Medicare fraud and how to stop it


By David E. Haynes

Millions of Americans rely upon the federal Medicare and Medicaid programs for their health care services. In order to fund these critical services, the federal government spends billions each year. In 2013, the federal government spent $772 billion on health insurance programs, nearly two-thirds of which went to Medicare. The funds for Medicare and Medicaid are financed by companies and individuals, who contribute by paying taxes.

Unfortunately, some unscrupulous individuals and companies cheat American taxpayers by defrauding the federal health insurance programs for personal gain. The U.S. Department of Justice estimates that fraud wastes approximately 3% to 10% of the entire annual Medicare budget. Healthcare fraud results in high costs for the Medicare and Medicaid programs and the waste of millions of taxpayer dollars. Whistleblower laws provide citizens with the tools to fight back. Under the False Claims Act, whistleblowers may report activity that defrauds the Medicare and Medicaid programs and receive a portion of a resulting settlement or verdict as a reward.


What are some common forms of Medicare fraud?

If you work in the medical field, you may have witnessed some activity that made you feel uneasy because it seemed wasteful but were unsure whether it was illegal. One of the most common forms of Medicare fraud is overbilling. This can occur when a partial prescription is provided, but was charged as a full prescription. Another common form of overbilling occurs when patients are unnecessarily admitted into hospitals to increase billable expenses. Another form of fraud is known as up-coding, which occurs when a service is billed under a code for a more expensive service than was actually provided. In essence, these fraudulent companies overstate and exaggerate expenses on Medicare claims about healthcare services and products that were provided to patients.

Some bad actors are even more brazen and fraudulently bill Medicare for services or goods that were not rendered. These fraudulent individuals and companies submit claims for treatments, procedures, devices, tests, and other services that were never provided. Others simply create patients out of thin air and submit claims for this so-called “ghost patient,” cheating American taxpayers of money they contributed to the Medicare and Medicaid programs. Billing ghost patients is often called “phantom billing” and can be difficult for the government to initially detect.

The list of commonly prosecuted forms of Medicare and Medicaid fraud goes on and on. Some doctors will prescribe medicine to patients when an alternative medicine will suffice but the doctor has an illegal kickback agreement with the chosen medicine’s manufacturer. If you have seen strange “rebates” and other forms of compensation such as expensive travel and meals provided by a drug manufacturer, there may be Medicare fraud.


How can whistleblowers fight Medicare fraud?

Whistleblowers are at the forefront of the government’s fight against Medicaid and Medicare fraud. Combating fraud, waste, and abuse is a challenging task and the government often needs cooperation and information from insiders who know about fraud. The necessity of inside information is why the government rewards and incentivizes whistleblowers to step forward and blow the whistle on waste and Medicare abuse.

To file a claim, whistleblowers may retain an attorney and file a lawsuit under the False Claims Act. The law rewards whistleblowers for their actions by compensating them with a portion of proceeds recovered during a qui tam lawsuit. These rewards can be substantial because the government may recover three times the amount of money it lost due to the defendant’s fraudulent activities. In 2011, a 63-year-old Medicaid patient received $14.8 million after blowing the whistle on a billion-dollar healthcare company that allegedly billed Medicaid fraudulently for care that the patient never received. In April 2014, an Alabama nurse was awarded $15 million for blowing the whistle on a healthcare company that allegedly submitted false billings to Medicare for home health services.

Nurses, physicians, pharmacists, other healthcare workers, and individuals who receive services covered under the Medicare/Medicaid health insurance programs can all blow the whistle on fraud. Patients can carefully scrutinize their Medicare Summary Notice (MSN) and ensure that the statement accurately reflects the services that were provided. If there are services listed on the MSN that seem exaggerated or false, you may be eligible to file a whistleblower claim. Pharmacists aware of pharmaceutical companies paying kickbacks to doctors or other pharmacists have blown the whistle on this prevalent form of healthcare fraud. Nurses aware of physicians who falsely diagnose more severe health problems than a patient actually has can similarly blow the whistle on fraudulent conduct and help protect American taxpayers from Medicare waste and abuse. By staying alert for fraud, waste, and abuse, together we can ensure the integrity of our nation’s federal health insurance programs.


About David E. Haynes

Haynes is the managing attorney of The Cochran Firm’s Washington, D.C. office, which provides legal representation to health care and Medicare whistleblowers.


“Medicare fraud and how to stop it” by David E. Haynes, was published May 21, 2014 at and