Understanding Medicare Fraud

Posted by Chris Morales on Mon, Oct 15, 2012 @ 01:49 PM

doctor being arrestedWith so many people being accused of Medicare fraud these days, and especially given the turn of events that unfolded this past week with the nationwide crackdown on over four hundred million dollars in false claims, it is important for people to understand what Medicare really is, what it stands for, how it came to be, and why it is susceptible to manipulation at the private level.

Medicare was instated by the United States Federal Government in 1965. This system guarantees health insurance for people under the age of sixty-five with documented disabilities or end stage renal disease, and people over the age of sixty-five regardless of whether or not they have a particular need for it. Unlike private insurance companies, who manage their financial risk by denying coverage to those they believe will need it most, Medicare spans the social plane and provides coverage for those meeting certain criteria.

In 2008, $391,266,000,000 was given to those in need through the Medicare program.

In 2010, forty-eight million people were enrolled in Medicare, forty million of which were people over the age of sixty-five, and eight million of which were people under the age of sixty-five with documented disabilities. Medicare is the leading insurer of a generous population of sick, low-income and elderly people. On average, with the varying plans that Medicare has in place, it covers approximately half of all medical expenses. The other half is paid out of pocket.

Medicare fraud refers to any attempt by any person to collect reimbursement for medical expenses from the Federal Government via false information. There are as many types of Medicare fraud as can be named, and a thousand more that can’t. Medicare fraud, by nature, is very difficult to detect, and not all claims that appear suspicious are deemed fraudulent. It was estimated that in 2010, $47.9 billion was paid to those who had falsified their information to receive benefits. Eventually, that estimate was rebuked as many of the suspicious claims turned out to be legitimate. That year it was estimated that $528 billion was spent on Medicare.

One of the ways that Medicare fraud can occur is when a medical provider bills Medicare for unnecessary tests, procedures or equipment. In most cases, these unnecessary tests are never given, the unnecessary procedures are never performed, and the unnecessary equipment is never purchased. Another method is when the healthcare provider offers the patient a bribe in exchange for their Medicare number. They are told to inform Medicare of whatever procedure the medical provider deems fit when Medicare calls to verify the claim.

A new system in place, used to prevent Medicare fraud, affords the program $350 million in proceeds to track claims, deemed fraudulent in nature, whether intentionally or unintentionally, put forth by medical providers.

On October 4th of this year, the United States Federal Government charged 91 people with Medicare fraud in one of the biggest crackdowns in the nation’s history. Many of those involved were nurses, doctors and other healthcare professionals who had provided kickbacks to their patients in exchange for their Medicare information, and who had billed Medicare for unnecessary medical tests and procedures.

The Obama administration has made a monumental push towards tracking those who have committed Medicare fraud and prosecuting them, expanding the pool of assets involved in the process with money and men. The aptly named Medicare Fraud Strike Force is made up of the Federal Bureau of Investigation, the Justice Department and the Health and Human Services department. Since 2007, 1,480 defendants have been prosecuted. Collectively, the group has billed over $4.8 billion in false claims to Medicare.

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