Medicare Abuse: How to Recognize It, What to Do

Medicare abuse occurs when unnecessary costs are billed to the Medicare program. It is an illegal practice that results in billions of dollars of losses to the U.S. healthcare system every year.

When Medicare abuse happens, tax-payer dollars are not spent on medically necessary care. The extra spending decreases how much money remains in the Medicare Trust Fund. Medicare could charge you more in premiums and other out-of-pocket expenses to make up the difference.

This article will address the different types of Medicare abuse, what to look for, and what you can do to report it. When you take action against Medicare abuse, you protect yourself and decrease the burden on the healthcare system at large.

Woman looking at computer, concerned about possible Medicare abuse

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What Is Medicare Abuse?

The Centers for Medicare and Medicaid Services reported nearly $43 billion in improper Medicare payments in 2020 alone. Some of these payments may be appropriate but lack the necessary documentation to prove it. Another portion, however, is outright due to Medicare abuse.

To protect yourself against Medicare abuse, you need to understand what it is and what to look for. 

What Is the Difference Between Medicare Abuse and Medicare Fraud?

People often use the phrases Medicare fraud and Medicare abuse interchangeably, but there is technically a difference between the two.

According to the Centers for Medicare and Medicaid Services, Medicare fraud happens when someone (an individual, group, or institution) intentionally tries to get payments from the Medicare program when they are not entitled to them.

On the other hand, Medicare abuse may not be intentional but increases unnecessary costs to the program just the same. Whether it is fraud or abuse, you should be on the lookout for them because they both affect your bottom line.

Examples of Medicare Fraud

Billing for services that were not provided: A healthcare provider could charge Medicare for a visit you scheduled but did not attend. Likewise, they could charge you for services that were not performed or for medical supplies you never received.

Inappropriate billing: You could be charged for preventive care services that are supposed to be free. You could be asked to pay a copay when one was not needed. Instead, your healthcare provider could refuse to bill Medicare and charge you directly for Medicare-covered services.

Ordering services and supplies they know are not necessary: A healthcare provider could order unnecessary medications, tests, and supplies with the goal to increase how much Medicare reimburses them.

Using inappropriate incentives to attract business: Someone could pay kickbacks to get more patient referrals or accept kickbacks to give them.

Soliciting information and filing false claims: Someone could offer you a discount or kickback to get your Medicare number. Others may try to convince you to give them that information in a phone scam. Be careful because they could then use your Medicare number to submit false claims.

Examples of Medicare Abuse

Upcoding bills: The more complicated or longer an office visit is, the more a healthcare provider can charge for it. Some healthcare providers may be rounding up the time they spent during a visit to bill for a higher level of care. They may also add billing modifiers that reflect a more extensive visit, but they may not always use them correctly.

Unbundling bundled services: Some services, especially surgical procedures and some hospital stays, are bundled together, and Medicare pays for them as one flat payment. A healthcare provider or facility could unbundle those services and charge you for each one separately.

Ordering unnecessary tests and supplies: A healthcare provider may order tests or services that may not be medically indicated. They can also overuse services by recommending excessive office visits and laboratory tests. Likewise, they could prescribe more medication than necessary to treat your condition.

Charging more than recommended for services and supplies: Medicare sets rates for its services each year. A participating provider can charge no more than that amount. A non-participating provider (i.e., they accept Medicare for payment but do not agree to the Medicare fee schedule) can bill you no more than 15% of the recommended rate.

However, suppliers of medical equipment have no limits on what they can charge and can take advantage of you with overpriced items.

The Fine Line Between Medicare Fraud and Abuse

Many of the examples of Medicare abuse listed here could constitute fraud if the person or entity performing them did them knowing they went against Medicare policy.

Penalties for Medicare Fraud and Abuse

Several laws are in place to protect the government against these practices. Anyone committing Medicare fraud and abuse can face serious consequences ranging from imprisonment to financial penalties. Not only could they be asked to repay any claims, in some cases they could pay as much as three times the damages.

Someone found guilty of Medicare fraud could be excluded from participating in Medicare and other federal programs in the future. Medical licenses could also be suspended or revoked.

As of September 2020, the Medicare Fraud Task Force reported 3,075 indictments accounting for $3.82 billion. In May 2021, the Department of Justice (DOJ) took down a COVID-19 and telehealth scheme that targeted Medicare beneficiaries for $143 million.

Although it was not limited to Medicare, the DOJ also charged 138 healthcare professionals, 42 of them doctors, for $1.4 billion in healthcare fraud in September 2021.

Signs of Medicare Abuse and Fraud

Medicare abuse goes beyond the high-profile cases you hear about in the media. It often happens on a much smaller scale. Through no fault of your own, it could even happen to you. You can be proactive by keeping your eye out for any suspicious activities.

If you are on Original Medicare (Part A and Part B), be sure to check your quarterly Medicare Summary Notice (MSN). The Centers for Medicare and Medicaid Services will mail this to you every three months. It includes a list of all the Medicare services you received during that time. Make sure the MSN matches your records.

Ask yourself the following questions:

  • Did I receive care on these dates of service?
  • Did I receive care at these facilities?
  • Did I receive care from these providers?
  • Are there any duplicate charges?
  • Do my receipts show that I paid more than the “Maximum You May Be Billed”?

You will not receive a Medicare Summary Notice for a Medicare Advantage (Part C) or Part D prescription drug plan. In those cases, you will want to check the Explanation of Benefits (EOB) mailed to you monthly by your plan’s insurance company. They will include similar information.

What to Do About Medicare Abuse

If you find an error on your MSN or EOB, there are steps you can take. The first thing you will want to do is reach out to your healthcare provider’s office. It could be a simple billing issue that can be easily corrected.

If this does not correct the problem, or you find something more suspicious (e.g., charges that cannot be explained or a trend in erroneous billing), you will want to take action and report this to the proper authorities so they can open an investigation.

For Original Medicare:

For Medicare Advantage and/or Part D plans:

  • Medicare Drug Integrity Contractor (MEDIC): 1-877-7SAFERX (1-877-772-3379)

You will want to have the appropriate information on hand when reaching out. This will include your name, Medicare number, claim information, and any billing discrepancies between the claim and your records.

Summary

People who abuse Medicare increase how much Medicare spends, but they do so unintentionally. On the other hand, Medicare fraud occurs when money is knowingly, willingly, and illegally taken from the program.

Whether it’s fraud or abuse, unnecessary costs to the Medicare program cost everyone. Knowing what to look for will protect you and the Medicare program at large. Be proactive and report any suspicious activity when you see it.

A Word From Verywell 

Medicare abuse is an all too common practice. It’s important to keep a record of any services you receive so you can compare them against your Medicare statements. When you find a discrepancy, don’t hesitate to look into it.

Whether it’s reaching out to your healthcare provider to fix a minor issue or reporting a bigger issue to the authorities, taking action can save you now and hopefully prevent Medicare abuse in the future.

Frequently Asked Questions

  • What is considered Medicare abuse?

    Medicare abuse can happen when a healthcare provider or facility adds unnecessary costs to the program. By definition, these practices are not intended to take advantage of Medicare, but they do not meet the usual professional standards for business or medical practice.

  • What is the most common type of Medicare abuse?

    One of the most common types of Medicare abuse is improper medical billing. Healthcare providers, medical facilities, and medical supply companies may overcharge for services.

    Medicare abuse can also occur when providers overuse services by conducting more visits, ordering more tests, and prescribing more medication than necessary.

  • What is an example of Medicaid abuse?

    Medicare and Medicaid are both funded by the federal government. It is illegal to target either program for personal gain. Medicaid abuse happens when an individual, group, or institution inadvertently adds costs to the program. As with Medicare, the most common abuses are overutilization and overbilling of services.

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5 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Centers for Medicare and Medicaid Services. 2020 estimated improper payment rates for Centers for Medicare & Medicaid Services (CMS) programs.

  2. Centers for Medicare and Medicaid Services. Medicare fraud & abuse: prevent, detect, report.

  3. Office of the Inspector General. Medicare Fraud Strike Force.

  4. Department of Justice. DOJ announces coordinated law enforcement action to combat health care fraud related to COVID-19.

  5. Department of Justice. National health care fraud enforcement action results in charges involving over $1.4 billion in alleged losses.