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What is Medicare Part B Fraud?

What is Medicare Part B Fraud?

A wide array of behaviors fall under the Medicare Part B fraud, waste and abuse (FWA) umbrella but they all have the same goal: personal gain.

In September 2019, the Department of Justice charged 35 people in a Medicare Part B fraud scheme that cost taxpayers $2.1 billion. Multiple telemedicine companies and cancer genetic testing labs offered kickbacks for referrals. Hundreds of thousands of beneficiaries were affected by the scheme, receiving unnecessary tests or nothing at all.

This is just one example of the wide array of behaviors that fall under the Medicare Part B fraud, waste and abuse (FWA) umbrella. Schemes vary, but they all have the same goal: personal gain.

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What is Medicare Part B?

Medicare Part B, the medical insurance aspect of the plan, covers two main types of medical services for beneficiaries.

The first category includes "medically necessary services" which the U.S. Centers for Medicare & Medicaid Services (CMS) defines as "services or supplies that are needed to diagnose or treat your medical condition and that meet accepted standards of medical practice." Examples include doctor's visits, diabetes testing supplies, crutches and X-rays.

Part B also covers preventive services meant to prevent health issues or detect them at an early stage. This category includes services such as flu vaccines and some cancer screenings. Medicare coverage varies by state, plan and service.

CMS contracts out the medical services and supplies they provide to plan sponsors. Plan sponsors are private companies including insurance providers, unions and employers.

RELATED: What is Medicare Part D Fraud?

What is Medicare Part B Fraud?

Medicare Part B fraud is "intentionally submitting false information to the Government or a Government contractor to get money or a benefit." Below are examples of Medicare Part B fraud, waste and abuse.


  • Medical identity theft: A person steals a beneficiary's personally identifiable information (PII), such as name and Medicare card number, in order to receive services covered by Medicare Part B. This could be committed by a Medicare beneficiary whose plan doesn't cover their desired services or someone not covered by Medicare at all. Fraudsters also steal PII to obtain drugs and equipment that they can sell for profit.
  • Receiving extra services: A beneficiary receives Medicare benefits that they aren't eligible for. They achieve this "by means of fraud or deception, or by not correctly reporting assets, income or other financial information."

Doctors, Medical Service Providers and Plan Sponsors

  • Billing for services not rendered: A provider bills for a service they didn't perform or supplies they didn't provide (phantom billing) or provides a service but bills for a more expensive service (upcoding).
  • Unnecessary services: A doctor performs unnecessary tests, orders unnecessary medical supplies or gives unnecessary referrals (ping ponging) so they can submit more Medicare claims.
  • Billing for missed appointments: A doctor bills Medicare Part B even though the beneficiary did not show up for their appointment.
  • Unbundling: A provider charges separately for services or supplies that usually come as a bundle.
  • Billing for services not covered: A provider bills Medicare for services or supplies that the beneficiary isn't entitled to under their plan.
  • Paid referrals: A doctor pays another doctor to refer patients to them.
  • Altered documentation: A provider changes information on claims forms or beneficiaries' medical records in order to receive a higher payment from Medicare Part B.

Watch this webinar to learn about emerging healthcare fraud schemes, their effects and how to detect them.

Medicare Part B Waste and Abuse

Medicare Part B FWA is responsible for billions of dollars in losses. While fraud is knowingly cheating the Medicare program out of money, waste and abuse don't always involve that same knowledge and malicious intent.

Waste, which the OIG defines as "misuse of resources," results in unnecessary Medicare expenditures. For example, a doctor might order excessive lab tests or schedule more visits with a patient than are necessary. Even if they don't hope to make a profit from these actions, they waste resources that could be used on other beneficiaries.

Abuse of Medicare Part B is when a provider commits a fraudulent act unknowingly. For instance, a doctor could absentmindedly write the wrong code for a service on their Medicare claim.

Regardless of whether the person tried or wanted to defraud the government, Medicare Part B fraud, waste and abuse take a heavy toll on the US medical system and cost taxpayers billions of dollars every year.

RELATED: What is Medicare Part A Fraud?