What Does Medicare Fraud Look Like?

Fraud can be committed by medical equipment suppliers or employees, Medicare billing employees, physicians or their employees, telemarketers, and even beneficiaries.

It comes in a variety of forms—taking kickbacks, billing either for services not rendered or twice for the same service, charging for an excessive amount of equipment or supplies that the recipient can’t possibly use, ordering unnecessary lab tests, using someone’s Medicare card to obtain service.

“There are so many variations (of fraud) out there,” said Barbara Dieker, director of the Office of Elder Rights at the U.S. Administration on Aging. “It’s very disheartening to hear of how creative some individuals have been in figuring out how they can take advantage not only of our seniors but the Medicare system.”

The Wall Street Journal told the story of a man who happened to be an SMP volunteer and was approached during kidney dialysis and asked if he wanted a new glucose monitor for his diabetes. “I didn’t need a new monitor, and I don’t know how she knew I had diabetes,” O’Malley told the reporter. Even though he declined the offer, a new glucose monitor arrived in the mail, followed by glucose test strips that he also hadn’t ordered. On his monthly statement, he saw that Medicare had been charged for everything—with test strips at 300 times their typical cost. He filed a report with Medicare investigators, who tracked down the con artists and got the money returned.

Up-coding, or overstating the severity of a patient’s condition, is another type of fraud. Medical procedures are billed using a code; fraud occurs when a code is selected that will pay the provider more money than the code that would have matched the patient’s condition.  

Infusion fraud therapy involves companies that provide intravenous medication for patients who are so ill they can’t be treated with oral medication. Medicare billing for infusion services in South Florida has been disproportionately high, and a series of arrests in June involved several Michigan infusion therapy companies that allegedly billed Medicare for services that were medically unnecessary, medically unlikely, or not performed at all.

Home health care fraud involves people coming to the home and offering products a person doesn’t need or services, such as housecleaning or laundry, that may not be covered by Medicare. But a dishonest provider armed with the senior’s ID number may bill Medicare anyway, for something entirely different.

The same thing that happens with scooters happens with wheelchairs and diabetic shoes. Someone comes to a senior center promising these goods, collects Medicare ID numbers, and leaves the senior with the bill—and often no products.

One type of fraud that “really bothers me,” Schoen said, involves hospice programs. “There are people who do ‘case finding,’” she said. “They cut a deal with someone in a nursing home. They look for people who have lost a lot of weight . . . they’re looking for failure to thrive. They’ll put that person in hospice when they’re not terminally ill.” The hospice agency collects from Medicare, often for longer than true hospice patients normally live—and of course, imagine the family’s surprise.

One recent scam, said Ginny Paulson, director of the SMP Resource Center, is for a “Medicare-approved arthritis kit.” The kit is “free if you have Medicare Part A and Part B,” according to the flyer, and purports to relieve diabetes, poor circulation, inflammation, achiness, and other ailments. The Texas SMP office found that Medicare gets charged $1,000 or more for these kits, but the senior gets items worth less than $100 that often don’t fit their needs. In addition, it’s not free: there’s a 20% co-pay unless you have other insurance.

The list goes on—and as soon as authorities are wise to one scam, it mutates into a different kind.

“The backlash,” said Schoen, “is when they (seniors) do need something, Medicare says, ‘you already got it. We’ve already paid for it.’” And patients are only eligible for one scooter in their lifetime. They can try to appeal, but it’s a long process. “The other backlash,” she said, “is when Medicare notices fraud in a certain area, it will tighten up. It started with home health care fraud. Medicare noticed that people were getting 100 visits of home care when the national average was only 30.” When Medicare investigators discovered the problem, it became more difficult for people to get home health care, she said.

Another problem, said Paulson, is that when a Medicare beneficiary’s number has been used to perpetrate fraud, it’s flagged. Future claims can be denied just based on the fact that the number was abused. “Another problem can be that their medical records will have a false diagnosis attached to them,” she said. The medical identity thief may use his victim’s ID to get treatments, which can compromise the victim’s care in the future.