How Big is Medicare Fraud?

Whenever anyone from President Barack Obama on down talks about cutting the cost of Medicare, the discussion invariably segues to Medicare fraud.

How big a retirement planning problem is Medicare fraud?

In a May 2012 report, FBI Special Agent David Welker said, “The United States spends more than $2.5 trillion on health care annually, and rough estimates indicate that anywhere from 3% to 10% of all health care expenditures are attributed to fraud."

If you do Welker's math, the annual cost of fraud ranges from $75 billion to $250 billion. That's a lot of our hard-earned retirement money.

The Government Accounting Office doesn't think this estimate is far wrong. It reported that in 2011, Medicare and Medicaid paid an annual $65 billion in "improper payments." It defines "improper" to include payments that are made in error -- not fraud, but wrong just the same.

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Fixing the Government's Medicare Mess

Steps to Stopping Medicare Fraud

The government is working on the problem. In 2012, the Department of Justice and the FBI together recovered $4.2 billion in fraudulent payments. They opened 1,311 new criminal health care fraud investigations involving 2,148 defendants. Once these crooks are convicted, the Affordable Care Act authorizes more jail time. Medicare scammers will receive 20% to 50% longer sentences for crimes that involve more than $1 million in losses.

What can you do to help? Last year, the government funded Senior Medicare Patrols in every state. These are volunteers who are trained to identify and report health care fraud. If you would like to be one of them, go to SMPResource.org, and contact the office closest to you.

If you can't be a volunteer, at least be aware that fraud happens everywhere. Examine your bills, and question things that don't look right. If you aren't comfortable with the answer, you can report the problem to your local Senior Medicare Patrol office, and they'll take it from there.