Medicare is a social medical system established in the United States during the nineteen-sixties. It provides affordable health care to millions of Americans each year, primarily to those who are over the age of sixty-five.

Reimbursement for medical services and equipment is provided by the Federal Government and Medicare has become a popular target among organized crime and others who defraud the service.

The exact amount of Medicare Fraud is not known, in part because it is not always detected or when it is detected, the individuals have been defrauding the government for many years.

How Much is Lost to Medicare Fraud Each Year?

The exact amount Medicare Fraud is not known. In 2010, the OMB, or Office of management and Budget, estimated that Medicare Fraud totaled around $50 Billion for that year. They estimated that total payments to Medicare that year were around $530 Billion.

However, after closer examination, some of the payments marked as fraud by the OMB were later found to be legitimate payments.

In any-case, many millions of dollars are lost to Medicare fraud each year and often when the fraud is finally detected, it can be a large sum of money, like the American Therapeutic Corporation which was allegedly responsible for over $200 million in Medicare Fraud.

Different Kinds of Medicare Fraud

One of the most common types of Medicare Fraud is the practice of billing for procedures that have not actually been preformed by the company or are unneeded. Often, this is in the form of laboratory testing, although medical procedures and even durable medical equipment is also often billed and not provided or resold later.

Often referred to as Phantom Billing, this practice can also involve marketing products incorrectly. For example, a recent Medicare Scam involved repackaging penis enlargers as tools for several medical conditions, including prostate and bladder problems, and then selling them for a significant profit.

While in some cases, the Medicare recipient has no knowledge of the scam, with the patients number being used without permission or even stolen by an unrelated party, providing kickbacks to patients is also a common practice. This type of Medicare Fraud can be harder to track, because both the business and Medicare recipient are in on the scam.

Kickbacks are also often paid to patient recruiters who find Medicare patients, or even just their information, to be used in Medicare Fraud. During the recent American Therapeutic Corporation fraud, patients, halfway house operators, doctors, and marketers were all involved in the scam.

While traditionally billing fraud for home medical equipment, medications, medical testing, and medical procedures, increasingly things like Medical Transport have become popular targets. Investors have also been known to purchase an established medical practice, with the sole intention of using the good reputation of the medical group to defraud Medicare.

It is also common for shell companies to be setup, often hiding behind multiple business registrations and fake identities. This can make identifying the real source of the Medicare fraud much more difficult.

What Makes Medicare Such a Ripe Target?

One of the biggest reasons for the explosion in Medicare fraud cases is that in the past, the government has typically reimbursed claims first and questioned them later. Rather than auditing companies right away, a good deal of reimbursements can be retrieved by the fraudster before being caught.

When this is combined with a shell company and false identity, the scammers can simply pickup shop and move to a new location, repeating the fraud for some time.

The Government Cracking Down

In addition to proposed changes in how reimbursements are provided, including keeping a much closer eye on new medical businesses, the Federal Government has introduced a special Medicare Fraud Strike Force, which is dedicated to identifying Medicare Fraud.

The Strike Force has been responsible for identifying around $3 billion in fraudulent claims over the past five years.

Medicare is a service that offers affordable health care to many of elderly Americans each year, with a similar service called Medicaid offering care for single parents and low income individuals. However, it is also a common target for those that wish to commit fraud. Some news agencies report that fraud among Medicare and Medicaid accounts for a third of their operating budget or as much as sixty billion dollars each year.

While it is possible that these figures are exaggerated by the reporting agency, the point remains that fraud among Medicare and Medicaid is a serious problem. Each month health care providers are charged with Medicare fraud and there are numerous on-going investigations.

One of the most common types of Medicare fraud is billing for services that are not preformed or unneeded. The federal government, who funds Medicare, will typically provide reimbursement for services in only a few weeks, so it is possible to bilk the government out of a good deal of money before being caught. In fact, seldom is a home health care provider caught before millions of dollars have been scammed from Medicare or Medicaid.

Medicaid fraud, which is common as well, is also an attractive target, in part because each state has its own Medicaid Office.

See the Medicaid Website Directory for each states Medicaid website portal.

The reason the number of state by state offices is an attractive target is that even though the actual funding for Medicaid usually comes from the federal government, each state has its own procedures and individual policies. This results in not only more overhead and bureaucracy, which can make it easier to slip through the cracks for an extended period of time, but also means that an agency can target the state with the least strict rules.

While often the actual Medicare patient’s account numbers who are used are completely un-aware that they are involved with a Medicare scam, this is not always the case. In many cases, health care providers and chiropractors will provide a payout or other benefit to those whose account numbers are used.

Those who are involved with Medicare scams are also often of foreign dissent, such as Zafar Mehmood, who has ties to Pakistan and was recently ordered held by federal courts while he awaits trial. However, this is not always the case and a number of well established hospitals and doctors have been involved with Medicare Fraud.

Despite these problems, Medicare and Medicaid both provide an essential service to our country, allowing those who would otherwise not be able to afford care to get the healthcare it needs. With that said, Medicare fraud is quite common and is something that federal agents fight daily. Not only does it provide assistance when obtaining durable medical equipment, such as lift chairs or wheelchairs, these services also provide quality healthcare needs to many seniors.

Those who receive Medicare and Medicaid are often quite thankful for it and even with its problems, it is an important service!

Zafar Mehmood, a 45 year old man from the Detroit area, was ordered by federal judges to be detained pending the outcome of his current Medicare Fraud Case, which alleges over $30 million in fraudulent claims.

Mehmood is charged with billing Medicare for many unneeded procedures and in many cases procedures that were never actually provided to the patient. In addition he is alleged to have laundered money through several other companies, with much of it ending up in personal accounts and some being taken to Pakistan.

In addition to fraudulent procedures, he is also accused of using kickbacks to people who recruit Medicare patients.

The Federal Judge, Mona Majzoub, decided that Mehmood not only presented a flight risk, but also might potentially try to intimidate witnesses, so ordered Mehmood be arrested awaiting the outcome of his criminal case.

Mehmood owned several home health companies, including Access Care Home Care, Inc., On Healing Home Care Inc., All State Home Care Inc., and Patient Care home Care, Inc, which all dealt with home medical equipment and home medical procedures. These, as well as several other locations were searched by Federal Agents after search warrants were issued, as well as taking control of 31 bank accounts and the suspension of Medicare Payments to sixteen different health care providers.

Mehmood, who is alleged to be the leader of the $30 million medicare fraud scheme will face trial, along with a number of other co-conspirators.