Since it was first established in 2007, the Medicare Fraud Strike Force has recovered almost $3.82 billion from fraudulent claims and indicted over 3,000 criminals.

Unfortunately, fraudsters keep finding new ways to scam the Medicare program, costing taxpayers billions of dollars each year. When funds are lost to fraud, Medicare beneficiaries also suffer physically due to reduced access to healthcare.

Investigating Medicare fraud is challenging. The guide below includes solutions to common issues investigators face when uncovering this type of healthcare fraud.

Download our free eBook to learn how case management software can help you recover more funds lost to Medicare fraud.

Table of Contents

Medicare Fraud Overview

Medicare Parts A & B Fraud

Medicare Part D Fraud

Fraud vs. Waste vs. Abuse

Medicare Fraud Laws

The Federal Civil False Claims Act (FCA)

The Anti-Kickback Statute (AKS)

The Physician Self-Referral Law (Stark Law)

The Importance of Whistleblowers

Whistleblower Awards and Protection

Investigating Medicare Fraud

Challenges and Solutions

RELATED: What is Medicare Part B Fraud?

Medicare Fraud Overview

Medicare Parts A and B Fraud

Part A of the Medicare program covers hospital and inpatient care for beneficiaries. Part B is medical insurance, covering outpatient medical treatments and supplies as well as preventive services. Common fraud schemes include:

• Medical identity theft
• Beneficiaries receiving services they aren't entitled to
• Lending or selling Medicare information
• Billing for services not provided (including missed appointments)
• Billing for services not covered
• Unnecessary services
• Upcoding
• Unbundling
• Kickbacks and bribes
• Paid referrals and conflicts of interest
• Altered documentation

RELATED: What is Medicare Part A Fraud?

Medicare Part D Fraud

Medicare Part D is an optional add-on that covers prescription drugs. While Part D fraud includes some of the same fraud schemes listed above, investigators may also encounter:

• Drug diversion (selling or giving the drug to someone it wasn't prescribed to)
• Prescription drug abuse
• Doctor shopping (one beneficiary getting the same prescription from multiple doctors)
• Billing for brand-name drugs when generic version was dispensed
• Auto-refilling fraud
• Dispensing counterfeit, expired, returned or inferior drugs

Fraud vs. Waste vs. Abuse

When investigating Medicare fraud, it's important to know the distinction among fraud, waste and abuse.

Fraud occurs when a person or group of people knowingly and intentionally attempt to defraud the Medicare program. For instance, a doctor might prescribe a drug to a beneficiary that they don't need in exchange for a kickback from the pharmaceutical manufacturer.

Waste is when someone misuses resources, leading to unnecessary costs to the US government. For example, a doctor could order a lab test that they don't actually need to diagnose a patient.

Abuse refers to fraudulent activities that the person committed either unknowingly or unintentionally. For instance, a pharmacist may bill Medicare for a prescription but the program isn't their primary insurance provider.

Learn more about common healthcare fraud schemes in our handy cheat sheet.

RELATED: Investigating Medicare Part D Fraud: Overcoming Major Challenges

Medicare Fraud Laws

Investigating Medicare fraud requires knowledge of not only common fraud indicators and schemes, but also the laws that govern them.

The Federal Civil False Claims Act (FCA)

According to the Centers for Medicare & Medicaid Services (CMS), the civil FCA "protects the Federal Government from being overcharged or sold substandard goods or services." This law "imposes civil liability on any person who knowingly submits, or causes the submission of, a false or fraudulent claim" to a government-run healthcare program.

Under the law, "knowing" that you have submitted a false claim doesn't equate to doing so intentionally. Whether the person knew that the claim is fraudulent or just didn't bother to check your documents to make sure they're truthful, they violate the FCA.

Penalties for violating the FCA are steep. Fraudsters may have to pay up to three times the value of their false claims, in addition to penalties up to $22,927 per fraudulent claim.

The Anti-Kickback Statute (AKS)

Per the AKS, it's a crime to "knowingly and willfully offer, pay, solicit, or receive any remuneration directly or indirectly to induce or reward patient referrals or the generation of business involving any item or service reimbursable by a Federal health care program."

Remuneration can refer to monetary payments or rewards of other items or services of value. This could include vacations, luxury items, free or discounted items or services, or overpayments for services.

Those who violate the AKS are subject to penalties up to three times the value of the kickbacks they received, plus fines as high as $100,000 per kickback. Fraudsters may also face criminal penalties including imprisonment and exclusion from participating in Medicare and other federal healthcare programs.

The Physician Self-Referral Law (Stark Law)

The Stark Law prohibits healthcare providers from referring Medicare beneficiaries to facilities in which they have a personal interest. This law covers any lab, hospital, office or other entity with which the doctor or a member of their immediate family has a financial relationship.

For example, a doctor violates the Stark Law if he refers a patient to a specific lab in exchange for a referral fee. There are some exceptions to this law, however, such as a doctor referring a patient to another doctor who works in the same practice.

Providers who violate the Stark Law may have to pay fines, repayments of their fraudulent claims and/or civil money penalties (CMP) of up to $24,478 per referred service. They may also be excluded from participating in federal healthcare programs.

The Importance of Whistleblowers

Whistleblower Awards and Protection

While the CMS is hard at work investigating Medicare fraud schemes, they can't catch every violation. That's why whistleblowers are essential to combatting these crimes.

"Because those who defraud the government often hide their misconduct from public view," explains Chad Readler, the Acting Assistant Attorney General of the Justice Department’s Civil Division, "whistleblowers are often essential to uncovering the truth."

Whistleblowers are seen as so valuable that they can receive between 15 and 30 per cent of the funds collected after a successful lawsuit under the FCA. They're also protected against retaliation.

That's why it's essential to encourage whistleblowers to report. SIUs and OIGs should set up an easy-to-use system with multiple reporting avenues, including webform, phone hotline and dedicated email address. Ensure that the system is secure, private and offers an anonymous reporting option to encourage use.

Watch our free webinar to learn how you can set up an effective whistleblower hotline.

Investigating Medicare Fraud

Challenges and Solutions

With government funds and access to healthcare on the line, investigating Medicare fraud shouldn't be taken lightly. Use a robust case management system to keep your investigations organized, well-documented, timely and compliant.

Challenge: I need to keep sensitive data secure.

Solution: For the protection of those involved in your investigations as well as compliance reasons, you must keep information secure. This rule applies to every type of investigation, but Medicare fraud involves both personally identifiable information (PII) and health-related data, which are especially sensitive. Using case management software for your investigations provides a secure platform with role-based access to files, ensuring case data stays private.

Challenge: I might be missing connections between Medicare fraud investigations.

Solution: Uncovering one instance of Medicare fraud is hard enough, but detecting a large ring takes real investigative skill. Case management software with case linking capabilities flags files with features in common such as location or subject name. Spot patterns even faster with a trend analysis tool. Using graphs, charts and heat maps, you'll be able to detect and prevent Medicare fraud schemes more effectively.

Challenge: My investigation information is spread out across multiple repositories.

Solution: Do you store investigation information in numerous spreadsheets, databases or other repositories? This makes retrieving key data time-consuming and difficult. Instead, use a case management system with a centralized case file where you can keep all the supporting documents, evidence, interview notes and other information in one place. Read how i-Sight (now Case IQ) helped one client track and manage healthcare fraud, waste and abuse investigations here.

Challenge: It's hard for my team to collaborate on investigations.

Solution: You may need to work with other investigators or other teams over the course of your Medicare fraud investigation. Don't waste time or risk data security sending information via email. Instead, use web-based case management software with multi-user access to foster collaboration. In addition, an activity timeline shows what actions have been made within a case file, improving oversight for larger teams.

Learn more about investigating healthcare fraud and how to overcome its challenges in this webinar with FWA experts from Prime Therapeutics.

Challenge: I forget key details of fieldwork before I get back to the office to log it.

Solution: No matter how good your notes are, details might slip your mind when travelling back to the office after a long day of investigating in the field. Reduce the amount of data that slips through the cracks by using web-based case management software. Anywhere, anytime access to case files keeps investigations on track.

Challenge: Writing investigation reports takes time away from my investigations.

Solution: With billions of dollars lost to Medicare fraud every year, there's no time to waste on paperwork. However, investigation reports are key to analysis, decision-making and prevention. Save precious investigation time by using case management software with one-click reporting. In minutes, you'll have a full report for stakeholders to review, whether it's at the end of the investigation or years later.

Challenge: My team spends too much time sorting through alerts.

Solution: Reading and actioning hotline tips or fraud alerts is time-consuming, especially for large organizations. Streamline the process by using case management software that integrates with fraud detection systems such as SAS. Every alert will be captured and sorted, followed by automatic case creation so you can action them sooner.

Challenge: I worry about complying with security and reporting regulations.

Solution: A wide array of laws and regulations cover healthcare data, so investigating Medicare fraud can be tricky. To protect your organization and the privacy of case subjects, use a case management system. Built-in templates, automatic reporting and strict back-end security ensures your investigations are secure and compliant.

Download our fraud investigation checklist to ensure you don't miss any important steps.