Medicaid Fraud and Penalties

According to federal law, Medicaid fraud occurs when an individual or entity commits actions that result in unnecessary costs to the program. Both beneficiaries and providers may commit Medicaid fraud and abuse.

Medicaid recipients commit fraud when they provide false information on an application or using Medicaid benefits illegally. Falsely stating their income could cause the Medicaid program to pay for services for which the individual is not qualified to receive.

Medical providers may also commit fraud by devising schemes to collect money they have not earned. Read further to learn about the penalties for lying on Medicaid application forms and other documents, as well as the impact that abuse has on the program.

What is Medicaid fraud?

Medicaid fraud refers to actions that knowingly, or unknowingly, result in unnecessary costs to the program. Both beneficiaries and service providers may commit fraud on Medicaid through a variety of methods. Regardless of who commits the action, fraud and abuse are illegal, and punishable by civil and criminal laws.

Medicaid is a needs-based program, reliant upon income. As such, it is against the law for an individual to provide false information on an application to qualify for the program. When an individual receives benefits under false information, the federal government wastes resources on those who could otherwise afford a regular health insurance plan. When the government spends additional money on those who aren’t qualified, it takes away funding for those who do qualify. Although fraud and abuse by beneficiaries are common, there are cases in which a provider commits Medicaid fraud and abuse against the program.

Types of Medicaid Fraud Cases

A beneficiary may be convicted on lying on a Medicaid application if he or she knowingly provides false information to qualify. For example, if an individual does not report all of his or her income when applying, he or she may receive benefits for which they are not entitled; in which case he or she may be charged with Medicaid fraud.

Medicaid is considered a last resort for payment when submitting a patient’s bills. The beneficiary’s primary insurance must always pay their covered portion of the bill before the program pays the remaining balance. Failing to report insurance information results in the program paying for services that should be paid for by another insurance plan. As such, Medicaid fraud cases apply to anyone who does not provide information about other insurance plans that are currently enacted.

When awarding benefits, Medicaid selects beneficiaries based on income and other qualifying criteria. Doing so ensures that the program pays for care rendered to those who have been approved. Given that, program participants may not allow another individual to use their Medicaid cards to receive health care. This type of Medicaid fraud and abuse could result in false medical information in the beneficiary’s medical file. It could also lead to errors in his or her care.

Provider Fraud

Providers may also abuse Medicaid in a variety of ways. When medical professionals submit a claim, they must provide accurate information for the Medicaid program to send the money to the correct place. Professionals may attempt to falsify their credentials to receive money that they are not authorized to receive.

Related Article: How to Find a Medicaid Provider

Also, providers commit Medicaid fraud and abuse when they bill for services they have not performed. This type of fraud is an effort to get money from the program that the provider has not earned. This type of fraud also occurs when a professional submits claims for services that are not medically necessary.

Penalties for Committing Medicaid Fraud

The Federal government imposes fines and penalties for those who commit Medicaid fraud and abuse. The penalties are in place to discourage Medicaid fraud, and to recoup some of the money lost. The laws regulating the crime and the penalties the government may impose for those who abuse the program include:

Federal False Claims Act (FCA): Under FCA, it is a federal crime to knowingly provide false information when submitting a claim. Providers accused of committing fraud for Medicaid may face penalties of up to three times the amount of damages, plus up to $21,916 per false claim. Providers may also face imprisonment for filing false claims.

Criminal Health Care Fraud Statute: Providers who knowingly and willfully execute schemes to defraud the Medicaid program may face penalties under the Criminal Health Care Fraud Statute. Common schemes include billing unnecessary services to acquire medical equipment or overcharging for services to retain the overage of the amount paid.

Anti-Kickback Statute (AKS): Medical professionals may not offer incentives for referrals for services reimbursable by Medicaid; nor may they receive remuneration or additional funds for such referrals. Those who do face payback of the amount collected, plus up the $74,792 per kickback.

Physician Self-Referral Law (Stark Law): Physicians may not make Medicaid referrals to entities in which the provider has an ownership interest or a compensation arrangement. If, after a Medicaid fraud investigation a provider is convicted of this crime, he or she faces penalties and fines. Penalties for violating this law include fines up to $24,253 for each service, plus repayment of claims.

How to Report Medicaid Fraud

Anyone may report Medicaid fraud using one of several methods. First, the interested party may contact the Office of Inspector General U.S. Department of Health & Human Services (OIG). Individuals may call the Medicaid fraud hotline at 1-800-447-8477. They may also do so by mailing their complaint to the OIG at the following address:

U.S. Department of Health and Human Services
Office of Inspector General
P.O. Box 23489
Washington, DC  20026

When mailing information, individuals should not include medical devices, used personal care products, medical waste or clinical specimens. Information submitted to the OIG becomes part of the complaint, and is not returned.

When reporting incidents, the individual must include the relevant information for the OIG to investigate the matter. Specifically, informants must provide the following details:

  • Name, address and contact phone number for the informant
  • Type of Medicaid fraud and abuse being reported
  • The name of the person or business in question
  • An explanation of the issue

Anyone who wishes to report Medicaid fraud may remain anonymous. However, it may make a thorough investigation more difficult if the OIG cannot reach the person making the complaint for verification.

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