What Are Fraud, Waste, and Abuse in Medicaid and Medicare?

Last updated: August 2022

Medicaid and Medicare are two separate government-run programs in the United States. They provide insurance coverage for people who meet specific criteria.

Any form of fraud, waste, and abuse of these resources can impact anyone who uses the healthcare system. Fraud, waste, and abuse can redirect valuable healthcare resources. This results in higher co-payments, premiums, and expenses. Misuse of these resources may affect the quality of care you receive. It also costs taxpayers billions of dollars per year.1

Fraud, waste, and abuse defined

First, it is important to understand what fraud, waste, and abuse actually are. Below are some simple definitions:1

  • Fraud – Fraud is making false statements or hiding certain pieces of information on purpose.
  • Waste – Waste is being careless about managing Medicaid and Medicare resources.
  • Abuse – Abuse is the excessive use of a resource.

Medicaid fraud, waste, and abuse

Medicaid is healthcare insurance for people who have low incomes. It is a large and complex system. The policies vary from state to state. Expenses are usually covered. A small co-payment is sometimes required.

Examples of Medicaid fraud and abuse are when a doctor deliberately prescribes unnecessary medicine or intentionally bills for a service that was not provided. Medicaid waste involves overusing resources or making incorrect or duplicate payments. In 2019, the Government Accountability Office reported more than 57 million dollars in incorrect payments.2

Medicare fraud, waste, and abuse

Regardless of their income, people over the age of 65 qualify for Medicare. Medicare also provides coverage for people with disabilities. People covered by Medicare usually have to pay a small monthly premium. The policies are the same across the country.

Medicare fraud can occur at small clinics, private practices, or large hospitals. An example is deliberately billing for services that the patient did not actually receive. Another example is requesting payment from Medicare for appointments patients have canceled.3,4

Medicare waste occurs when a doctor orders excessive or unnecessary tests or prescribes more medicine than needed to treat a condition. Examples of Medicare abuse include billing for unnecessary services, charging too much for services or supplies, or misusing clinical codes.3,4

Sometimes, a person qualifies for both Medicaid and Medicare. Fraud, waste, and abuse can occur in these situations as well.

Reporting fraud, waste, and abuse

Committing Medicare fraud has serious consequences. It can lead to legal action. Participating in these activities can also cause doctors to lose their licenses.5

As a healthcare consumer, patient, and taxpayer, you can help fight the misuse of Medicaid and Medicare. One way is by carefully reviewing any "explanation of benefits" documents you receive. If there is a service listed that was not performed, you may want to look into it. Then, consider reporting it to the Office of Inspector General's Hotline or calling 1-800-HHS-TIPS (1-800-447-8477).5

If you have questions about Medicare and Medicare fraud, waste, and abuse, search our forums.

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