Health Care Fraud and Abuse


Fraud and abuse are significant problems affecting costs in the health care system. They come in many forms. It could include overcharging or double-billing health insurance companies or the government for services provided. Or it could be charging for services not provided or providing care that is not needed. 

Fraud and abuse cost the Medicare program, its beneficiaries, and taxpayers tens of billions of dollars annually. However, the actual amount of money lost is unknown. There is a lack of empirical evidence on the extent of fraud and abuse and the effects of activities to combat these illegal practices. And this seriously hinders efforts to battle them. 

Beneficiaries and their family members who suspect Medicare fraud and abuse are encouraged to report it by calling 800-HHS-TIPS. However, to ensure they report accurate information (i.e., not based on a misunderstanding or an error in billing), they should first discuss the issue with their clinician’s office, provider, or supplier. 

Our current health care system has more than 1,000 payers, hundreds of thousands of providers, and billions of annual claims. That vast size makes detection of fraud and abuse extremely difficult. In addition, previous government detection efforts have been typically underfunded. Private-sector payers have met with even less success in combating fraud and abuse. They lack the legal and administrative tools available to the federal government for monitoring programs like Medicare and Medicaid. 

Several relatively recent legislative and regulatory actions have facilitated efforts to combat health care fraud and abuse. Since its inception, the national Health Care Fraud and Abuse Control Program has returned more than $11 billion to the Medicare trust fund. 

Enforcement efforts are partially supported by funds recovered from inappropriate Medicare and Medicaid reimbursement, as well as related fines and penalties received by federal investigators and prosecutors. However, according to government reports, recovered funds cannot be fully accounted for. Federal agencies may have been spent some for activities unrelated to Medicare and Medicaid. 

The Affordable Care Act increased funding for the abuse control program by about $350 million over ten years. 




All levels of government and the private sector should adequately fund and support antifraud and anti-abuse efforts. A balanced approach to enforcement should be taken. It should ensure that antifraud and anti-abuse activities do not have unintended negative effects on patient health care. For example, if they decrease access to care or result in the withholding of medically necessary treatment. 

Restrictions on physician self-referral and provider-kickback schemes must be strengthened and enforced. 

The Department of Health and Human Services (HHS) and the Department of Justice should continue their enforcement activities, including research to determine the extent of fraud and abuse. They should also assess the effects of initiatives to combat them. Both agencies must continue investigations, operations, and prosecutions to reduce the impact of fraud and abuse on federal health care programs and beneficiaries. Congress should continue to oversee the effectiveness of these enforcement activities to ensure that they are appropriate and do not adversely affect access to care. HHS should expand and intensify its efforts to educate health care providers about compliance with Medicare billing rules. And HHS should assist them in preventing and correcting billing errors. 

Fines and penalties recovered as the result of enforcement efforts should be spent for the benefit of Medicare and Medicaid. This includes continued enforcement activities to reduce fraud and abuse in these programs. These funds should not be redirected to unrelated programs.