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Health Care Reform Explained

The New Health Care Law and Medicare and Medicaid Fraud

Your questions answered

Health healthcare reform

— Masterfile

Q. How does the health care reform law stop criminals from stealing from Medicare and Medicaid?

A. The law arms the federal government with new tools to combat fraud and waste in Medicare, and in other government health programs like Medicaid. Medicare fraud alone costs taxpayers, by some estimates, $60 billion a year.

"Thanks to the new law, we will now have resources that will enable us to do more to prevent fraud and stop criminals from getting into the system in the first place," said Donald Berwick, M.D., chief of the Centers for Medicare & Medicaid Services (CMS).

The health care reform law provides $350 million to fight these scammers. And for every dollar invested to combat fraud, experts estimate Medicare saves $7 to $14. Any savings will be used to strengthen Medicare, helping it to pay for new benefits such as free preventive screenings.

Fraud and waste not only cost taxpayers billions of dollars but also jeopardize patient care, said Daniel Levinson, inspector general for the Department of Health and Human Services, who heads the agency's fraud investigation unit. Over the past fiscal year, the agency has recovered $3 billion from convicted scammers.

"Health care fraud schemes commonly include billing for services that were not provided or were not medically necessary, purposely billing for a higher level of service than what was provided, misreporting costs or other data to increase payments, paying kickbacks, and/or stealing providers' or beneficiaries' identities," Levinson told a congressional committee in September.

A key part of this new effort relies on Medicare beneficiaries to report possible fraud to the Medicare (1-800-633-4227) or Health and Human Services (1-800-447-8477) hotlines, says Peter Ashkenaz, a CMS spokesman.

Under the new rules, calls from Medicare enrollees about fraud can be
considered "credible allegations" so that the government can respond quickly and stop paying a health care provider or supplier suspected of billing for services the patient didn't receive.

"We were never able to suspend payment before," says Ashkenaz.

Other new rules expand what the government can do to find and stop fraud by giving officials the power to:

  • Step up screening of clinics, doctors offices and health care companies that participate in these programs.

  • Target areas of the country — such as Miami, the acknowledged capital of Medicare fraud — and types of suppliers that have a history of fraud — home care agencies and medical device suppliers — by requiring fingerprinting, criminal background checks and unannounced office visits.

  • Impose a six-month moratorium on accepting new Medicare providers and suppliers who offer a service or operate in a location where fraudulent activity is rampant.

  • Require all state Medicaid programs and Medicare to stop doing business with a provider or supplier who is dropped from any one of the programs.

  • Impose stronger penalties for this kind of fraud.


The new rules will ensure that only qualified medical suppliers will be able to participate in federal health programs, Health and Human Services Secretary Kathleen Sebelius said at a recent Medicare fraud meeting in Los Angeles.

"The days when you could just hang a shingle out over a desk and start submitting claims are over," she said. "No more power-driven wheelchairs for marathon runners."

Susan Jaffe of Washington, D.C., covers health and aging issues and writes the Bulletin’s weekly column, Health Care Reform Explained: Your Questions Answered.

Learn how to protect yourself from health care fraud. Read

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