Help Prevent Medicare Fraud

Pharmacist handing customer prescription
Blend Images/Ariel Skelley

The Office of Inspector General (OIG) has designed and issued special fraud alerts to the health care provider community. These alerts were intended to publicize the national trends of fraud to the general public. It is also a way to provide insight and awareness on fraudulent practices within the industry and address violations specific to the Medicare and Medicaid Anti-Kickback Law.

Medicare and Medicaid Anti-Kickback Law

The Anti-Kickback law sets provisions to identify and penalize anyone guilty of making certain health care decisions in exchange for money. The provisions are broad but fall within two categories:

  • Any money transaction that influences the referral of an individual for any service payable under the Medicare or Medicaid program
  • Any money transaction that leads to the purchase of any item payable under the Medicare or Medicaid program

The penalties for violating the Anti-Kickback statute can be severe. Violating the Anti-Kickback statute is a federal crime that can result in fines of up to $25,000 per violation and/or imprisonment of up to five years. In addition to fines and imprisonment, providers can also be excluded from participation in the Federal Healthcare Program.  Once a provider is excluded from participation in the Federal Healthcare Program, the provider is no longer able to receive payments for any services performed or items furnished to patients. This includes services performed or items furnished at the direction or prescription of an excluded provider.

Special Fraud Alerts

The OIG has named five areas that may indicate a violation of the anti-kickback law. They are by no means intended for any other purpose than detecting potentially fraudulent activity.

  • Joint Venture Arrangements: Any joint venture that is structured to obtain a stream of referrals from physician investors in which they are compensated indirectly can be questionable. Any physician that financially benefits from referrals may order or perform unnecessary services which are costly to the Medicare and Medicaid programs.
  • Waiving Copayments or Deductibles: Routinely waiving copayments or deductibles to Medicare patients without determining financial hardship results in excessive use of services paid for by Medicare. The provider can prompt patients into items or services that are medically unnecessary. Patients are willing to comply simply because the items and services are free.
  • Hospital Incentives to Physicians: In a rapidly growing industry, physicians can be difficult to recruit and retain. Hospitals that resort to attracting physicians with special incentives implies that a physician refer all of his patients to them. This decision would be based on financial influence rather than the quality of care.
  • Prescription Drug Marketing: Physicians or pharmacists accepting gifts or payments in exchange for prescribing their patients with specific prescription drugs are taking risks with their care. Payments given to patients for changing a prescription from one product to another is also an indicator of risky behavior.
  • Clinical Lab Services: In certain instances, an outside laboratory may offer physicians, hospitals or other provider's special services outside of their scope of routine or contractual expectations. It can be viewed as a benefit in exchange for referrals to the laboratory.

Reporting Information

To help reduce fraud, the OIG requests that you contact the Department of Health and Human Services or the Office of Inspector General with information you may have regarding anyone engaging in potentially unlawful health care practices.

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Article Sources
  • Brown, June Gibbs. Inspector General Notice. The Office of Inspector General. U.S. Department of Health and Human Services. Date December 2, 1994,