a free service in exchange for your Medicare number. There’s actually no free service, and the company uses your number to make fraudulent claims against Medicare. In some cases, the Medicare beneficiary willingly cooperates in the scam in exchange for part of the money received from the fraudulent claims.
  • Upcoding. This is very hard for the average person to identify, since it involves technical billing codes most people aren’t familiar with. If you have a 10-minute face-to-face visit with your doctor, you should be billed for a lower level of service. With upcoding, the doctor bills Medicare for a more expensive and complex 30-minute office visit instead of the brief visit she actually performed.

There’s another, rarer form of Medicare fraud that’s hard for beneficiaries to spot. It involves referring a Medicare beneficiary for tests or other services to a facility where the referring provider has a financial interest. This kind of fraud occurs when your doctor refers you for physical therapy at a clinic he partially owns.

How do I identify Medicare fraud?

The easiest way to spot Medicare fraud is to carefully review your Explanation of Benefits (EOBs). You should compare the services you received against the services listed on the EOB. And if you get an EOB from a provider you don’t recognize, you should definitely call the CMS hotline at 1-800-MEDICARE or the Office of the Inspector General at 1-800-HHS-TIPS.

You should also be on your guard if someone calls and promises a consultation or other free service in exchange for your Medicare ID.

The CMS also identifies ambulance services and home health agencies as potential fraud hotspots. If you’ve used these services—or even if you haven’t—pay special attention to your Medicare EOBs. If you see a provider you don’t recognize on your EOB, or a service you don’t recall receiving, contact Medicare right away.

What should I do if I suspect Medicare fraud?

There are several federal agencies that oversee the Medicare program. CMS itself has many internal watchdog agencies and task forces. The Health Care Fraud Prevention Partnership and the Center for Program Integrity are just two initiatives that seek to reduce fraud.

Despite their best efforts, however, Medicare fraud is a rampant problem. So, it’s very important that Medicare enrollees are vigilant about protecting their rights under the program.

You should call the Medicare hotline at 1-800-MEDICARE immediately if you see something suspicious on your EOB. You should also report any callers who ask for your Medicare ID in exchange for a free consultation or service. If you prefer, you can fill out an anonymous complaint with the OIG using this form.

If you suspect fraud in your Medicare Advantage plan or Part D prescription drug plan, you can also call 1-877-772-3379.

For more help spotting Medicare fraud, the Senior Medicare Patrol website is loaded with information. You can learn about current schemes and what you can do to protect yourself.

Danielle K. Roberts is the co-founder of Boomer Benefits, where her team helps baby boomers navigate their entry into Medicare.

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