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INTRODUCTION: The United States has spent approximately $2.6 trillion on healthcare in recent years. This accounts for 17.9% of the national gross domestic product. Fraud has been identified as one of the leading causes of the nation's increasing health expense. Medicare fraud has taken many forms including overutilization, upcoding, billing for services not provided and filing false cost reports. Fraud has been found throughout the healthcare industry and has been difficult to detect.

METHODOLOGY: The methodology for this qualitative study was a literature review. Four electronic databases and several government websites were utilized. Thirty nine sources were referenced for this literature review.

RESULTS: Medicare fraud has recently been found to be much easier and more lucrative than dealing drugs. Many flaws within the system have been identified, primarily in billing procedures. The organization of the Medicare system has made it susceptible to corruption. Not only have providers committed fraud; insurance agents have manipulated new Medicare enrollees, adding to the fraud problems. Some provisions have been put in place to help prevent Medicare fraud. Government agencies such as the Center for Medicare and Medicaid Services, the Department of Justice, and the Department of Health and Human Services have joined together to address this matter; however fraud has continued to plague Medicare. Efforts to revise the system have led to the detection of several fraud schemes in the past two years. Many more schemes may be identified and stopped as the government becomes more proficient in combating Medicare fraud.

CONCLUSION: Fraud has been identified throughout the healthcare industry and has been difficult to detect. The many flaws in the billing system and lack of responsibility and commitment by the government have led fraud to be a significant issue. To address the problem of fraud, an effective strategy must be put in place that better detects, deters, and remedies vulnerabilities. Part of such a strategy is being implemented by the current presidential administration, however further prevention programs may be required to continue this trend.


This article first appeared in the 2012 issue of Franklin Business & Law Journal and is reprinted with permission.

Copyright © 2012 Franklin Publishing Company. All rights reserved.

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