Medicaid Fraud, Waste, and Abuse

When opponents of Medicaid (or any government program) begin to argue against the program, a recurring theme is ‘waste, fraud, and abuse’. You’ll hear those terms, even the whole phrase, repeated ad nauseum…yet Medicaid is consistently shown to be better-managed and more efficient at combating abuses than any other governmental program. One of the reasons is that Medicaid takes abuses, especially fraud, very seriously.

Waste is waste. Any government program (and honestly, any private corporation as well) is likely to benefit from increased attention on the best usage of its resources. The goal is to provide health care for people who need it, and doing it as efficiently as possible means more people get helped and more services are available.

Abuse is more vague than the other categories. In fact, we can’t think of a possible abuse that isn’t either fraud or waste (if you come up with one, email us or leave a comment!). A person working in the Medicaid system who happens to be abusive does not necessarily represent a particular failing of the Medicaid program — any more than a rude blackjack dealer equals “Casinos Abuse”. So when you hear someone use the phrase “waste, fraud, and abuse”, you know that they’re probably just being redundant, and likely promoting a specific political agenda.

Fraud is much more concrete. There’s a difference between provider fraud and recipient fraud. Recipient fraud is basically misrepresenting oneself or one’s situation in order to access Medicaid services. Provider fraud actually takes advantage of both the patient and the government for the provider’s profit.

Examples of provider fraud include:

  • “Phantom Billing” for services not performed, or twice for the same service
  • “Upcoding” — a more expensive service is billed than was actually performed
  • “Unbundling” — billing for multiple services when only one should appear
  • Billing for brand-name prescriptions but giving generic drugs instead
  • Bribery and “Kickbacks” — giving or accepting something in return for services
  • Providing unnecessary services
  • Embezzlement of funds or keeping false cost reports

MFCU (Medicaid Fraud Control Units) investigate and prosecute providers that defraud Medicaid, and also handle complaints of abuse or neglect within nursing homes (including misappropriation of patients’ funds). The Units also investigate fraud in the Medicaid administration itself.

If you know or suspect Medicaid “fraud, waste and abuse”:

  • Contact Your State Directly – As the individual states handle the day-to-day Medicaid business, you should report any fraud, waste, or abuse to the Program Integrity Contact at your State’s Medicaid agency (which often called simply ‘the State Medicaid Agency’). See our “Contact Numbers” or “Medicaid by State” pages for more info.
  • Call the OIG National Fraud Hotline – you may also report suspected fraud to the OIG (the Office of the Inspector General) National Fraud Hotline (1-800-HHS-TIPS (1-800-447-8477)). The hotline will handle calls about Medicaid (and Medicare), but may be less direct than calling the  State contact.

Information that will be useful to the investigators includes:

Medicaid client’s name and card number

The doctor, hospital, or other health care provider involved

Date of service

The amount that Medicaid paid (or approved)