Medicare Beneficiaries and Taxpayers Are Getting Ripped Off, And Our Government Lets Too Many Get Away With It

Medicare Beneficiaries and Taxpayers Are Getting Ripped Off, And Our Government Lets Too Many Get Away With It

Waste, fraud, and abuse is estimated to have cost Medicare $47 billion in 2022 according to a report from the U.S Government Accountability Office. That’s an astonishing $721 for every Medicare beneficiary. Since beneficiaries pay about one-quarter of Part B costs, that means beneficiaries will spend an estimated $180 in higher Part B costs this year— slightly more than one entire month’s Part B premium — due to improper Medicare payments.

Our federal government hasn’t been good at stopping fraud, waste, or billing abuse, and Medicare budget cuts may be helping unscrupulous providers get away with it. From telemarketing calls illegally offering free Medicare - covered genetic cancer tests, to some of the nation’s largest insurers pressuring and misleading older adults about Medicare Advantage coverage, seniors are besieged by increasingly sophisticated efforts to get their money.

Medicare’s problem with waste, fraud, and abuse takes many forms, but it appears to be worsened by untargeted Congressional budget cuts. The automatic 2% budget cuts that followed the 2011 debt limit showdown wound up leaving Medicare with fewer resources to fight fraud and abuse from 2013 to 2021, according to the Fiscal Year 2021 report from the Department of Health and Human Services and the Department of Justice. The bottom line has been a significant drop in funds recovered from fraud and waste cases and returned to Medicare.

Medicare’s track record prior to the start of the automatic cuts was a return of $5 for every $1 expended in anti-fraud, waste, and abuse efforts in Fiscal Year 2012. The Fiscal Year 2021 report estimates, however, that the return on investment to fight fraud and abuse for 2019–2021 has dropped to $4 for every $1 expended.

While some attempts at fraud tend to be more obvious, such as suspicious telephone calls offering “free” services covered by Medicare, abusive or wasteful billing by providers can be more deceptive and hard to spot. Here are a few examples of how Medicare waste and abusive billing can occur:

  • Prescription drugs: Doctors often prescribe drugs that can cause serious side effects which may then require follow-up treatment or even another prescription.  Healthcare providers need to review medication lists regularly to weed out prescriptions that are ineffective or no longer required.  Doctors may prescribe pricey drugs that aren’t covered by the patient’s drug plan, but there might be equally effective, less costly drugs that can be tried.
  • When the medical practice has been bought out by another firm.  Calling it the “golden age of colonoscopies” Kaiser Health News reports that private equity firms are buying up colonoscopy and other types of specialty medical practices.  With profit as those firms’ primary objective, patients are finding they may pay much more for the same or even receive less care. Medicare covers the full cost of preventive colonoscopies without patient cost sharing, but when there is an existing condition, patients can be on the hook — often for considerably higher costs when the practice is controlled by private equity-backed investors. A shortage of experienced nurses, administrative staff, and even doctors can be a red flag. Asking a doctor for a referral to a different provider may not even be an option in some areas, where private equity companies have bought up all the practices to ensure they are the only game in town.
  • The federal system meant to stop corrupt health care business owners from bilking Medicare fails to do so. Kaiser Health News recently reported on a public list maintained by the Office of Inspector General for the U.S. Department of Health and Human Services of those it has barred from receiving any payment from Medicare and Medicaid. Even though the federal government reports excluding more than 14,000 individuals and entities since 2017, it does little to track or police the future endeavors of those it has legally banned due to fraudulent or illegal behavior. Kaiser Health News sampled 300 healthcare businesses that appeared on the Inspector General’s exclusion list and found those excluded had continued to own or operate companies that submitted false claims, received kickbacks for referrals, billed for care that was not provided and harmed patients, in some cases by stealing their medication and selling unnecessary medical devices.

TSCL supports stronger investigation and enforcement efforts to return improper payments to Medicare.


Sources: “CMS Needs to Address Risks Posed By Provider Enrollment Waivers And Flexibilities,” U.S. Government Accountability Office, December 19, 2022.

“Betting On ‘Golden Age’ Of Colonoscopies, Investors Buy Up Gastroenterology Practices, Fortune, May 31, 2022.

“The Department of Health and Human Services and The Department of Justice Health Care Fraud and Abuse Control Program, Annual Report for Fiscal Year 2021,” July 2022.