Medicare Fraud: How to Protect Yourself and Report Scams

Medicare fraud is a lucrative game for cybercriminals and white-collar criminals. The Senior Medicare Patrol (SMP), a volunteer-run organization funded by the US Department of Health and Human Services (HHS), estimates that approximately $60 billion is lost to Medicare fraud and abuse every year. Other regulatory bodies and statistics experts believe this annual loss may be as high as $100 billion.

As the tail end of the Boomer generation approaches the age range for Medicare eligibility, Medicare fraud offenses have steadily increased. The United States Sentencing Commission reports that the number of convicted healthcare fraud offenders increased in 2022 with Medicare and Medicaid as the chief targets. Lack of Medicare staff and investigative resources has been cited as the main reason fraudsters target Medicare itself, healthcare facilities and Medicare beneficiaries.

Medicare and Medicare Advantage fraud are only going to keep rising in the coming years. It’s important to know what Medicare and Medicare Advantage fraud red flags look like, what you can do to protect yourself or loved ones and how to report Medicare fraud.

Understanding Medicare Fraud

Medicare fraud is:

• Knowingly submitting false claims or making misrepresentations of fact to obtain federal payments from Medicare when one would otherwise not be entitled to do so
• Making prohibited referrals for certain healthcare services 
• The Center for Medicare Services also defines Medicare fraud as “knowingly soliciting, receiving, offering, or paying remuneration (such as kickbacks, bribes, or rebates) to induce or reward referrals for items or services reimbursed by federal healthcare programs.”

Medicare fraud has consequences for patients, providers and the public. It erodes public trust in Medicare and the federal government, and drains funds from Medicare that impact the program’s ability to provide coverage and support to beneficiaries. Also, physicians’ unscrupulous relationship with suppliers and vendors may lead to distrust in the relationship between patients and their providers. 

Most of all, Medicare fraud severely impacts the quality of care that beneficiaries receive. Medicare beneficiaries’ health can suffer due to unnecessary services, supplies or medications, or by not receiving proper care. Medicare beneficiaries’ finances and identities are also at risk when a corrupt provider or vendor commits fraud.

Common Medicare Fraud Schemes

The list of Medicare fraud schemes grows as medical, technological and social evolutions take place. SMP has a thorough outline of Medicare fraud schemes. Some of these scams date back to Medicare’s inception, like phantom billing and durable medical equipment (DME) fraud, but others didn’t take off until more recent years, such as COVID-19 fraud and prescription drug fraud.

The most common Medicare fraud schemes include:

Billing Scams

The most common type of Medicare fraud is billing scams. Medicare beneficiaries get billed more than what they are actually obligated to pay, or the provider fraudulently bills Medicare for unnecessary services. 

Medicare billing fraud includes knowingly billing for appointments where the patient didn’t show up, ordering medically unnecessary services or supplies, and billing for more complex services than the patient actually received.

Durable Medical Equipment Fraud

Durable medical equipment (DME) includes wheelchairs, catheters and other medical devices that can withstand repeated use and can be used at home. It is prescribed by your doctor to make daily life easier.

Many Medicare beneficiaries genuinely need these items for medical reasons. However, fraudulent vendors promising free DME will bill Medicare for a new item and send a pre-owned item to the beneficiary—if they even send any items at all. Providers and vendors colluding on Medicare fraud may also charge Medicare beneficiaries for DME without proving that the item is medically necessary.

Operation Rubber Stamp was a multi-year initiative established by the Department of Justice (DOJ) that closed the largest Medicare fraud case in Southern District Court of Georgia history in 2020, totaling over $1.5 billion. A majority of the fraudulent billings identified in Operation Rubber Stamp were Medicare DME fraud, with just one company that billed over $1 billion in unnecessary DME that was never delivered to patients.

Prescription Drug Fraud

Prescription drug fraud has been a rampant problem since the inception of Medicare Part D in 2006. While there are variants of Medicare pharmacy fraud, the main aspect of prescription drug fraud is that Medicare gets billed for drugs that the beneficiary never received or the beneficiary intentionally receives different drugs than what they were prescribed.

For controlled substances like opioids, receiving significantly more or less pills than prescribed is a common sign of prescription drug fraud along with the prescribing doctor not being the one the patient had seen.

A multi-agency investigation spearheaded by the FBI resulted in the indictment of a Texas pharmacy owner who committed over $10 million in prescription drug fraud. The defendant received more than $1 million in bribes and kickbacks from physicians who prescribed medically unnecessary expensive drugs and $10 million in Medicare and Tricare reimbursements.

Genetic Testing Fraud

Genetic tests have become popular in recent years.  Individuals simply swab their cheek at home then send their sample to a lab to learn more about their heritage and medical history.

Scammers targeting Medicare beneficiaries have engaged in genetic testing fraud as a response. The purpose of this scheme is fraudulent billing and medical identity theft. Phony genetic tests are advertised as screenings for diseases like cancer, dementia and Parkinson’s. Some offer a chance to learn more about how one metabolizes medication with a pharmacogenetic test. The scammer then bills Medicare for these tests even though they weren’t requested by your doctor, or arranges to have your swab discussed through telehealth fraud.

Operation Double Helix was a joint effort between HHS, OIG and the FBI that charged 10 defendants, including nine doctors, with fraudulently billing Medicare over $2.1 billion for genetic cancer testing. The labs that tested the swabs paid illegal kickbacks to providers for the referral of Medicare beneficiaries. The providers who did so colluded with these fraudulent telemedicine companies and the tests were not medically necessary. The telemedicine company preyed on vulnerable beneficiaries who did not receive information from the tests that did not provide any medical insights.

Red Flags and Warning Signs

All Medicare fraud schemes have similar warning signs. By becoming more aware of what common Medicare fraud red flags look like, you can keep yourself safe and report suspicious activities so others aren’t harmed by Medicare fraud schemes. 

• Requests for personal information: Only your doctors, insurance company and other Medicare-affiliated entities like State Health Insurance Assistance Programs should have your Medicare Number or Social Security Number on file. Anyone else who solicits this information or your medical records should be treated suspiciously.
• Being asked for your Medicare card or ID number: Your Medicare ID number is highly sensitive information that needs to be safeguarded. Medicare cards need to be treated like credit cards and if you suspect yours is compromised, you may need to request a new card.
• Bills for services, supplies or drugs you did not receive: Also known as “phantom billing,” this form of fraud occurs when your explanation of benefits (EOB) shows that Medicare was billed for services, supplies or drugs that you never received, or Medicare was billed for an amount significantly higher than what you received. While providers may make honest mistakes, unexplained bills are a cause for suspicion.
• Unsolicited phone calls or other contact: Medicare does not make unsolicited calls, so if you receive a call from someone claiming to be from the government, the caller may have fraudulent motives. Unless you were specifically in touch with Medicare, Medicare Advantage or a healthcare provider, unsolicited phone calls regarding your care and coverage are likely a sign of Medicare fraud. Do not give any information to people you were not specifically in touch with. 
• “Free gift” offers: Do not accept offers of free gifts in exchange for medical care or devices. The gifts are usually not given, and if they are, Medicare may be fraudulently billed for them.
• You received something very different from what you expected: This often occurs with prescription drug fraud (e.g., being prescribed a generic medication but receiving an expensive compound drug or brand-name instead). Prescription drug fraud can be extremely lucrative, providing the pharmacy with ways to bill Medicare for unneeded services, unnecessary drug refills and increased quantities.

Protecting Yourself From Medicare Fraud

Once you’ve become familiar with Medicare fraud red flags, protecting yourself is your top priority.

Never give out your Medicare number to anyone who isn’t your healthcare provider, Medicare Advantage plan or other healthcare entity. Vendors do not need this number from you, and if they solicit it and other personal information, they are likely committing Medicare fraud.

Stay informed about Medicare guidelines and listen to what they have to say about recent scams. Medicare fraud schemes evolve rapidly, and the guidelines can tell you what to look out for and how to keep your personal information safe.

It’s also a good idea to regularly review your EOBs and Medicare Summary Notice, which is mailed to you on a quarterly basis regarding services and medical supplies received under Medicare Parts A and B. Keep copies of these documents where you can easily find and reference them in case you find anything suspicious. The more documentation you have, the easier it is to prove if fraud occurred.

Reporting Medicare Fraud

While Medicare fraud and abuse is an ongoing concern, there are several resources for Medicare fraud defense.

First, you need to rule out whether suspicious bills were an error or intentional fraud. Review your EOB and Medicare Summary Notice then contact your providers and health plan for an explanation of unusual charges or incidents (such as not receiving DME or receiving something considerably different than what your doctor prescribed).

If the matter is not resolved after contacting them, your local Senior Medicare Patrol (SMP) may be able to determine if Medicare fraud occurred and refer your case to the appropriate entity that can intervene. 

If you suspect or experience provider fraud under Original Medicare, you can call 1.800.MEDICARE (1.800.633.4227) or you can submit an online complaint to the HHS Office of the Inspector General. If you need to report a tip on a classified matter to HHS-OIG, call 1.800.447.8477.

If you suspect or experience provider fraud with a Medicare Advantage plan, you can also call 1.800.MEDICARE or the Investigations Medicare Drug Integrity Contractor at 1.877.7SAFERX (1.877.772.3379).

Other organizations that may be able to help include:

• Your local Agency on Aging
• Centers for Medicare & Medicaid Services (CMS)
• Medicare.gov
• Senior Medicare Patrol
• Your local Legal Aid Society
• State Medicaid Fraud Control Units
• State attorneys general
• Local law enforcement

Spreading Awareness

Sharing information about the widespread impact of Medicare fraud can encourage your friends, family and community to be proactive in protecting one another. Community engagement on this issue can prevent innocent people from receiving poor medical care or having their money and identities stolen.

Medicare fraud disrupts our health and wellbeing, our finances, and trust in the medical system. By becoming aware of common Medicare fraud schemes like DME fraud and phantom billing, you will know which red flags to watch out for and can share them with your community to keep each other safe. Read more of the Baylor Scott & White Health Plan blog to stay informed on Medicare issues and join the fight against Medicare fraud.