CMS Pub. 100-08, ch. 4, § 4.2.1

This section applies to UPICs, SMRCs and MACs.

The most frequent kind of fraud arises from a false statement or misrepresentation

made, or caused to be made, that is material to entitlement or payment under the

Medicare program. The violator may be a provider/supplier, a beneficiary, an employee

of a provider/supplier, or some other person or business entity, including a billing

service or a contractor employee.

Providers/suppliers have an obligation, under law, to conform to the requirements of

the Medicare program. Fraud committed against the program may be prosecuted under

various provisions of the United States Code and could result in the imposition of

restitution, fines, and, in some instances, imprisonment. In addition, a range of

administrative sanctions (such as exclusion from participation in the program) and

CMPs may be imposed when facts and circumstances warrant such action.

Fraud may take such forms as (this is not an exhaustive list):

• Incorrect reporting of diagnoses or procedures to maximize payments;

• Billing for services not furnished and/or supplies not provided. This

includes billing Medicare for appointments that the patient failed to keep;

• Billing that appears to be a deliberate application for duplicate payment for

the same services or supplies, billing both Medicare and the beneficiary for the

same service, or billing both Medicare and another insurer in an attempt to get

paid twice;

• Altering claim forms, electronic claim records, medical documentation, etc.,

to obtain a higher payment amount;

• Soliciting, offering, or receiving a kickback, bribe, or rebate (e.g., paying for

a referral of patients in exchange for the ordering of diagnostic tests and other

services or medical equipment);

• Unbundling or “exploding” charges;

• Completing Certificates of Medical Necessity for patients not personally

and professionally known by the provider;

• Participating in schemes that involve collusion between a provider and

a beneficiary, or between a supplier and a beneficiary;

• Participating in schemes that involve collusion between a provider and a

MAC employee where the claim is assigned (e.g., the provider deliberately

overbills for services, and the MAC employee then generates adjustments with

little or no awareness on the part of the beneficiary);

• Billing based on “gang visits,” (e.g., a physician visits a nursing home and

bills for 20 nursing home visits without furnishing any specific service to

individual patients);

• Misrepresenting dates and descriptions of services furnished or the identity

of the beneficiary or the individual who furnished the services;

• Billing non-covered or non-chargeable services as covered items;

• Repeatedly violating the participation agreement, assignment agreement, or

the limitation amount;

• Knowingly allowing a beneficiary to use another person's Medicare card to

obtain medical care;

• Giving false information about provider ownership; or

• Using the adjustment payment process to generate fraudulent payments.

Examples of cost report fraud include (this is not an exhaustive list):

• Incorrectly apportioning costs on cost reports;

• Including costs of non-covered services, supplies, or equipment in

allowable costs;

• Providers making arrangements with employees, independent contractors,

suppliers, and others that appear to be designed primarily to overcharge the

program through various devices (commissions, fee splitting) to siphon off

or conceal illegal profits;

• Billing Medicare for costs that were not incurred or were attributable to

non- program activities, other enterprises, or personal expenses;

• Repeatedly including unallowable cost items on a provider's cost report

for purposes of establishing a basis for appeal;

• Manipulating statistics to obtain additional payment, such as increasing

the square footage in the outpatient areas to maximize payment;

• Claiming bad debts without first genuinely attempting to collect payment;

• Making improper payments to physicians for certain hospital-based

physician arrangements;

• Paying amounts to owners or administrators that have been determined to

be excessive in prior cost report settlements;

• Reporting days improperly that result in an overpayment if not adjusted;

• Depreciating assets that have been fully depreciated or sold;

• Using depreciation methods not approved by Medicare;

• Repaying interest expense for loans that were for an offset of interest

income against the interest expense;

• Reporting program data where provider program amounts cannot be supported;

• Allocating costs improperly related to organizations that have been

determined to be improper; or

• Manipulating accounting