How Fraudulent Providers Game Medicare and Medicaid

Medicare and Medicaid are programs designed to help some of the most vulnerable Americans. Because these programs are so large and complex, they are also vulnerable to fraudsters. Every year, billions of dollars are lost to fraud, abuse and waste in our healthcare system.

Some estimates suggest that more than 10 percent of Medicare’s budget is lost to fraud. That’s about $60 billion of taxpayer money that is handed over to bad actors. Fortunately, there are people working hard to combat these fraudulent parties. The federal government, along with the invaluable assistance of whistleblowers, are recovering billions of dollars annually.

We can all appreciate the efforts of these watchdogs, and we can even educate ourselves on the ways in which our system is susceptible to fraud in case we witness it. This is particularly true for those of us who work in healthcare, where we are more likely to see fraud, abuse and waste firsthand.

What Does Medicare and Medicaid Fraud Look Like?

Fraudulent billing practices: One of the primary ways fraudulent providers game the system is to submit bills for services that were never provided or to misrepresent or inflate services that were provided. In some cases, providers abuse the system by performing tests or providing services that aren’t needed, simply to run up the bill submitted to Medicare.

Referrals: There are many laws governing referrals in our healthcare system. For example, “kickbacks” or paid referrals are prohibited because a provider is supposed to make referrals strictly for the patient’s needs and best interests, and not because they are getting something in return.

These practices are not always easy to spot, which is why the exact amount of taxpayer money lost to fraud is difficult for the authorities to know. It’s often someone who works at a medical facility or with a provider that witnesses the fraud or abuse and reports it to the authorities or becomes a whistleblower.

The Importance of Whistleblowers

Because people that work in facilities might have access to unique information that proves fraud against Medicare or Medicaid, they are well-suited to file a lawsuit on behalf of the government to seek a recovery of the money lost to fraud or abuse. The False Claims Act allows these citizens to file qui tam suits (lawsuits filed on behalf of the government).

If the information provided by the whistleblower leads to a recovery, the whistleblower then earns 15 to 30 percent of the recovered amount. It also means that taxpayer money can be reallocated to the services for which it was intended. It’s appropriate that whistleblowers have this incentive for a reward after providing such a valuable public service, and it’s clear that their efforts have a major impact on our system.

In the fiscal year 2017, the False Claims Act enabled the Justice Department to recover more than $3.7 billion in settlements and judgments, $2.4 billion of which involved the healthcare system.

Every taxpayer should appreciate the work done by federal investigators and whistleblowers. If you happen to be in a position where you have witnessed fraud and abuse against Medicare or Medicaid, know that you have legal protection if you choose to become a whistleblower. Your fellow Americans would be grateful for the hard-earned money you help recover.