Fraudulent billing of Medicare is a problem of mammoth proportion. Mammoth not only because of the number of individuals, companies, and institutions involved in it, but also because of the amount of money the Federal government loses annually to fraudsters. It’s not a new problem, either, having existed for decades. You may have recently read about the hundreds of fraudulent hospices in Los Angeles, CA that billed the government for billions. That’s just one example. The Medicare bureaucracy is so vast, and preventive measures have been less effective than the problem demanded.
We discovered recently that my wife had been an unwitting participant in a scheme. It did not involve her in any way other than her information was used by a fraudulent rehab facility in Houston to bill for services which were totally bogus. Medicare and her USAA supplement were billed $1800 a pop for a total of $36,000 for rehab services she never received, in a city where we did not live. I noticed these billings on the “explanation of benefits” billing and payment receipts I received from Medicare and USAA. Medicare had made partial payment of their part, but USAA had detected something amiss and denied payment.
When I called both Medicare and USAA, the former was clueless when I told them they were fraudulent charges while USAA was fully aware of this activity and had been investigating the facility for months. They paid nothing on the $36,000 claim because they knew it was not legitimate.
To take a crack at the problem, the Centers for Medicare and Medicaid Services, CMS, in late February, proposed a “new set of anti-fraud measures the agency dubbed CRUSH, Comprehensive Regulations to Uncover Suspicious Healthcare.” The regulations “incorporate[s] analytics and AI to detect fraud in real time.” I have no idea what that means, but it appears modern day technology is being used to stop the fraud effectively without “denying or deterring medically necessary and appropriate care.”
Two major areas which represent a large portion of Medicare’s problem are the center of focus.
Molecular Diagnostics—genetic testing procedures for rare disorders
Durable Medical Equipment—prosthetics, orthotics, supplies, mobility products, etc.
Molecular Diagnostics are expensive tests that screen for genetic disorders and other rare diseases, cancer being one. In 2024, these payments amounted to 43% of spending. In 2019, arrests were made of individuals and labs responsible for fraudulently billing Medicare $2.1 billion. The magnitude of the problem has forced CMS “to improve its fraud detection technology.” Exactly how this will be accomplished was not stated.
Durable Medical Equipment is any supply, mobility device, prosthesis, etc. needed for rehabilitation or to maintain the status quo. This is a huge category, too, as most Medicare patients need some assistive device, etc. The companies that “sell” these devices do so fraudulently to people who don’t exist or don’t need the equipment. This is a huge challenge for CMS, too.
Medicare has a huge tendency to deny payment even if billing is submitted correctly. They also have a huge tendency to pay when the charge is bogus—it literally feels like fraudulent charges are paid more readily than legitimate charges. Physicians and other entities are concerned these new anti-fraud procedures will lead to more denials of legitimate claims. That’s a real concern, I think.
CMS’s mission is to control both overutilization (fraud) and underutilization (denial of payment). I think they are sincere when they say they want to stop fraud and save the taxpayers’ money. Whatever happens, however, it will definitely be another process that will increase the financial and managerial burdens physicians already carry. Whenever CMS has a new idea or a new program, it’s guaranteed to make a physician’s life more complicated and affect practice sustainability and viability. We’ll see what happens this time.
Reference: Arnold C. New U.S. Anti-Fraud Measures for Diagnostics: What Doctors Need to Know Medscape 2026 March 13.
