What Are The Main Sources Of Medicare Fraud In The Healthcare Industry?

By admin / October 26, 2020

Medicare fraud is a serious problem that costs the US healthcare industry billions of dollars every year. Medicare fraud involves people at various points in the supply chain deliberately lying to exploit Medicare and trigger erroneous payouts.


A significant amount of Medicare fraud occurs when people first enter the system. Without a system for robust pre-enrollment screening, it is relatively easy to defraud the Medicare system. The Office of the Inspector General is responsible for overseeing the Social Security Administration, which is responsible for administering Medicare. The OIG has uncovered numerous cases of illegitimate medical supply businesses being set up by organized criminals with the sole intention of defrauding the US government.

For example, one case in 2005 involved a fraudster traveling to Miami from Cuba and enrolling as a Medicare provider. Over a three-month period, this one fraudster was able to bill the government for more than $4.1 million in fraudulent Medicare claims. The government paid out more than $1.5 million of these claims before detecting the fraud and taking action.

Screening measures such as requiring proper accreditation and proof of identity and business are essential for preventing Medicare fraud at the enrollment stage.


Any payments made through the Medicare program should be enough to provide access to the necessary care, but not so high that the government ends up overspending. The healthcare and pharmaceutical marketplaces change regularly. Payment methodologies and technologies available through Medicare should reflect these changes. Outdated payment processing and methods are ripe targets for fraudsters.

For example, a recent OIG investigation showed that Medicare was paying out $17,000 for wound therapy pumps, despite an average supply price of just $3,600. This discrepancy arises because Medicare continues to pay out for these pumps on the basis of outdated pricing.

Similarly, where Medicare providers are paid a fee each time they dispense a particular service, there is an incentive to administer these services even when there is no concrete medical justification for doing so.

Lack of Awareness

Ultimately, the root cause of Medicare fraud is often a lack of awareness on the part of people and organizations in a position to prevent fraud. While some of Medicare’s issues are systemic and require a rethink of the Medicare system’s fundamental aspects, better awareness among those who administer it is also important.

One of the most effective things that any individual organization can do to help combat Medicare fraud is to ensure that workers know the most common manifestations of the problem throughout their business. Better awareness among the people and organizations in a position to spot Medicare fraud and request a Medicare Fraud Investigation where appropriate. Make sure that everyone in your business in a position to spot Medicare fraud understands what to look out for.

Medicare fraud is a much more common issue than many people realize. The Medicare system provides a critical lifeline to millions of people throughout the US. The US Government is not the only victim in cases of Medicare fraud; patients and communities are also harmed.


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