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A Full Guide on Healthcare Fraud

Posted on by Dawna M. Roberts in SafetyJanuary 30, 2023

Healthcare fraud can take many forms, costing the country $88 billion to $100 billion annually, almost a third of all healthcare spending. It's essential to avoid becoming a victim – as well as an unwitting perpetrator.

What is Healthcare Fraud?

Healthcare fraud is a massive problem for the medical community because people often believe it's a victimless crime. In fact, taxpayers foot much of the bill for medical theft, particularly when it’s Medicare fraud, the federally underwritten medical insurance for seniors. Fraud includes billing or accepting payment for services that are not actually needed or, often, not provided. Letting another person use your identification to get medical services is also illegal. The federal Inspector General's Office investigates and prosecutes about 800 healthcare fraud cases each year.

The Health Insurance Portability and Accountability Act (HIPAA) established a fraud and abuse hotline to address these issues. The federal government also provides information for healthcare providers to avoid fraud and abuse in healthcare. In 2021 the Justice Department charged 36 people with schemes that amounted to $1.2 billion in fraudulent telemedicine, genetic testing for cardiac issues, and charging for durable medical supplies.

healthcare fraud

Types of Healthcare Fraud

For all of the fraud schemes that have been identified, there are dozens more that are as yet unknown. The following are a few of the common ploys used by those involved in fraud and abuse in healthcare:

  • The theft and fraudulent use of medical insurance documents enable people to get medical care under another person's name.
  • Kickback schemes share a portion of the profit when medical professionals or billing agents get reimbursed for more services than provided.
  • Upcoding is reporting and filing reimbursement paperwork for higher-level diagnoses than the patient needs.
  • Double billing is submitting multiple requests for reimbursement despite receiving payment.
  • Using a dead person's credentials to receive services or to bill for services.
  • Performing and billing for procedures that are not medically necessary.
  • Duplicating medical insurance documents so another person can use them.
  • Prescription medicine abuse is when insurance companies or Medicare are billed for prescriptions that are not needed or not provided. Forging prescriptions and shopping for doctors who will write unnecessary prescriptions are also forms of healthcare fraud.

Penalties for Healthcare Fraud

Healthcare fraud is usually prosecuted as a felony, with up to four years of prison time and $50,000 in fines. If the crime involves individuals in more than one state, wire fraud, or crosses state lines, it may be tried in federal district court. Federal prosecutors often seek double or triple damages based on the amount of fraudulently-obtained funds. Additionally, physicians and nurses involved may lose their medical licenses. They also can be sued in civil court by those victimized by fake diagnoses and unnecessary procedures.

Vital records can be used to commit healthcare fraud. Criminals may use the identity of a dead person or a child to apply for healthcare services or to bill for services fraudulently. That's why it's difficult for anyone but a family member to get birth certificates, and important to protect your personal information like social security number and birthdate. The Medical Identity Theft Alliance says that up to two million people have been victims of healthcare fraud.

How to Identify Healthcare Fraud and Avoid Being a Victim

In many cases, it's easier to prevent fraud through vigilance than to untangle a legal mess of false records. Follow these steps to keep fraud at bay:

  • Always question the necessity of a procedure.
  • Get a second opinion before accepting complex services and procedures. 
  • Always follow up when the medical office cancels procedures and is not rescheduled. 
  • Avoid becoming a victim by protecting your health insurance documents and ID card. Shred bills or statements that you are throwing away and keep your insurance information in a secure place.
  • Question your provider if they bill separately for procedures and items provided concurrently.
  • Ensure that you receive the medical hardware that you are billed for, including walkers, splints, crutches, oxygen, braces, and hospital beds.
  • Read the mail you receive from your healthcare insurer to screen for theft of services or physicians overbilling.
  • Do not exchange or sell prescription medication because that is a type of fraud.

Famous Examples of Healthcare Fraud

In 2022, three officials associated with a Texas hospital were given a total of over 140 years in prison for a $125 million mental health care fraud scheme. It involved paying kickbacks to enroll patients with dementia and Alzheimer’s in an elevated level of care at facilities the hospital managed.

A cardiologist from Ohio was prosecuted in 2015 for doing unnecessary heart surgery on patients to overbill insurance companies by millions of dollars. The surgeries, such as bypasses and heart catheterizations, were life-threatening and could have resulted in severe complications.

An obstetric surgeon was also among those perpetrating healthcare fraud through unnecessary procedures that risked patients' lives. These procedures involved unnecessary invasive medical tests and biopsies, among other things.

A doctor was sentenced to five years in prison for bilking medical insurers out of $10 million based on fake prescriptions for expensive immunosuppressant drugs.

AthenaHealth, a medical records company, paid an $18 million fine for illegally enticing medical providers to use their electronic records product. The kickback scheme the company used included inviting representatives to sports events and concerts, essentially bribing them to adopt the software.


Health insurance is challenging for many people to understand, as is medical terminology. It's crucial for individuals to know how their insurance works and to monitor their medical records for evidence of falsification. Ask your provider if there are procedures listed on your medical records that you don't remember receiving or medications that you don't take. In addition, read through insurance documents that are mailed to you to check for the possibility that someone else is using your name and insurance card to receive services. Doctors' offices that tell you some tests or procedures are "free" may be gaming the system. Contact the tipline of the Office of Inspector General with any suspicions.

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