Medicare & Medicaid Fraud

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Definition: Medicare & Medicaid Fraud

Medicare and Medicaid fraud includes illegal practices that are aimed at getting higher health care reimbursements from government funded healthcare programs. Even though calculating the exact loss due to such frauds is not possible, FBI estimates that around 3-10% of all health care claims are fraudulent. In 2011, the total Medicare expenditure was around $565 billion, out of which loss due to Medicare fraud is estimated to be between $17 billion and $57 billion.

Some of the common types of Medicare fraud include

• Phantom Billing: Billing for procedures that weren’t necessary, or for procedures that weren’t performed, false pricing of equipments. E.g. Physician may submit bills for examination and tests that never took place.

• Patient Billing/ Kickbacks: Where the health care service provider and the patient enter into an agreement and the service provider falsely bills the Medicare for treatments that have not been actually performed. The patient receives kickbacks from the service provider. It also includes unnecessary referrals. E.g. A physician receives payments for referring patients to a particular medical imaging facility.

• Upcoding: It includes billing for services at a level of complexity higher than the service actually provided. E.g. The supplier of wheelchair may bill for motorized one but he would have supplied a manual wheelchair to the patient.

• Unbundling: Charging separately for services that can be bundled together and charged at a lower rate. E.g. A laboratory receives an order for a panel of tests to be performed. Instead of bundling these tests and billing them together, it charges each test separately in order to increase its income.

Several laws such as the False Claims Act, Anti-Kickback statute, Stark law, Affordable Care act have tightened the regulatory requirements and there is increased scrutiny of billing patterns using data analytics to prevent such frauds.



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