Medicare has no official estimate of the amount of money lost to fraud each year, but the Federal Bureau of Investigation refers to estimates of 3-10 percent of all health care billings. In 2011, Medicare expenditures totaled approximately $565 billion. If the FBI percentages are applied to this amount, the cost of Medicare fraud for the 2011 fiscal year was anywhere from $17-57 billion.
CMS also estimates that the federal government distributed about $65 billion in improper payments (payments that shouldn't have been made or were for an incorrect amount) through Medicare and Medicaid combined in fiscal year 2011.
There is no exact data on Medicare fraud for the following reasons:
1. Broad definitions: Estimates may not differentiate between fraudulent payments (resulting from knowing and willful schemes to defraud Medicare), incorrect reimbursements that resulted from waste (resulting from inefficient claims processing and administration, redundant procedures, preventable readmissions, unnecessary ER visits and other medical errors and wasteful behaviors) and abuse (provider actions that depart from accepted medical, business or financial practices). Estimates might also cover the whole health care system without singling out Medicare.
2. Increasingly higher stakes: The amount that the government loses from an incidence of fraud is going up, so it's difficult to estimate fraud based on past statistics. For example, the U.S. Department of Justice reports that a single incidence of fraud might now involve $30 to $50 million, whereas $1 million would have been a shocking figure ten years ago.
3. Unknowns: Most cases of fraud go undetected, and therefore the actual amount lost to fraud is hard to quantify. In 2009, HHS Inspector General Daniel Levinson stated that the government cannot determine the full extent of Medicare fraud.
Several Bills Have Been Introduced in Congress Regarding Medicare Fraud. Will Any of Them Become Law?
Who's Who in Medicare Fraud? Who Is in Charge? Who Handles the Investigations? Who Prosecutes?
Have Doctors and Other Providers and Suppliers Been Excluded From Medicare Because of Fraud, Abuse or Waste? Is There a List of Those Who Have Been Excluded?
How Does the Government Recover Money From Those Who Have Committed Medicare Fraud?
What Has the Medicare Fraud Strike Force Achieved So Far?
What Is the Medicare Fraud Strike Force?