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How big is Medicare fraud?

By Jennie L. Phipps · Bankrate.com
Thursday, February 21, 2013
Posted: 1 pm ET

Whenever anyone from President Barack Obama on down talks about cutting the cost of Medicare, the discussion invariably segues to Medicare fraud.

How big a retirement planning problem is Medicare fraud?

In a May 2012 report, FBI Special Agent David Welker said, “The United States spends more than $2.5 trillion on health care annually, and rough estimates indicate that anywhere from 3 (percent) to 10 percent of all health care expenditures are attributed to fraud."

If you do Welker's math, the annual cost of fraud ranges from $75 billion to $250 billion. That's a lot of our hard-earned retirement money.

The Government Accounting Office doesn't think this estimate is far wrong. It reported that in 2011, Medicare and Medicaid paid an annual $65 billion in "improper payments." It defines "improper" to include payments that are made in error -- not fraud, but wrong just the same.

The government is working on the problem. In 2012, the Department of Justice and the FBI together recovered $4.2 billion in fraudulent payments. They opened 1,311 new criminal health care fraud investigations involving 2,148 defendants. Once these crooks are convicted, the Affordable Care Act authorizes more jail time. Medicare scammers will receive 20 percent to 50 percent longer sentences for crimes that involve more than $1 million in losses.

What can you do to help? Last year, the government funded Senior Medicare Patrols in every state. These are volunteers who are trained to identify and report health care fraud. If you would like to be one of them, go to SMPResource.org, and contact the office closest to you.

If you can't be a volunteer, at least be aware that fraud happens everywhere. Examine your bills, and question things that don't look right. If you aren't comfortable with the answer, you can report the problem to your local Senior Medicare Patrol office, and they'll take it from there.

Remember, it's your money.

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12 Comments
Frankie Rader (MS)
February 22, 2013 at 10:55 am

In October of 0-10, I had a hip replacement and went into a Rehab Center because I lived alone....That was good but while there they suggested that the have someone talk to me about a Walker.....This Comppany brought a Rollalator in and explained it to me. I asked how much it was and was told that it didn't matter, that Medicare would pay for it. At the time I didn't give it much thought but since then I have seen almost idenical ones in Catalogs for way less...They ranged in price from 89 to $300.I bought one for $89. that is a little bit lighter but easier to fold....I found out that Medicare paid $700. for the one they gave me. That is $611. more.

Joan Hogan
February 22, 2013 at 10:44 am

CVS Pharmacy does not give patients the quantity of pills prescribed. I always find errors on behalf of my sons pills. My Son Has Medicaid and Medicare as he is disabled. The other problem being TEVA PHARMACEUTICALS who offers generic drugs to pharmacies like CVS has had numerous complaints and recalls because the generic version of brandname drugs did not have the proper strength and customers meds did not work adequately. This IS FRAUD AND WASTE ! CMS take a good look @ this.

EIEIO
February 22, 2013 at 9:45 am

In November 2012 my spouse experienced first encounter with Medicare by getting a flu shot. I had to pay privately as it is several more months before Medicare eligibility for me. However, we just got the Medicare Summary Notice (3 months later) of the breakdown of the flu shot. $30.92 flu vaccine and $25.00 admin infuenza virus vac for a total of $55.92. Medicare paid $55.12 or a reduction of eighty cents. What is weird though, my shot paid with cash was a total of $35.00. How come Medicare pays an administer fee? Puzzling! Not really just proves the waste of money thing. Multiply # of Seniors x $25 admin fee and what is that total. A hefty amount methinks.

Mike Nichols
February 22, 2013 at 9:40 am

Fraud is big problem in all government funded healthcare programs, but the real problem is government mis-management. If anyone ever looked at how much money is lost due to vague regulations and oversight plus the lack of penalties which allow medical providers to exploit the Medicare program they would be shocked. It would drawf the money lost because of fraud.

Shirley
February 22, 2013 at 9:19 am

There is fraud in all government programs because no one wants to do their jobs and investigate before they give taxpapyer money away. Welfare, Disability and unemployment you only hear them doing anything about any of the fraud all you hear is nothing we can do, That is our government at work. Do nothing government except take away from Social Security for the elderly who paid in all their working lives. They could save money if they really wanted to. It should be harder to get on these programs they should really need them. As long as it doesn't affect the government officials and their benefits which we pay for they just don't care!!! They just keep taking away from the taxpayer with taxes and give it away. Some how they think they are GODS and they deserve all of what they get to do nothing.

Tennise
February 22, 2013 at 9:19 am

What's "fraud?" I went to a hospital for help after a severe depressive break. They kept me for hours, until I was too exhausted to keep my eyes open (I'm 66 and have MS), then sent me home with a list of three doctors to try to call. One wasn't taking new patients, one my secondary insurance didn't cover, and one was the wrong number. They billed Medicare over $3,000. I tried to call Medicare and ask how I could challenge this WITHOUT being billed myself if Medicare refused to pay. Medicare has NO WAY to do this! I was told to wait until it was paid or refused, and then appeal! Appeal what? Appeal that they SHOULD pay it so I don't have to? I wrote my Congressman. So far, NO RESPONSE.

Lynn
February 22, 2013 at 6:41 am

All the time and $$ that is wasted in Washington - and all the complaining about a budget crisis - and this problem is REAL and being reported and nothing is being done. Our politicians - ALL of them are such a bunch of do-nothings - It's a shame and a travesty. They care about only 1 thing - THEMSELVES!

Jeff
February 22, 2013 at 6:21 am

They are not stealing from the elderly. They are stealing from us! Medicare is taxpayer funded. Thats our money.

Jerry
February 22, 2013 at 4:16 am

I have actually reported fraud several times, know what was done? Nothing I was politely told they would look into it. I followed with reports of continued fraud and still nothing. If they want to actually save medicare, stop the fraud. One example is a home medical supply company where I receive medical equipment, from day one they have been ripping off medicare. My first monthly charge included nearly $2000.00 worth of supplies I never got or ordered. And this has continued since for over five years now. And nobody wants to do anything about it. My mother uses the same supplier and her bills are padded as well. This is what needs addressing by congress.

Dave
February 21, 2013 at 8:22 pm

With Medicare & Medicade going broke, these people are stealing from the people who need it the most (the elderly). The punishment needs to be severe.