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James Sullivan
 

Medicare Fraud Threatens the Program’s Financial Viability and Your Clients’ Well-Being

Medicare fraud and abuse may cost the system as much as $51 billion per year. Increasingly, medical identity theft goes hand in hand with Medicare fraud and may directly impact your clients.

December 13, 2010
by James Sullivan, CPA

Medicare fraud is more than just the submission of millions of dollars of false claims to Medicare by organized crime. It also includes medical identity theft and the submission of false claims on behalf of participants. False claims submitted on behalf of clients can impact legitimate future claims they may submit.

Reader Note:If this topic is of interest, you might consider the Retirement/Elder Planning track at the upcoming AICPA Advanced PFP Conference Jan. 9-12 in Las Vegas at the Bellagio. Early bird registration is still available!

For example, a legitimate claim submitted by a participant to Medicare for a wheelchair was denied. Why? His Medicare number had been stolen two years earlier. A false claim for a wheelchair submitted on his behalf had been paid at that time by Medicare. Under the rules, only one wheelchair is provided a participant every five years. He was not entitled to a new wheelchair for another three years. It took time and effort to prove to Medicare that the earlier claim was fraudulent. While the participant eventually received his wheelchair he was inconvenienced for several months and Medicare ended up paying two claims.

CPA advisors must educate themselves and their clients about Medicare fraud. Clients must learn to protect themselves from fraud as well as detect and report fraud when it does occur.

Fraud and Abuse: A Growing Problem

It is estimated that Medicare fraud and abuse costs the system as much as $51 billion dollars annually (according to the Kaiser Foundation, total Medicare spending in 2010 will amount to approximately $509 billion).

Fraud is defined as knowingly and willfully executing a scheme to defraud the Medicare program and receive inappropriate payment. Examples include:

  • Billing for services or supplies not provided (as in the wheelchair example above);
  • Billing twice for the same service or item;
  • Altering claim forms to obtain a higher payment amount (for example, a podiatrist billing routine foot care as the higher paying foot surgery and misrepresenting the diagnoses on the claim form).
  • In 2010 alone several high profile arrests took place of organized groups accused of defrauding Medicare. In October, a large healthcare provider located in Florida was charged with defrauding Medicare of $200 million. Earlier that same month a nationwide crime syndicate was accused of stealing the identities of doctors and patients. They used this information to bill Medicare for $35 million of fraudulent claims through nonexistent healthcare clinics.
  • Medicare abuse is defined as incidents or practices of providers that are not consistent with accepted medical, business or fiscal practices. In such cases, the provider is not legally entitled to payment but has not knowingly and intentionally misrepresented the facts in order to obtain payment. Examples include:

    • Submitting duplicate claims;
    • Excessive charges;
    • Billing Medicare at a higher fee than the rate charged for non-Medicare patients (providers must charge the lesser of the amount charged non-Medicare patients or the Medicare approved amount);
    • Claims for services that are not medically necessary.
    • It is easy for abuse to slide over to outright fraud.
    • Medicare fraud does more than just undermine the financial integrity of the system; increasingly it directly impacts participants in the form of medical identity theft.

Protect Against Medicare Fraud Medical Identity Theft

According to the U.S. Office of Inspector General medical identity theft occurs when someone steals the Medicare beneficiary’s name, Social Security number or Medicare number to obtain medical care, purchase prescription drugs or submit false billings to Medicare.

Erin Weir is director of the Senior Medicare Patrol (SMP) program in Illinois. SMP is a federally funded program located in all 50 states designed to educate Medicare participants regarding fraud. The SMP program is simple teach Medicare participants how to:

  • Protect themselves from Medicare fraud;
  • Detect fraud; and
  • Report fraud or any suspicion of fraud.

Weir recommends that participants guard their Medicare numbers as carefully as they do their credit card numbers. In fact, she tells beneficiaries not to carry their Medicare cards unless going to the doctor’s office or the hospital. This is contrary to the advice previously provided to participants to carry their card with them at all times. Weir acknowledges the contradiction but states that the policy is in the process of changing due to the increasing occurrence of medical identity theft.

In an emergency, medical treatment cannot be denied because the Medicare number is not provided. The number can be provided later so that proper billing takes place.

Other ways participants can prevent medical identity theft include:

  • Never providing their Medicare number in exchange for “free” goods (such as groceries), medical equipment or healthcare services. If the product or service is truly free the number is not required.
  • Hanging up the phone if someone calls claiming to be conducting a health survey and asks the participant for his or her Medicare number.
  • Never giving their Medicare number to callers claiming to be from Medicare or Social Security. For example, as part of the Affordable Care Act of 2010 participants in the Part D (prescription drug) plan “doughnut hole” receive $250 rebate after reaching this gap in coverage. The money is deposited or mailed automatically. Yet seniors have received calls from individuals identifying themselves as being from Medicare asking for personal information (such as the senior’s bank account number and Medicare number) before the payment can be made.

Detect Medicare Fraud Checking Medicare Claims

Another way participants can protect themselves from Medicare fraud is by setting up their own account at www.medicare.gov. Once there, the participant clicks on Sign in to MyMedicare.gov located in the upper right side of the screen. If the participant does have an account they can go ahead and sign in. If not, the participant may set up an account by clicking on Create an Account located under New to MyMedicare.gov? (located on the left side of the screen).

Once signed in, the participant should check for:

  • Any medical services or equipment never received;
  • Dates for services or other charges that look unfamiliar;
  • Billing for the same service or equipment twice.

If the participant does not set up an account with MyMedicare, he or she can check their quarterly Medicare Summary Notice (MSN) for suspicious charges and double billing under Parts A and B. They should also check any Explanation of Benefits (EOB) received for suspicious charges under Part D. EOBs are not bills but statements showing prescription drug claims made during the month.

Participants are also informed of claims filed under Medicare Advantage (Part C). While there is no standard form, most plans will send a statement after paying for a service. A statement will also be issued if a claim is denied.
 
Report Medicare Fraud

In some cases, a suspicious charge may just be a simple mistake. In that case, your client may want to start by calling the provider to correct the error. If that doesn’t work or if fraud is suspected, contact the SMP in the participant’s state of residency. For contact information go to www.smpresource.org. A drop-down menu allows visitors to select his or her state of residency for contact information.

Conclusion

Medicare fraud and abuse is a threat not only to the financial solvency of the Medicare system but also to the financial well being of individual clients. In addition, the care your client receives may be compromised due to Medicare fraud and medical identity theft. You can provide an invaluable service to your clients (and their adult children) by helping educate them about this important topic.

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James Sullivan, CPA, PFS, MAS, is an investment counselor at Core Capital Solutions LLC. He has almost 25 years of experience in individual tax, investing and personal financial planning. Before joining Core Capital Solutions, Sullivan spent 20 years at Arthur Andersen LLP. He is a member of the AICPA PrimePlus/ElderCare Task Force.

* PFP Section members, including PFS credential holders will benefit from additional Medicare resources in Forefield Advisor on the AICPA’s PFP website at aicpa.org/pfp. Non-members can click here to join the section.