Medicare Fraud: Abuse of the System & Means of Struggle

May 16, 2011 - There are many different kinds of Medicare fraud yet the goal is always the same – to rook money from the Medicare program. Generally Medicare fraud is challenging to track as not all fraud is detected and not all suspicious claims prove to be fraudulent. That is when Medicare abuse is in place. It occurs when physicians or suppliers fail to follow best medical practices, resulting in unnecessary costs to Medicare such as improper payments, or medically irrelevant services. In fact, Medicare fraud – estimated now to total about $60 billion a year – has become one of, if not the most profitable, crimes in America..

Significant decrease of fraud will cut costs for families, businesses and the federal government. Instead it will increase the quality of services for those in need of care. The U.S. Department of Health and Human Services (HHS) and U.S. Department of Justice are proactively cooperating to help eliminate fraud and investigate fraudulent Medicare (and Medicaid) operators who are cheating the system.

On January 24, 2011, HHS announced new rules authorized under the Affordable Care Act that will help prevent defrauding the Medicare program. These rules serve to protect patients and legitimate doctors as well as other providers. They include: enhanced screening and other enrollment requirements (rigorous screening process for providers enrolling Medicare in order to keep fraudulent providers out of the program), stopping payment of suspect claims (the program can temporarily stop enrollment of a category of providers or of providers within a geographic area that has been identified as high risk), new resources and sharing data to fight fraud, new tools to prevent fraud, expanded overpayment recovery efforts, enhanced penalties to deter fraud and abuse, stiff new rules and sentences for criminals, greater oversight of private insurance abuses.

According to federal law, a healthcare provider filing a false claim for medical services that not provided, weren’t rendered in full, or that were medically unnecessary, can be subjected to 5 years of prison, a $250,000 fine as an individual and $500,000 for a corporation, or both. In case of making false statements, or covering up material, offenders will pay a $10,000 fine, and serve a 5 years prison sentence, or both. Soliciting monies or services, or receiving them, in exchange for gifts, financial rewards, or services that Medicare covers, is also a crime. Penalties for this could include a fine of $25,000 and/or serve 5 years in prison. If a prosecutor can prove that the violator used certain forms of media (TV, Internet etc.) to advance such deceit to the public, they can end up in jail for 5 years, plus become liable to pay a $1,000 fine. Finally, according to the recent passage of the Kennedy-Kasselbaum Act, if the offender schemes to defraud any healthcare agency, they may draw penalties of up to 10 years of imprisonment, plus any court costs, fines, or financial penalties the court deems fit to assign them. If an injury occurs due to such schemes, the sentence may get up to 20 years plus fines. In case of death the penalty may turn into a life term in prison.

Physicians can take 2 simple steps to avoid accusation of Medicare fraud or abuse in the future: billing audits and keeping detailed and accurate patient records. Conducting regular audits may disclose contradictions that should be investigated and corrected immediately. Detailed and accurate records will assist any investigator in determining whether a medical billing issue was fraud or a mistake, and will help eliminate any mismatch quickly. Ultimately, the easiest way to elude prosecution of healthcare fraud is keep up with the relevant laws, regulate your billing practices, and immediately deal with errors discovered during routine audits.


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