How Medicare And Medicaid Fraud Became A $100B Problem In The U.S. (2023)


In an exclusive investigation, CNBC takes you inside how fraudsters are stealing Medicare and Medicaid funds through a wide variety of criminal operations. Special agents from the Office of Inspector General (OIG) show us how brazen these schemes have gotten from burying stolen Medicare funds in PVC pipes under a home to setting up a fraudulent business in the same building as the OIG. A convicted fraudster who served time for health care-related crimes says it’s “very easy” to make millions and stay under law enforcement’s radar because the fraud is so rampant. In a Miami shopping mall that’s been the targeted of OIG investigations, CNBC finds a medical supply company that’s billed Medicare more than $2 million in a small glass-enclosed office with someone sitting at desk, which investigators say is typical about fraudulent operations are set up. Annual Medicare and Medicaid fraud is estimated at more than $100 billion.

Senior Investigative Producer: Scott Zamost
Correspondent: Contessa Brewer
Editor: Steve Banton
Photographers: Oscar Molina, Marco Mastrorilli
Audio: Juan Merlo
Graphics: Michael Schwartz

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How Medicare And Medicaid Fraud Became A $100B Problem In The U.S.


This is the face of health care fraud in America.

A Miami businessman smiling, as he counts, stolen Medicare money.

In this video secretly recorded by a government informant.

From sham storefronts to empty offices billing the government for Medicare.


Is this business? To buried millions in cash., The business of stealing Medicare and Medicaid dollars has never been as brazen.


Are we talking? $100 billion? That's? Probably a conservative number.

Why Medicare fraud? Because, it's easy.

It's unbelievable.

It's, real easy.

We're in south Florida today, at the headquarters of the agents charged with investigating Medicare and Medicaid fraud.

And today, they're taking us on location to show us how those schemes work.

Behind the steering wheel for this rare ride along is Omar Pérez Aybar, Florida's special agent in charge of the investigation.

So, Omar.

Give me a sense of where are you taking me? So today we're going to head down the south portion of Florida.

He's, one of some 450 special agents nationwide from the Office of Inspector General, who fight a health care fraud battle every day.

Annually, estimated Medicare and Medicaid fraud tops $100 billion.

Around, the world, it's known for its postcard, perfect beaches.

But to federal investigators, Florida's famous for its fraud.

Won't, be able to get.

Massive theft from the government's health care, benefits.

Far more than anywhere else in the nation.


We're going to head over to a durable medical equipment, company, which unfortunately, has been one of the lines of business.

That is really keeping us busy.


Durable medical equipment, DME, think braces and wheelchairs.

Fraudsters buy lists of patients and doctors, so they can steal from the government.

And with those two key pieces of information.

They can sit at a place that is open, Wi-Fi and just start submitting claims to Medicare.

In South Florida, alone, Pérez Aybar, says about 90% of the DME.

Companies are fraudulent., He had two businesses, here.

He had two businesses set up, here.

So we're at 241.


If you can notice, this is kind of the business.

It looks so nondescript.

It is.

And, that's purposeful.


They want to try to keep us off their trail.

A storefront once used to bilk the government out of $48 million in a single year run by the guy counting the money.

He thought he was a CEO when in fact he was just a crook.

His name is Jesus Garces.

Back on the road, we head to the home where Garces stashed his stolen money.

This, is where agents armed with a search warrant say they made a startling.


Garces had hidden some $2.5 million in cash in 12 PVC pipes under his home.


Where were the pipes? So, he had buried them in the foundation of the home.

There was a portion of the home that they were remodeling.


So he put the PVC pipes in the ground.

Was it just loose.

Cash stuffed into the pipes? They had saran, wrapped them, or packaged them.


Almost looked like bricks of cocaine.

So hand would go in, a pipe would come, out, hand would go, in, a pipe would come out.


It really was for us an indication of how brazen this DME fraud, is.

Garces pled guilty to health care and wire fraud and was sentenced to 12.5 years in prison.

Back at headquarters.

Perez Eibar shows me how bold these health care schemes have become.

The fraudsters here in South Florida are getting so brazen that even in our own building, they decided to set up a fraudulent DME company.


They don't even care that agents in charge of investigating this Medicare fraud are in the same building.

They're in our face.

And we're just as brazen back.

Investigators shut down this operation.

But the fraud is flourishing.


Do the fraudsters even need to set up a storefront?? It is Medicare regulations that you have to have a business, especially in this case, for durable medical equipment.

We're at the Miami Merchandise Mart, which federal agents tell us, is a hotbed for these fake companies set up to bill Medicare for products and services.

They never deliver.


This maze of tiny shops in a kind of indoor flea market.

We find exactly what investigators describe.

There's a desk.

Perhaps there's a bit of a curio with 1 or 2 different types of braces.

They'll have the manuals that Medicare requires, and usually there's some type of partition.


Let's say we're talking about orthotics, because the patient is supposed to come in and actually get fitted.

That's, the DME company.

Most times we show up.

There's nobody there.


If there is someone there, they have no clue what business they are representing or how it even operates.

Agents shut, one down and new ones.

Pop up.

In this business, which has been billing Medicare for durable medical equipment.

We find a young woman sitting alone at a desk.


How are you? I'm, Contessa, Brewer.

I'm with CNBC.

What? Is this business? The woman says it's a medical supply store, but she has nothing to do with the actual business.


The only thing she can show us right now is a brace.

She gives us a business card for the owner.

I call the number, but it rings at the desk inside.


This is Contessa Brewer from CNBC.

We just talked a minute.


This is the number you gave me to call to talk to Antonio.

I leave a message for the owner who we eventually reached weeks.


He says all the durable medical equipment is ordered through another company after the patient sees a doctor.

He refuses to give more information.

But government records show the company has billed more than $2 million to Medicare, mostly for wound.


That doesn't surprise this man.

We'll call him Julio because he wants to conceal his identity.

Julio admits.

He knows a lot about stealing from Medicare, because it was his entire life for many years in Miami., Why, Medicare, fraud? Like.

Why was that alluring to you as compared to other ways, other, maybe even illicit ways to make money? It's easy.

Did? Someone teach you how to game the system? A friend of mine, Yeah.

He texted me one day., He called me and says, Look, I do this, this, this, this.

Are there, a lot of people who are willing to break the law? A lot of people.

You'll, be surprised.

For money, they'll do anything.

Is there a lot of money to be made?.

A lot of money.

Millions of dollars to make.

How much? Millions of dollars.


Did that stack, up? The risk versus the reward? Reward, it was excellent.

There is still risk.

Fraudsters get caught.

The cases against them.

Fill this massive evidence.


So we do search warrants, secure, evidence, make sure we have to keep it in this type of pristine, condition.


This is drawer upon drawer full of fake documents.

This is evidence that we seized during one of the search warrants.

I look around here, and this is one warehouse in one county in Florida.

How big, is this problem? South Florida, without question, is the ground zero for health care, fraud.

But, it's only one.


There are 49 others in territories where these types of schemes are occurring.


The Office of the Inspector general says of every $100 spent by Health and Human Services in 2021.

Only $0.02 was spent on oversight and enforcement.


Its return on investment? $12 for every dollar it spends on enforcement.

We asked the federal Centers for Medicare and Medicaid Services about the widespread fraud.

They told us, "We continuously work to safeguard taxpayer dollars and strengthen program integrity in our operations by identifying vulnerabilities in the system." What I was told was that what we need is investigators and we need a lot of them.

Why? It's hard for us to keep up with the amount of fraud that is occurring.


Just can't keep up.

We need some additional resources.


What is the largest case of Medicare fraud? ›

The Columbia/HCA fraud case is one of the largest examples of Medicare fraud in U.S. history. Numerous New York Times stories, beginning in 1996, began scrutinizing Columbia/HCA's business and Medicare billing practices.

Is Medicare fraud 100 billion? ›

Fraudsters with fake medical equipment companies and other fronts are scamming Medicare and Medicaid out of billions each year, CNBC reported March 9. Medicare and Medicaid fraud tops $100 billion each year, according to estimates from the National Health Care Anti-Fraud Association.

How much does Medicare fraud cost the US? ›

Medicare fraud is big business for criminals. Medicare loses billions of dollars each year due to fraud, errors, and abuse. Estimates place these losses at approximately $60 billion annually, though the exact figure is impossible to measure.

Which of the following are examples of a Medicare fraud scheme? ›

There are many types of Medicare and Medicaid fraud. Common examples include: Billing for services that weren't provided, in the form of phantom billing and upcoding. Performing unnecessary tests or giving unnecessary referrals, which is known as ping-ponging.

What is the most common type of Medicare abuse? ›

Some common examples of suspected Medicare fraud or abuse are:
  • Billing for services or supplies that were not provided.
  • Providing unsolicited supplies to beneficiaries.
  • Misrepresenting a diagnosis, a beneficiary's identity, the service provided, or other facts to justify payment.

Who is designed to fight Medicare fraud? ›

Medicare Fraud Strike Force | Office of Inspector General | Government Oversight | U.S. Department of Health and Human Services.

Does Medicare ever pay 100 percent? ›

Medicare Advantage Plan (Part C):

Deductibles, coinsurance, and copayments vary based on which plan you join. Plans also have a yearly limit on what you pay out-of-pocket. Once you pay the plan's limit, the plan pays 100% for covered health services for the rest of the year.

Can Medicare fraud ever be stopped in the United States? ›

Medicare fraud has been a persistent crime, and laws and policies themselves have not been enough to control the problem. Further investments in governmental partnerships and new detection systems can reduce Medicare fraud but probably will not eliminate it altogether.

How do you catch Medicare fraud? ›

If you suspect Medicare fraud, do any of these:

Call 1-800-MEDICARE (1-800-633-4227). TTY users can call 1-877-486-2048. Call the fraud hotline of the Department of Health and Human Services Office of the Inspector General at 1-800-HHS-TIPS (1-800-447-8477).

How much does fraud cost the US? ›

Insurance Fraud Costs Families Hundreds of Dollars Each Year

To give you an idea of how costly insurance fraud is, the total gross domestic product (GDP) of the United States approaches $24 trillion. Thus, insurance fraud costs the economy about 1.5 percent of the GDP each year.

How does Medicare fraud affect patients? ›

Unnecessary procedures and prescriptions can be dangerous — as can a lack of necessary medical care. Fraud can also result in inaccurate medical records, and medical identity theft can also lead to an early, unexpected exhaustion of a patient's medical insurance coverage.

What states have the most health care fraud? ›

The top five districts for health care fraud offenders were: Southern District of Florida (95); ♦ Eastern District of Michigan (18); ♦ Southern District of Texas (18); ♦ Middle District of Florida (17); ♦ Eastern District of Louisiana (17). months. 73.4% were sentenced to prison.

What are red flag factors for Medicare fraud? ›

Some of the factors that could indicate potential fraud include: Resubmitting denied claims (e.g. billing for the same services using a different procedure code after the first procedure was denied) Billing for services that aren't covered by coding the service as a procedure that is a covered service.

What are three examples of healthcare fraud? ›

Billing for Goods/Services not Provided

A common type of Medicaid or health care fraud scheme is billing for a treatment or procedure never rendered -- such as X-rays, laboratory tests, or drugs that were never dispensed. Fraudulent providers also "upcode" various medical procedures.

What is the difference between fraud and abuse in Medicare? ›

Fraud is an intentional deception or misrepresentation of fact that can result in unauthorized benefit or payment. Abuse means actions that are improper, inappropriate, outside acceptable standards of professional conduct or medically unnecessary.

What is the biggest problem with Medicare? ›

The top concerns of Medicare enrollees include navigating Part B, appealing Medicare Advantage (MA) denials and affording meds, according to an annual report from the Medicare Rights Center.

What is the greatest problem of Medicare? ›

Financing care for future generations is perhaps the greatest challenge facing Medicare, due to sustained increases in health care costs, the aging of the U.S. population, and the declining ratio of workers to beneficiaries.

What are the top issues in Medicare? ›

Several key trends stood out, including:
  • Medicare enrollment and affordability challenges, often exacerbated by COVID-19.
  • Difficulty appealing Medicare Advantage (MA) and Part D denials.
  • Problems accessing and affording prescription drugs.
  • The need for a comprehensive Medicare dental benefit.
May 26, 2022

What are the 4 Rs to remember in preventing Medicare fraud and abuse? ›


Protect your Medicare Number. Don't give it out, except to people you know should have it, like your doctor or other health care provider. Never give your Medicare Number in exchange for a special offer. Never let someone use your Medicare card, and never use another person's card.

What will Medicare not pay for? ›

Medicare and most health insurance plans don't pay for long-term care. Non-skilled personal care, like help with activities of daily living like bathing, dressing, eating, getting in or out of a bed or chair, moving around, and using the bathroom.

Who pays more for Medicare? ›

If you have both Medicare Part B and Medicare prescription drug coverage, you'll pay higher premiums for each. If you have only 1 — Medicare Part B or Medicare prescription drug coverage — you'll pay an income-related monthly adjustment amount only on the benefit you have.

Is Medicare changing in 2023? ›

What are the changes to Medicare benefits for 2023? Changes to 2023 Medicare coverage include a decrease in the standard Part B premium to $164.90 and a decrease in the Part B deductible to $226. Part A premiums, deductible and coinsurance are all increasing for 2023.

Can Medicare ever be taken away? ›

No, Medicare benefits do not run out. Medicare is a federal health insurance program for people who are 65 or older, people with certain disabilities, and people with End-Stage Renal Disease. As long as a beneficiary is eligible for Medicare, they will continue to have access to its benefits. NEW TO MEDICARE?

Should I keep my Medicare card in my wallet? ›

Carry your Medicare card with you when you're away from home. Show your Medicare card to your doctor, hospital, or other health care provider when you get services. If you have a Medicare drug plan or supplemental coverage, carry that plan card with you too.

What was largest fraud in America? ›

Bernie Madoff
OccupationsStock broker investment adviser financier
EmployerBernard L. Madoff Investment Securities (founder)
Known forBeing the chairman of Nasdaq and the Madoff investment scandal
Criminal statusDeceased
12 more rows

Who pays for the cost of fraud? ›

You do. If an insurance company is swindled out of money, those added costs are ultimately passed on to consumers. The insurance industry estimates that approximately $80 billion is stolen each year as a result of insurance fraud.

How big is fraud in the US? ›

Fraud cost consumers $8.8 billion last year, Federal Trade Commission says. That's up 44% from 2021. Although the number of fraud reports dropped to 2.4 million in 2022 from 2.9 million in 2021, the aggregate amount lost to the scams rose 44%.

Why do people commit healthcare fraud? ›

Motivations for Committing Healthcare Fraud

When patients come in needing medical care but cannot afford the out-of-pocket costs, healthcare providers may try to lessen their financial burden by overbilling insurance companies. While this is done with good intentions, it is still a fraud crime.

How much does the government lose due to healthcare fraud? ›

Fraud flourishes

Taxpayers are losing more than $100 billion a year to Medicare and Medicaid fraud, according to estimates from the National Health Care Anti-Fraud Association.

What does Medicare fraud look like? ›

A provider is committing fraud if they: Bill Medicare for services you never received. Bill Medicare for services that are different from the ones you received (usually more expensive) Continue to bill Medicare for rented medical equipment after you have returned it.

Which is the most common form of healthcare fraud and abuse? ›

The most common kind of healthcare fraud involves false statements or deliberate omission of information that is critical in the determination of authorization and payment for services. Healthcare fraud can result in significant monetary liabilities and, in some cases, subject the perpetrator to criminal prosecution.

What are three most common red flags that could indicate fraud might be taking place? ›

There are four elements that must be present for a person or employee to commit fraud: • Opportunity • Low chance of getting caught • Rationalization in the fraudsters mind, and • Justification that results from the rationalization.

How can we prevent fraud and abuse in healthcare? ›

How Can I Help Prevent Fraud and Abuse?
  1. Validate all member ID cards prior to rendering service;
  2. Ensure accuracy when submitting bills or claims for services rendered;
  3. Submit appropriate Referral and Treatment forms;
  4. Avoid unnecessary drug prescription and/or medical treatment;

How serious is Medicare fraud? ›

According to the CMS, these individuals may be imprisoned for up to 10 years. If an alleged scheme causes another person's injury or death, the maximum possible periods of incarceration rise. Furthermore, individuals who have been convicted of Medicare fraud may be ordered to pay fines worth up to $250,000.

How rampant is Medicare fraud? ›

Taxpayers are losing more than $100 billion a year to Medicare and Medicaid fraud, according to estimates from the National Health Care Anti-Fraud Association.

What pain doctor was convicted of over $100 million health care fraud scheme? ›

Francisco Patino, who was convicted by a jury in September 2021 after being accused of masterminding a more than $100 million scheme and prescribing dangerous amounts of pain pills amid the nation's opioid crisis. The case drew wide interest because of the scope of the scheme and the doctor's outsized personality.

Who are the 4 doctors found guilty in $150 m healthcare fraud scheme? ›

After a four-week trial, Spilios Pappas, 62, of Lucas County, Ohio, Joseph Betro, 59, of Oakland County, Michigan, Tariq Omar, 62, of Oakland County, Michigan, and Mohammed Zahoor, 53, of Oakland County, Michigan, were each found guilty of one count of conspiracy to commit health care fraud and wire fraud, and one ...

Who are the victims of healthcare fraud? ›

Individual victims of health care fraud are sadly easy to find. These are people who are exploited and subjected to unnecessary or unsafe medical procedures. Or whose medical records are compromised or whose legitimate insurance information is used to submit falsified claims.

What doctor was sentenced for fraud? ›

A former doctor convicted of fraudulently submitting nearly $120 million in claims related to the 1-800-GET-THIN Lap-Band surgery business has been sentenced to seven years in federal prison. Julian Omidi, 58, of West Hollywood was sentenced Monday by U.S. District Court Judge Dolly M.

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