Definition of Medicare Fraud & Abuse

Medicare fraud and abuse practices take a costly toll on the United States healthcare system. According to the United States Government Accountability Office, fraud and abuse activities accounted for a 44 percent increase in overall Medicare spending between the years 2002 and 2006. And while both practices involve Medicare billing claims, fraud and abuse differ in terms of how the claims process is used to reap additional payment benefits.

Medicare Fraud

• The word "misrepresentation" defines Medicare fraud in terms of how a fraudulent practice is carried out. In one form or another, a misrepresentation of services provided, the patient treated or the number of services provided defines the actual billing activity. Medicare fraud most often takes the form of false claims filed by healthcare providers and insurance companies. False claims can involve billing for services that were never rendered, for people using false identities or for unnecessary services. Medicare fraud also occurs in cases where a criminal obtains a Medicare number from a living or deceased person and bills for services using the stolen number.

Medicare Abuse

• Medicare abuse practices occur when providers bill for unnecessary treatments or supplies. This can appear as an unusually large number of laboratory tests done by a provider or within a certain population group. Doctors in particular follow certain procedural standards that dictate when a particular test or treatment is needed. In effect, practitioners who abuse Medicare violate these standards of practice. Medicare abuse can also occur when providers accept kickbacks for recommending certain medications or treatments. As a result, providers are encouraged to recommend certain treatments and products to patients.

Fraudulent Billing Practices

• Medicare providers follow a certain set of guidelines that list different levels, or degrees of service and their associated costs. Billing procedures use individual codes that charge for different types of treatment and medical supplies. Fraudulent billing practices can involve using codes that don't apply to the treatment that was given or using codes that indicate a more comprehensive level of treatment was administered. In either case, the misuse of codes triggers higher costs, which draws a larger payment for the provider. Other instances of fraudulent billing occur when healthcare providers and legal professionals work together to create Medicare claims by preying on people who've been injured in accidents. In effect, accident injuries become the source of false billing practices and exaggerated lawsuits.

Unnecessary Billing Practices

• Diagnostic testing procedures can have a direct effect on how practitioners manage a patient's course of treatment. In general, diagnostic tests provide additional information regarding a particular condition, which in turn may warrant a certain diagnosis or treatment approach. As an abusive practice, unnecessary testing involves ordering tests for conditions that don't call for a certain type of test. These practices occur most often within the chiropractic field where practitioners track a person's condition using non-standard testing procedures. Examples of this would include using x-ray tests to determine a person's range of movement or the use of ultrasound to detect muscle spasms. In doing so, practitioners can reap additional payments while diagnosing for conditions that don't actually exist.