Medicare abuse is when healthcare providers bill Medicare in ways that are improper but don’t necessarily involve deliberate deception. It includes practices like charging for services that aren’t medically necessary, billing for more expensive treatments than what was actually provided, or consistently using incorrect billing codes. The line between abuse and outright fraud often comes down to intent, but both cost the Medicare program billions of dollars each year.
How Abuse Differs From Fraud
Fraud requires intentional deception: a provider knowingly submits false claims to get paid for something they didn’t do or didn’t provide. Abuse, on the other hand, involves practices that are inconsistent with accepted medical or billing standards but may not stem from a conscious plan to cheat the system. A doctor who routinely bills for 60-minute appointments when visits only last 15 minutes is engaging in abuse. If that same doctor creates fake patient records for people who never visited the office, that’s fraud.
In practice, the distinction matters less than you might think. Federal law doesn’t require proof that a provider specifically intended to defraud Medicare. Under the False Claims Act, submitting claims that a provider “knows or should know” are false is enough. That includes acting with reckless disregard for whether the billing is accurate. So even abuse that starts as careless billing can carry serious legal consequences. Fines can reach up to three times the program’s loss plus $11,000 per individual claim filed, and since every single service billed counts as a separate claim, penalties accumulate fast.
Common Forms of Medicare Abuse
The most widespread type of abuse is upcoding: submitting billing codes for more severe or expensive diagnoses and procedures than what was actually diagnosed or performed. A patient who comes in with a cough and fever might be coded as having pneumonia without ever being tested for it. The Tenet Healthcare Corporation paid $900 million to settle charges that it systematically assigned inflated diagnosis codes to increase reimbursement from Medicare and Medicaid.
Emergency departments have been a particular hotspot. Between 2006 and 2012, the percentage of elderly Medicare patients billed at the highest, most expensive level for emergency visits rose from 45.8% to 57.8%. At Baylor Medical Center, eight out of ten Medicare patients were billed at the two most expensive treatment levels. That kind of pattern strongly suggests upcoding rather than a genuine increase in patient severity.
Other common forms include:
- Unbundling: Billing separately for services that should be billed together at a lower combined rate. Duke University settled for $1 million over unbundled cardiac and anesthesia services.
- Billing for longer visits than provided: One psychiatrist was fined $400,000 and permanently banned from Medicare after billing for 30- to 60-minute sessions that actually lasted 15 minutes.
- Billing established patients as new patients: Medicare pays higher rates for new patient evaluations, so some providers bill returning patients under new-patient codes.
- Inflating risk scores: In anesthesia, providers increasingly coded patients as high-risk to receive larger payments. The percentage of claims using the highest risk score jumped from 2.9% in 2005 to 13.2% in 2013.
- Billing for medically unnecessary services: Ordering tests, procedures, or prescriptions that a patient doesn’t need, purely to generate revenue.
The Laws That Govern It
Five federal statutes form the backbone of Medicare abuse enforcement. The False Claims Act is the most commonly used tool, covering any false or fraudulent billing submitted to Medicare or Medicaid. It also includes a whistleblower provision that allows private individuals to file lawsuits on behalf of the government and collect a percentage of whatever money is recovered.
The Anti-Kickback Statute makes it a criminal offense to pay or receive anything of value in exchange for patient referrals involving federally funded healthcare. The Stark Law (formally the Physician Self-Referral Law) prohibits doctors from referring Medicare patients to facilities where they or their immediate family members have a financial stake, unless a specific exception applies. Violations of either law can lead to exclusion from all federal healthcare programs.
The Civil Monetary Penalties Law allows the government to impose fines without going through a full criminal prosecution. Penalties range from $2,000 per improper service up to $100,000 for certain reporting violations, with caps reaching $1 million for the most serious failures. On top of fines, the government can impose assessments of up to three times the amount improperly claimed and can exclude providers from Medicare entirely, sometimes with no maximum time limit.
How Much It Costs
Medicare’s improper payment figures give a sense of scale, though not every improper payment is abuse. In fiscal year 2025, Medicare Fee-for-Service had an estimated improper payment rate of 6.55%, totaling $28.83 billion. Medicare Advantage (Part C) added another $23.67 billion at a 6.09% rate, and Part D prescription drug plans contributed $4.23 billion. Combined, that’s over $56 billion in payments that didn’t meet program requirements in a single year.
CMS is careful to note that improper payments aren’t all attributable to fraud or abuse. Some result from missing documentation or honest coding errors. But the sheer volume explains why enforcement agencies prioritize this area. Current federal oversight efforts focus on Medicare Advantage risk-adjustment accuracy, home health agency compliance, chronic care management billing, and compounded drugs, all areas where patterns of abuse have been documented.
How to Spot It on Your Statements
If you’re a Medicare beneficiary, your first line of defense is your Medicare Summary Notice (MSN) or Explanation of Benefits (EOB). These documents list every service billed to Medicare on your behalf. The Senior Medicare Patrol program recommends checking for these red flags:
- Charges for services you never received
- The same service or supply billed twice
- Services not ordered by your doctor
- Services that don’t seem medically necessary based on your condition
- Services denied by Medicare that you’re still being billed for
Keep a personal record of your appointments, including dates, what was done, and who provided the care. Comparing your notes against your MSN makes it much easier to catch discrepancies.
How to Report Suspected Abuse
If something on your statement looks wrong, call 1-800-MEDICARE (1-800-633-4227) or file a report online through Medicare.gov. If you’re enrolled in a Medicare Advantage Plan or a Medicare drug plan, you can also contact the Investigations Medicare Drug Integrity Contractor (I-MEDIC) at 1-877-772-3379. Reports can be made anonymously, and the information goes to investigators who determine whether a pattern of abuse exists and whether enforcement action is warranted.