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News and investigations of waste, fraud, and abuse in the Medicare program have made waves in the past few weeks. Recently, the Department of Justice uncovered a massive $375 million fraud scheme committed by several providers of Medicare-covered home health care services in Texas. Such an egregious case is indeed shocking and offensive, and federal authorities should be commended for cracking down on such blatant theft of taxpayer dollars. 

It is critical, however, that efforts to weed out such abuse do not undermine access to legitimate, medically necessary services. A careful evaluation of the needs of individual patients remains imperative and should guide any assessment of the claims and certifications of those who provide and supply Medicare-covered services and items.  The Center for Medicare Advocacy hears of far too many beneficiaries who are denied necessary Medicare-covered care on the grounds that their conditions will not improve.  Providers often tell beneficiaries that they will not provide services and bill Medicarefor fear that they will be accused of fraud. 

Medicare and Medicaid Fraud: Enforcement Tools Exist

Fraud certainly is an issue.  The federal government estimates that improper payments under Medicare and Medicaid totaled $70.4 billion in 2010.  Approximately $34.3 billion comes from traditional Medicare; $22.5 billion comes from Medicaid; and $13.6 billion comes from Medicare Advantage.[1] However, new resources and tools in the Affordable Care Act – the health care reform law – ensure that the appropriate authorities are well-equipped to fight such cases.

The Affordable Care Act (ACA) includes a number of features that enhance the federal oversight function with respect to Medicare and Medicaid.[2] Moreover, the  Secretary of Health and Human Services, who is responsible for the administration of the Medicare, Medicaid, and the Children's Health Insurance Program (CHIP), must share and match data in the systems of records maintained by the Social Security Administration (SSA), the Veterans Administration (VA), the Department of Defense (DOD), and the Indian Health Service (IHS).[3] In addition, the ACA continues the refinement and extension of the competitive bidding and certification program for providers of durable medical equipment, prosthetics, orthotics, and supplies (DEMPOS).[4]

More Tools in the Affordable Care Act

The ACA increases screening requirements for providers that want to participate in Medicare, Medicaid, and CHIP and requires enhanced penalties for violations; establishes and facilitates data sharing among various health programs; imposes new requirements on claims; expands the authority of the Recovery Audit Contractor (RAC) and appropriates additional funding for its efforts to combat fraud.[5]  The RAC's authority includes requiring license checks, criminal background checks, fingerprinting, unscheduled and unannounced site visits, and data base check as part of its enhanced approached to combating fraud, waste, and abuse.[6]


The ACA requires that a medical provider or supplier must disclose any current or previous affiliation with a provider of medical or other items or services or a supplier that has uncollected debt, has been or is subject to a payment suspension under a federal health care program, or has been excluded from participating in Medicare, Medicaid, or CHIP.[7] Medical providers or suppliers must place their NPI on all applications to enroll in Medicare, Medicaid, or CHIP and on all claims for payment submitted to Medicare, Medicaid, or CHIP.[8]  Moreover, the Secretary may suspend Medicare and Medicaid payments pending investigation of credible allegations of fraud.[9] In addition, the Secretary may impose an administrative penalty if a Medicare beneficiary or a CHIP or Medicaid recipient knowingly participates in a health care fraud scheme.[10]

Other tools granted the Secretary through the ACA include the imposition of a temporary moratorium on the enrollment of new providers and suppliers of services as a means of combating fraud, waste, or abuse.[11]  The ACA also establishes a process for making available to states within 30 days of termination the name and national provider identifier (NPI) of Medicare providers who were terminated from participating in Medicare.[12]

The ACA requires nursing facilities and skilled nursing facilities to report ownership and control relationships.[13] The rationale is that information about ownership and control relationships will facilitate oversight, and enforcement efforts.  Further, that disclosure of facilities' relationships is critical to monitoring and oversight of quality of care and related health issues.

Other ACA tools include a face-to-face encounter with a physician or other recognized prescriber within 90 days of starting Medicare-covered home health care or within 30 days after Medicare-covered home health care has commenced.[14] Similarly, a face-to-face encounter with a physician is required before durable medical equipment (DME) can be prescribed.[15]  A face-to-face encounter is also mandated for hospice care to determine continuing eligibility.[16]  For Medicare hospice coverage, the encounter must occur prior to the 180-day recertification, and prior to each subsequent recertification.[17]

The Secretary of Health and Human Services has authority to apply the face-to-face encounter requirement to other areas of Medicare if she deems the requirement would reduce waste, fraud and abuse.[18] She also has the authority to apply the face-to-face encounter requirement to Medicaid services.[19]

Only Medicare-enrolled physicians or other "eligible professionals" may prescribe DME.[20] The Secretary has the authority to extend this requirement to other items and services related to DME and home health services.[21] The Secretary is using its Provider, Enrollment, Chain, and Ownership System (PECOS) as the vehicle through which physicians and eligible professionals must enroll.[22]   An eligible professional is defined in the ACA as one who has enrolled under Medicare's Quality Reporting System for providers.[23]  Eligible professionals include physicians, certified nurse anesthetists, certified midwives, clinical social workers, clinical psychologists and physical or occupational therapists or qualified speech-language pathologists.[24]


Waste, fraud, and abuse are a serious concern in efforts to maintain the federal programs Americans and their families depend on for care, and the impact of these deceitful activities on the public treasury is undeniable.  As set out in the ACA, there are extensive tools for ensuring responsible stewardship of Medicare.  At the same time, however, policy makers must ensure that efforts to eliminate fraud and abuse do not prevent older and disabled Americans from accessing the care and services they need, and that are legitimately covered by Medicare.  

[1] See "High-Error Programs" at:; see also the Center's Weekly Alert, abuse. For a discussion of improper payments and how the federal government defines them, see: There is generally a lag in the computation of improper payment data.  2011 data is not yet available.
[2] The Affordable Care Act (ACA), 6402 (Enhanced Medicare and Medicaid Program Integrity Provisions), §6408 (Enhanced Penalties), Pub. Law 111-148 (March 23, 2010).
[3] See generally §§6401-6411, 6501-6508 of the ACA.
[4] See ACA, §6410.
[5] See ACA, §6401(a)(2)(B)(Medicare), §6401(b)(1)(B)(Medicaid); see also §6411(expansion of the Recovery Audit Contractor (RAC) Program).
[6] See ACA, §6401.
[7] See ACA, §6401(a)(5)(Medicare); §6401(b)(7)(Medicaid).
[8] Ibid.
[9] Ibid.
[10] Ibid.
[11]  See ACA, §6401(a)(7)(Medicare, Medicaid, and CHIP).
[12] See ACA, §6401(b)(2), NPI website:
[13] See ACA, §6101.
[14] See ACA, §6407(a).
[15] See ACA, §6407(b).
[16] See ACA, §3132.
[17] Ibid.
[18] See ACA, §6407(c).
[19] See ACA, §6407(d).
[20] See ACA, §6405(a)-(d). 
[21] See ACA, §6405(c).
[22] See ACA, §6405; see also
[23] See ACA,§6405(a) and its reference to §1848(k)(3)(B) of the Social Security Act, 42 U.S.C. §1395w-4 (Payment Based on Fee Schedule).  42 U.S.C. §1395w-4(k)(3(B) (Covered Professional Services and Eligible Professionals Defined) describes an "eligible professional" as a physician, a practitioner (including a certified nurse anesthetist, a certified midwife, a clinical social worker, and a clinical psychologist (see 42 U.S.C. §1395u)), and a physical or occupational therapist or a qualified speech-language pathologist.

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