3 Big Ways That Medicare Fraudsters Rip You Off

by Jeff Reeves | May 31, 2014 6:00 am

3 Big Ways That Medicare Fraudsters Rip You Off

A year ago, four Florida residents were convicted of billing the government for $70 million worth of mental health care[1] that either wasn’t administered or wasn’t medically necessary.

Cheated Fraud Black 185 3 Big Ways That Medicare Fraudsters Rip You Off[2]This March, the owners and several employees of a Houston medical facility were convicted in a $97 million fraud scheme[3] where the government was billed for treatment “when the beneficiaries were actually watching movies, coloring and playing games.”

These are just two recent cases of Medicare fraud — a pickle that continues to bleed billions of dollars out of the Treasury each year.

According to the U.S. Department of Health and Human Services, the Medicare Fraud Strike Force has charged almost 1,900 defendants in fraud schemes that total almost $6 billion since 2007.

And that’s just the fraudsters who have been caught.

Still, despite the scope of the problem, many Americans aren’t familiar with how Medicare fraud works and how it affects them.

Here are some common examples of Medicare fraud — and how they can be prevented to save taxpayer dollars and ensure a high quality of care for American seniors who rely on Medicare treatment to stay healthy.

Medicare Fraud Case #1: Fake Charges

One of the more common ways Medicare fraud is committed involves the government getting a bill for treatment that was never administered.

For instance, in February, a Seattle doctor pleaded guilty[4] to billing Medicare for nursing home visits for patients who were dead.

This is an extreme case. More commonly, unscrupulous doctors will simply add an extra test or procedure to your bill or charge you twice for services that were received.

How to prevent it:
If you ever find additional or duplicate charges on your Medicare statement, contact your provider immediately or call 1-800-MEDICARE. You may be eligible for a $1,000 reward if your tip helps the police uncover a fraud scheme that is sizable and affecting other patients.

Medicare Fraud Case #2: Unnecessary Treatment

Just because a patient actually receives treatment from a real doctor, that doesn’t always mean the charges are legitimate.

Physicians are frequently targeted by unscrupulous Medicare providers, and promised bribes or kickbacks for sending patients along for treatment — whether they need it or not.

It’s deceptively simple: Doctor A tells all his patients to go to Doctor B for mental health treatment. Doctor B bills Medicare a fortune for all those services, and passes a cut of the money back to Doctor A for sending him plenty of “customers.”

This kind of Medicare fraud can happen on a massive scale, as illustrated by the recent allegations from two North Carolina ER doctors[5] who claimed the company running their hospital tried to bribe them into admitting more patients and administering unneeded tests just to juice corporate profits.

How to prevent it:
Without medical training, it’s very difficult to know what treatment is legitimate and what is not needed. However, there are some warning signs to look out for.

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For instance, if your doctor suggests additional procedures because they are “free,” he might be overreaching. In fact, no treatment is free — because Medicare has to pay even if you don’t. Extra charges not only cost taxpayers more money, but can drive up the cost of treatment for people who actually need it.

Also, if television advertising or telemarketing pitches make grand promises about how a device will change your life, or use high-pressure sales tactics for medical devices, this could be a warning sign, too. Never take an advertisement’s insistence that you should bill Medicare for a treatment over your doctor’s professional advice.

Medicare Fraud Case #3: Fake Providers

In 2012, an investigation by the Atlanta Journal-Constitution[6] uncovered about two dozen fraudulent or suspicious “medical providers” that were simply shell companies operating out of a UPS Store mailbox, some who which had stolen the medical licenses of legitimate doctors in the area.

Some of these fraudsters would then obtain Medicare numbers of real patients — either through theft or a slick telephone pitch or through door-to-door scams — then rack up charges.

How to Prevent It:
While it’s not a taxpayer’s job to hunt down fake providers, it is possible to alert Medicare regulators to their presence if an unknown provider pops up on your statement. As with false charges from a legitimate provider, you should call 1-800-MEDICARE if there is ever a foreign healthcare company or doctor on your statement.

And remember, your Medicare number (which is on your Medicare card) should be treated like a credit card number or a Social Security number. Never give this number out to anyone other than a legitimate healthcare provider, because that number gives criminals the ability to charge treatment in your name.

If someone calls or shows up at your door posing as a Medicare official and asking for your number, don’t give it to them. Medicare will never call, visit or sell you anything.

Medicare as a Gateway to Fraud

These are just a few of the most common ways Medicare fraud happens, but they surely aren’t the only ones.

Sometimes a scam artist doesn’t actually bill Medicare for fraudulent charges, but uses the good name of the program as a gateway to other forms of fraud.

Maybe they call you up and act like they are enrolling you in a Medicare prescription drug coverage program, asking for your Social Security number or even your first premium payment. Or maybe when enroll you in Medicare you are also “enrolled” in a package of pricey, non-healthcare products at the same time such as life insurance or an annuity.

The bottom line is that you should always be suspicious when you get unsolicited offers regarding Medicare.

There is no way to be 100% safe from fraud, but the same tips apply to Medicare scams as they do to identity theft and credit card fraud: Always protect your personal information, including your Medicare number and your Social Security number, and always check your bill for false charges.

Read More From ‘Cheated’

Jeff Reeves[8] is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks[9]. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com[10] or follow him on Twitter via @JeffReevesIP[11]

Endnotes:
  1. $70 million worth of mental health care: http://www.washingtontimes.com/news/2013/jun/30/medicare-fraud-trial-ends-with-4-convictions/
  2. [Image]: http://investorplace.com/fraud-corruption-and-waste/
  3. $97 million fraud scheme: http://www.justice.gov/opa/pr/2014/March/14-crm-261.html
  4. pleaded guilty: http://blogs.seattletimes.com/today/2014/02/seattle-doctor-asks-to-change-plea-in-medicare-fraud-case/
  5. two North Carolina ER doctors: http://www.charlotteobserver.com/2014/01/02/4583725/doctors-allege-for-proft-owner.html#.U4X3x_ldXYE
  6. an investigation by the Atlanta Journal-Constitution: http://www.ajc.com/news/news/fake-medical-providers-slip-through-medicare-looph/nTLFF/
  7. 10 Internet Scams to Watch Out For: http://investorplace.com/2014/05/10-internet-scams/
  8. Jeff Reeves: http://slant.investorplace.com/author/profile/jeff-reeves/
  9. The Frugal Investor’s Guide to Finding Great Stocks: http://www.amazon.com/dp/B007KB9CSI/ref=rdr_kindle_ext_tmb
  10. editor@investorplace.com: mailto:editor@investorplace.com
  11. @JeffReevesIP: http://twitter.com/JeffReevesIP

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