Medicare Fraud: The Dirty Truth

NEW YORK (MainStreet) -- Medicare fraud is so vast and measured in so many billions of dollars, nobody knows for sure how big it is at any given time. It is estimated according to the FBI's website that health care fraud costs the country an estimated $80 billion a year.

The impact of this fraud indirectly affects everyone who has commercial health insurance policies, as well, as the Medicare patients themselves. Medicare is often viewed as the benchmark for commercial health insurance companies. If there is fraud surrounding the benchmark, it drives up the cost of services, and it is also linked to commercial health insurance costs in other ways. For example, some commercial policies reimburse doctors at a Medicare rate only. Customers who hold those policies may not even be aware of this, and they may be as young as recent college graduates. They certainly are aware of how much it is costing them every pay period to have insurance and that this cost continues to rise.

There are several different ways these crimes can be set up. Daniel Purdom, a partner in the health care and white collar practice in Hinshaw & Culbertson's Chicago office, taught a health care fraud investigation course at the FBI Academy in Quantico and pinned down why the gambit can work in such an undetected way.

"Providers can bill for services never rendered," he said. For example, someone running billing codes out a motel is just collecting checks. It can also happen when providers can bill for more sophisticated services than were rendered. A good example of this is when a chiropractor might bill physical therapy codes to collect insurance money. "Then there is billing for unnecessary procedures," he said. This happens more often in hospitals and surgery centers when patients are sent for multiple tests like X-rays during the time they are admitted.