What does Medicare and Medicaid fraud actually look like?

Since the beginning of the second Trump administration, Medicaid and Medicare have been hot topics, with the president claiming widespread fraud in the programs.

In February, the Centers for Medicare and Medicaid Services (CMS) announced the Comprehensive Regulations to Uncover Suspicious Healthcare, or CRUSH, initiative the agency says can root out fraud in Medicare and Medicaid.

“Healthcare fraud is real, documented, and devastating—and stealing from people when they are vulnerable or seeking care they need isn’t just fraud, it can cost them their future,” CMS Administrator Mehmet Oz said in a statement shared with Healthcare Brew, adding that “CMS is going to drive these predators out of the health system.”

However, experts say that despite claims of rampant fraud, there’s actually no reliable measure of how widespread the problem is, primarily due to the fact that it can only be detected after the fact. Plus, much of what has been portrayed as Medicare or Medicaid fraud are actually improper payments—which are essentially administrative errors that led to inaccurate payments—rather than a malicious scheme intended to cheat the payers, according to health policy research firm KFF.

“Fraud exists…across the healthcare system,” Jane Tavares, senior research fellow and lecturer in UMass Boston’s gerontology department, told us. “What is being conveyed right now to the public in this narrative is that this is so widespread, and it’s so unique to Medicare and Medicaid, and that particular sectors of these programs are just out of control. And that’s not the case.”

Fraud vs. abuse vs. improper payments

While similar, fraud and abuse have two distinct definitions when it comes to Medicare and Medicaid, according to CMS.

Fraud occurs when a provider knowingly submits false claims or misrepresents facts to receive a Medicare payment they’re not entitled to. Examples include a provider intentionally billing Medicare for services they never provided, writing unnecessary prescriptions, or billing Medicare for an ineligible beneficiary.

The agency defines abuse, on the other hand, as “any practice that does not provide patients with medically necessary services or meet professionally recognized standards of care.” This can include a provider using incorrect billing codes to get reimbursed more or charging an excessive amount for their services, per KFF.

Then there are improper payments, which are defined as any payments that should not have been made or were not for the correct amount, according to KFF. One reason these can occur is due to administrative errors, such as a missing signature. Improper payments aren’t the same as fraud because they don’t involve willful misrepresentation, Jessica Mathers, senior policy analyst with KFF’s Program on Medicaid and the Uninsured, told Healthcare Brew.

What does fraud typically look like?

Medicare and Medicaid fraud can be committed by providers, insurers, beneficiaries, healthcare companies, and organized criminal groups.

“When people think ‘fraud,’ they think of this person on Medicaid who’s scamming the system and getting free care,” Tavares said. “But that’s not what we’re talking about. It’s not beneficiaries who are defrauding the system…It’s providers, it’s private owners of these big organizations, it’s big ownership structures that will create schemes.”

Some common fraud schemes include durable medical equipment, medical identity theft, and telehealth schemes, according to Nicole Liebau, resource center strategic partnership and engagement director at Senior Medicare Patrol, a government-funded program designed to prevent, detect, and report Medicare fraud and abuse. Durable medical equipment schemes, for example, occur when a medical supply company bills Medicare for equipment like catheters or knee braces, but the supplies were never requested or received by a patient, she said.

“All the schemes are very different, and they’re complex,” Liebau said.

Major insurer UnitedHealthcare was also recently sued in Massachusetts for allegedly receiving $100 million in inflated state Medicaid payments after making patients appear sicker than they really were, Stat reported May 29.

^{—Ricardo Carcas}

Combatting fraud

Several government agencies play a role in combating Medicare and Medicaid fraud. These include CMS through its Center for Program Integrity, the Department of Health and Human Services’s Office of Inspector General (OIG), the Department of Justice, and the Federal Bureau of Investigation.

Within the OIG is the Medicare Strike Force, an initiative created in 2007 to better detect and combat fraud. Strike forces are located in areas that see higher rates of healthcare fraud, such as Miami, Dallas, and New York, Ricardo Carcas, assistant special agent in charge of the strike force, said.

While fraud is historically detected after the fact, Carcas said the strike force, by working closely with CMS, is getting better at preemptively detecting schemes. Last December, the group played a role in convicting two healthcare executives in a $34 million Medicare Advantage scheme that involved pressuring beneficiaries to accept unnecessary medical equipment.

“We’re trying to create a[n AI] predictive modeling of…once we shut off the spigot on one end, where are [these bad actors] going to go next?” he said.

Each state also has its own Medicaid fraud control unit designed to investigate allegations of improper payments, typically housed within its attorney general’s office, Andy Schneider, research professor of the practice in the McCourt School of Public Policy at Georgetown University, said.

In addition, federal regulations currently require CMS and states to re-screen Medicare and Medicaid providers at least once every five years to ensure they’re legitimate. Despite the fact that providers are already regularly reevaluated for legitimacy, in April Oz announced CMS will require all 50 states to submit plans within 30 days to reevaluate providers in “high-risk” areas.

“That could be quite an undertaking for the state agency, which would be fine if it had nothing else to do, but it’s got a lot coming at it,” Schneider said.

The Trump administration has taken a number of other steps it claims are intended to root out fraud, including issuing a six-month moratorium on new Medicare enrollees for home care and hospice services, withholding Medicaid payments when fraud is suspected, and instituting work requirements for Medicaid.

These tools the administration is using are “broad, blunt instruments that actually do nothing to prevent the fraud, but end up just harming directly the beneficiaries that often have nothing to do with the fraud at all,” Tavares said. Instead of sweeping actions that take away access to services provided under Medicare and Medicaid, she said targeted measures are needed to discourage specific forms of fraud.