What to Do About Medicaid Fraud

In this article...
  • Medicaid fraud is a problem that drains funds and makes states’ low-income health systems less efficient. Find out how to detect and report Medicaid fraud.
A woman's hand holding a pen points out an item in a binder

Medicaid is the federal-state health insurance program that provides basic healthcare to more than 76 million financially and medically needy Americans. Each year, the program spends just short of $600 billion to help eligible beneficiaries get needed preventive care, medical treatment and elder care services, as well as mothers’ and children’s health programs.

As you might expect from such a large and well-funded program, Medicaid has issues with fraud. The federal government estimates that nearly 15% of Medicaid payments are improper, with a nearly even split between accidental overcharges and deliberate fraud. Every dollar lost through Medicaid fraud is money that can’t be spent on preventive care, senior care, children’s vaccines and medical equipment for people with disabilities.

Types of Medicaid Fraud

There are two basic types of Medicaid fraud: provider and beneficiary. Sometimes the two overlap, as when a Medicaid enrollee works with a provider to file fraudulent charges, but these two major categories describe most of the known fraudulent activity.

Provider Fraud

Medicaid programs only disburse payments to practitioners and organizations that have enrolled as authorized Medicaid providers. This is usually a laborious process with multiple safety checks in place, but the sheer volume of payment requests each month make effective policing of every claim difficult or impossible. Thus, Medicaid depends on its authorized network of providers to follow the rules and report suspicious activity they observe. Typical provider-based Medicaid fraud includes:

  • Fictitious charges for patients who don’t exist, services that weren’t provided and supplies or equipment that have not been used. At the low end, this type of fraud may include adding charges to Medicaid-covered visits that aren’t justified, such as bogus consultation fees and charges for tests that were never run. At the high end, extreme forms of this Medicaid fraud could involve billing for Medicaid beneficiaries who have not been seen, or for equipment that was never distributed. A provider might also unnecessarily inflate a bill by ordering tests that aren’t necessary or tacking extra miles onto a medical transport.

  • Illegally billing Medicaid participants for services, in addition to submitting a regular Medicaid invoice.

Providers may also work together to refer Medicaid enrollees to each other unnecessarily, thus increasing the time they can bill the program for. Other forms of collusion could include a doctor authorizing "medically necessary” transportation with a partner company, which he either owns or splits profits with. Because these forms of Medicaid fraud depend on providers’ superior knowledge of medicine and healthcare services, they can be difficult to detect.

Beneficiary Fraud

Medicaid beneficiaries can also commit fraud. One common type of beneficiary-based Medicaid fraud is the sharing of benefits with unauthorized people. In this scam, a person who is either barred from receiving Medicaid benefits, or who is ineligible for whatever reason, uses a legitimate beneficiary’s Medicaid card to obtain services. Aside from being expensive and illegal, this is potentially dangerous, as it creates a fictitious record of a beneficiary’s prior health history that might mislead a future doctor into the wrong diagnosis or treatments. Other common forms of beneficiary fraud include:

  • Staging false illnesses or injuries in order to get free transportation, medical equipment or prescription drugs at Medicaid expense.

  • Using multiple cards to get around share of cost or coverage limits

  • Selling benefits to non-enrollees for cash or food stamps

  • Using stolen identity documents to obtain benefits as an illegal alien, a person barred from public benefits because of past fraudulent activity or other person who is not normally eligible for aid.

  • Fraudulently applying for caregiver benefits in order to pay program funds to a friend or family member who is listed as a caregiver.

While personal acquaintances may be employed as caregivers under in-home care programs, program participants must have a genuine medical need for such caregiver assistance before being approved for benefits.

Signs of Medicaid Fraud

Some forms of Medicaid fraud can be hard to detect, while others are obvious to people who know what to look for. Common signs you are the victim of Medicaid fraud include:

  • Receiving a bill from a provider for services normally covered by Medicaid.

  • Offers of extra medical procedures, tests or drugs from a provider.

  • Requests to borrow your card, or a benefits ID card going missing while another person uses it.

  • Calls, emails or other communications from healthcare providers or medical suppliers you haven’t contacted, confirming your appointment or telling you your medical equipment is ready to pick up.

  • Erroneous medical history in your file, such as a doctor asking you about a condition you were never diagnosed with, or an injury you never experienced; this could be a sign someone is posing as you to obtain benefits.

If you suspect you have been or might become the victim of Medicaid fraud, it's important to report your suspicions as early as possible. If allowed to continue, fraud on your account could drain your benefits, cost you money, and cause you to incur penalties, such as a loss of benefits.

Ways to Report Medicaid Fraud

You can report fraud or suspicious activity by speaking with your Medicaid worker or case manager right away. You can also report suspected Medicaid fraud to your state’s human services authority, or nationally at the Office of the Inspector General online. You can also call 1-800-HHS-TIPS. (1-800-447-8477) to report your suspicions by phone, or by fax at 1-800-223-8164, with a maximum of 10 pages. The mailing address to write to is:

Department of Health and Human Services

Office of Inspector General


P.O. Box 23489

Washington, D.C. 20026

You can report potential fraud anonymously if you wish, though it is helpful if you can provide supporting documentation and your contact information for a follow-up interview by Medicaid fraud investigators. By promptly reporting potentially fraudulent activity, you can help ensure that the law is followed, losses to the program are kept down and benefits are more easily available to everyone who needs and is qualified to get them.