HEALTH CARE 

FRAUD

Information on Most 

Common Schemes 

and the Likely Effect 

of Smart Cards 

Report to Congressional Requesters

January 2016

GAO-16-216

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-16-216, a report to 

congressional requesters

January 2016

HEALTH CARE FRAUD

Information on Most Common Schemes and the 

Likely Effect of Smart Cards

Why GAO Did This Study

While there have been convictions for 

multimillion dollar schemes that 

defrauded federal health care 

programs, there are no reliable 

estimates of the magnitude of fraud 

within these programs or across the 

health care industry. In some fraud 

cases, individuals have billed federal 

health care programs or private health 

insurance by using a beneficiary’s or 

provider’s identification information 

without the beneficiary’s or provider’s 

knowledge. One idea to reduce the 

ability of individuals to commit this type 

of fraud is to use electronically 

readable card technology, such as 

smart cards. Proponents say that these 

cards could reduce fraud by verifying 

that the beneficiary and the provider 

were present at the point of care.

GAO was asked to identify and 

categorize schemes found in health 

care fraud cases. This report describes 

(1) health care fraud schemes and 

their prevalence among cases resolved 

in 2010 and (2) the extent to which 

health care fraud schemes could have 

been affected by the use of smart card 

technology. GAO reviewed reports on 

health care fraud and smart card 

technology and reviewed court 

documents for 739 fraud cases 

resolved in 2010 obtained for a related 

2012 GAO report on health care fraud. 

GAO is not making any 

recommendations.

The Department of Health and Human 

Services and the Department of 

Justice provided technical comments

on a draft of this report, which GAO 

incorporated as appropriate.

What GAO Found

GAO’s review of 739 health care fraud cases that were resolved in 2010 showed 

the following: 

• About 68 percent of the cases included more than one scheme with 61 

percent including two to four schemes and 7 percent including five or 

more schemes. 

• The most common health care fraud schemes were related to fraudulent 

billing, such as billing for services that were not provided (about 43 

percent of cases) and billing for services that were not medically 

necessary (about 25 percent). 

• Other common schemes included falsifying records to support the fraud 

scheme (about 25 percent), paying kickbacks to participants in the 

scheme (about 21 percent), and fraudulently obtaining controlled 

substances or misbranding prescription drugs (about 21 percent). 

• Providers were complicit in 62 percent of the cases, and beneficiaries 

were complicit in 14 percent of the cases. 

GAO’s analysis found that the use of smart cards could have affected about 22 

percent (165 cases) of cases GAO reviewed in which the entire or part of the 

case could have been affected because they included schemes that involved the 

lack of verification of the beneficiary or provider at the point of care. However, in 

the majority of cases (78 percent), smart card use likely would not have affected 

the cases because either beneficiaries or providers were complicit in the 

schemes, or for other reasons. For example, the use of cards would not have 

affected cases in which the provider misrepresented the service (as in billing for 

services not medically necessary), or when the beneficiary and provider were not 

directly involved in the scheme (as in illegal marketing of prescription drugs). 

Percentage of 2010 Health Care Fraud Cases Reviewed That Could Have Been Affected by Use 

of Smart Card Technology

View GAO-16-216. For more information, 

contact Kathleen M. King at (202) 512-7114 or 

kingk@gao.gov.
Page i GAO-16-216 Health Care Fraud

Letter 1

Background 7

Fraudulent Billing Schemes Were Most Common Schemes in 

Cases Reviewed 11

Smart Cards Likely Would Not Have Affected the Majority of 

Cases Reviewed 19

Agency Comments 23

Appendix I Methodology for Describing the Types of Health Care Fraud and 

Their Prevalence 26

Appendix II Additional Details on Health Care Fraud Schemes in Cases GAO 

Reviewed 30

Appendix III GAO Contact and Staff Acknowledgments 38

Tables

Table 1: Number and Percentage of Health Care Fraud Cases 

Reviewed, by Fraud Scheme 12

Table 2: Number and Percentage of Health Care Fraud Cases 

Reviewed, by Provider’s Role 16

Table 3: Number and Percentage of Health Care Fraud Cases 

Reviewed, by Beneficiary’s Role 18

Table 4: Number of Health Care Fraud Cases GAO Reviewed in 

Which Schemes Could Have Been Affected by Use of 

Smart Cards, by Scheme 21

Table 5: Health Care Fraud Schemes by Category and 

Description, for Cases Reviewed 26

Table 6: Number and Percentage of Health Care Fraud Cases 

Reviewed, by Fraud Scheme 30

Table 7: Number and Percentage of Health Care Fraud Cases 

Reviewed, by Number of Fraud Schemes Used 31

Table 8: Number and Percentage of Health Care Fraud Cases 

Reviewed, by Role of Provider 32

Table 9: Number and Percentage of Health Care Fraud Cases 

Reviewed, by Role of Beneficiary 35

Contents
Page ii GAO-16-216 Health Care Fraud

Figure

Figure 1: Percentage of 2010 Health Care Fraud Cases Reviewed 

That Could Have Been Affected by Use of Smart Card 

Technology 19

Abbreviations

CHIP Children’s Health Insurance Program

CMS Centers for Medicare & Medicaid Services 

DME durable medical equipment

DOJ Department of Justice

FBI Federal Bureau of Investigation

FEHBP Federal Employees Health Benefits Program

HHS Department of Health and Human Services

HHS OIG Department of Health and Human Services Office of 

Inspector General

PACER Public Access to Court Electronic Records

VA Department of Veterans Affairs

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, because this work may contain 

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necessary if you wish to reproduce this material separately.
Page 1 GAO-16-216 Health Care Fraud

441 G St. N.W.

Washington, DC 20548

January 22, 2016

Congressional Requesters:

We have designated Medicare and Medicaid as high-risk programs 

because their size, scope, and complexity make them particularly 

vulnerable to fraud and abuse.1 Although there have been convictions for 

multimillion dollar schemes that defrauded federal health care programs, 

the extent of the problem is unknown as there are no reliable estimates of 

the magnitude of fraud within these programs or across the health care 

industry generally. According to the Department of Health and Human 

Services’ (HHS) Office of Inspector General (OIG), there are several 

types of health care fraud schemes, including those in which providers bill 

for services or supplies not provided or not medically necessary, and 

those in which providers’ or beneficiaries’ identities are stolen. However, 

little is known about which schemes are the most common or most costly.

To help reduce fraud and abuse in federal health care programs, 

including Medicare, Medicaid, and the Children’s Health Insurance 

Program (CHIP), HHS OIG, the Centers for Medicare & Medicaid 

Services (CMS)—an agency within HHS—and the Department of Justice 

(DOJ) were provided $571.7 million in budgetary resources for fiscal year 

2014 to identify, investigate, and prosecute health care fraud. During 

fiscal year 2014, about $3.3 billion in health care fraud judgments and 

settlements were collected (including from cases that occurred before 

fiscal year 2014) as a result of the HHS OIG’s and DOJ’s investigations 

and prosecutions.

Many different types of providers and suppliers are the subjects of fraud 

cases.2 In 2012, we examined the types of providers and suppliers 

 1

GAO, High-Risk Series: An Update, GAO-15-290 (Washington, D.C.: February 2015). 

Fraud represents intentional acts of deception with knowledge that the action or 

representation results in obtaining something of value through willful misrepresentation. 

Abuse represents actions deficient or improper with acceptable business or medical 

practices.

2

For this report, the term “providers” includes individuals and entities that provide medical 

care (such as physicians, medical centers, hospitals, pharmacies, and medical clinics). 

The term “suppliers” includes companies that provide medical supplies (such as durable 

medical equipment (DME) suppliers). 

Letter
Page 2 GAO-16-216 Health Care Fraud

involved in criminal and civil health care fraud cases and found that for 

cases resolved in 2010, medical facilities and durable medical equipment 

(DME) suppliers were the most common provider or supplier types that 

were subjects of criminal fraud investigations and in which subjects were 

found or pled guilty.3 Hospitals and medical facilities were the most 

common subjects of civil fraud investigations and the cases that resulted 

in judgments or settlements.

In some fraud cases, the subjects of the case are able to bill federal 

health care programs or private health insurance for payment by stealing 

a beneficiary’s or provider’s identification information and using it without 

the beneficiary’s or provider’s knowledge. Proposals have been put 

forward to reduce the ability of individuals to commit this type of fraud. 

Proponents of one proposal—to use electronically readable card 

technology, such as smart cards that use microprocessor chips to store 

and process data—say that using these cards would bring a number of 

benefits, including reducing fraud.4 In a March 2015 report, we examined 

the benefits and limitations associated with the use of electronically 

readable cards in Medicare.5 We reported that the use of electronically 

readable cards to verify that the beneficiary and provider were present at 

the point of care could curtail certain types of fraud (such as when 

providers misuse beneficiary identification information to bill fraudulently) 

but would have a limited effect on other types of fraud. Because little is 

known about the prevalence of even the most common types of fraud, it is 

difficult to assess the extent to which smart card technology would affect 

fraud.

 3

GAO, Health Care Fraud: Types of Providers Involved in Medicare, Medicaid, and the 

Children’s Health Insurance Program Cases, GAO-12-820 (Washington, D.C.: Sept. 7, 

2012). In this report, we use the terms criminal or civil fraud to represent the disposition of 

the fraud case by its criminal or civil penalties. In addition, while criminal cases are 

prosecuted and civil cases are litigated, our report describes both types of cases as being 

prosecuted for simplicity.

4

Electronically readable cards include cards with magnetic stripes, cards with bar codes, 

and smart cards. 

5

See GAO, Medicare: Potential Uses of Electronically Readable Cards for Beneficiaries 

and Providers, GAO-15-319 (Washington, D.C.: Mar. 25, 2015). The March 2015 report 

focused on electronically readable cards, including smart cards. Our current study is 

focused on smart cards.
Page 3 GAO-16-216 Health Care Fraud

You asked us to identify and categorize schemes found in health care 

fraud cases. In this report we describe

1. health care fraud schemes and their prevalence among cases 

resolved in 2010 and

2. the extent to which health care fraud schemes could have been 

affected by the use of smart card technology.

To describe health care fraud schemes and their prevalence among 

cases resolved in 2010, we reviewed government reports (such as 

reports produced by HHS and DOJ regarding the Health Care Fraud and 

Abuse Control Program), and DOJ and HHS OIG press releases to 

develop a list of definitions for schemes related to health care fraud. To 

determine the prevalence of health care fraud schemes, we reviewed 

court documents for fraud cases resolved in 2010 that were obtained 

during our work for our 2012 report on the types of providers involved in 

health care fraud.6 Although the cases obtained for our 2012 report 

included investigations as well as prosecutions, judgments, and 

settlements, for this study, we included only cases that had been 

adjudicated favorably for the United States.7 The cases we obtained 

involved both federal health care programs and private health insurance. 

In total, we reviewed court documents for 739 cases from HHS OIG and 

DOJ to determine the prevalence of health care fraud schemes by type.8

These documents were associated with the charging stage of the case 

(such as an indictment, information, or complaint) unless the charging 

document for a case was not available. If the charging document was not 

available, we reviewed case details as described in a DOJ or Federal 

 6

The data we obtained for GAO-12-820 were investigations and prosecutions from HHS 

OIG and DOJ’s U.S. Attorneys’ Offices and Civil Division, which included information such 

as the subjects of the investigations and the outcomes of the case (such as civil penalties 

for civil cases or prison or probation for criminal cases). We obtained data on criminal and 

civil health care fraud cases from both agencies because HHS OIG conducts 

investigations, but DOJ does not prosecute all of the cases investigated. 

7

By “favorable for the United States,” we mean criminal cases in which the subjects were 

found guilty, pled guilty, or pled no contest to at least one of the charges, and civil cases 

that resulted in a judgment for the United States or a settlement.

8

There were 834 cases that resulted in a favorable outcome for the United States. 

However, we did not review 95 of those cases for a variety of reasons including that they 

were duplicative of another case or because we could not determine the fraud schemes 

used based on the information contained in the charging documents. 
Page 4 GAO-16-216 Health Care Fraud

Bureau of Investigation (FBI) press release. For several HHS OIG cases, 

we were unable to locate a charging document or a press release. For 

these cases, HHS OIG provided us with other court documents, such as 

settlement agreements and plea agreements. For each case, we also 

categorized information on the beneficiary’s role, the provider’s role, the 

programs affected by the fraud (such as Medicare, Medicaid, or private 

health insurance), and any monetary amounts associated with the fraud 

schemes (such as the amount paid).9 For each case we reviewed, two 

reviewers independently categorized the case into the relevant health 

care fraud schemes and resolved any differences in the categorization. 

To assess the reliability of the data, we reviewed relevant documentation 

and examined the data for reasonableness and internal consistency. We 

found these data were sufficiently reliable for the purposes of our report. 

(See app. I for additional information about our methodology.)

To describe the extent to which types of health care fraud schemes could 

have been affected by the use of smart card technology, we reviewed 

literature on the benefits, uses, technical capabilities, and potential effects 

of smart cards, including our March 2015 report on electronically readable 

cards, and analyzed data on health care fraud schemes from our review 

of court cases resolved in 2010. Our analysis of the potential effect of 

smart cards on the cases we reviewed is based on the assumption that 

the smart cards would have the capability to correctly identify both the 

beneficiary and provider at the point of care (e.g., physician office or 

hospital).10 We did not assume any other changes in information 

technology that some smart card advocates have suggested could 

 9

We use the term beneficiary to describe individuals who receive medical care and 

supplies from providers and who are beneficiaries of federal health care programs (such 

as Medicare or Medicaid) or enrollees or covered individuals of private health insurance 

plans.

For our review, we defined providers as those who actually deliver care and services 

directly to beneficiaries (such as physicians) or those who provide supplies to 

beneficiaries ordered by the provider (such as pharmacies). Additionally, we collected 

information separately on whether a DME supplier was involved in the case. 

10Our analysis of the effect of smart cards focused on the use of smart cards to verify 

beneficiary and provider identities and did not include the use of the smart cards for other 

purposes, such as to store and convey medical information or to verify the provider’s 

credentials. 
Page 5 GAO-16-216 Health Care Fraud

accompany the adoption of smart cards in some circumstances.11 For this 

analysis, we first identified schemes that could be affected by the smart 

cards based on the nature of the scheme and the beneficiary and 

provider roles.12 We then determined the number and percentage of 

cases with these particular schemes. For purposes of our analysis, we 

defined the term “affected” to mean that the use of smart cards to verify 

the beneficiary and provider identities could have potentially reduced the 

risk of fraud.13 We determined whether the smart cards could affect the 

entire case (if the scheme was the only one used or was used in 

conjunction only with other schemes that could have been affected by 

smart cards) or part of the case (if the schemes were used in combination 

with other schemes that would not have been affected by smart cards). In 

some cases, we were unable to determine if smart cards would have had 

an effect because there was insufficient information.

Our analysis has several limitations. First, it is based on cases we 

received from DOJ and HHS OIG that had been resolved in 2010. 

Although the cases were resolved in 2010, the fraud schemes and 

investigations could have occurred in prior years. The types of fraud 

schemes used during those years may be different from the schemes 

prevalent now, as schemes can be influenced by various factors, such as 

changes to payment policies and program integrity efforts in Medicare 

and Medicaid. To mitigate this limitation, we discussed the schemes 

identified and our analysis with officials from HHS OIG and DOJ, who 

confirmed that while there may be geographic or provider type differences 

in fraud cases, the schemes we identified are still relevant today because 

they are similar to the common fraud schemes that have been used since 

 11According to reports from smart card advocates, there is a range of potential uses and 

capabilities of smart cards. For example, some advocates maintain that smart cards could 

be used to track a beneficiary’s presence for each service rendered or the duration of the 

service.

12Specifically, we analyzed whether (1) the scheme was related to misusing the 

beneficiary’s or provider’s identification information to fraudulently bill, such as when the 

beneficiary’s identification is stolen for use in the fraud case; (2) the scheme did not 

involve the provider or beneficiary; (3) the beneficiary was present at the point of care; and 

(4) the beneficiary or provider was complicit in the scheme.

13However, we cannot conclude that the use of the smart card technology would have 

prevented the fraud schemes in these cases because it is not possible to account for the 

various factors that may have contributed to the fraud occurring. Also, individuals may 

circumvent the smart card technology to still carry out the fraud schemes, and smart cards 

may introduce new fraud schemes. 
Page 6 GAO-16-216 Health Care Fraud

2010. A second limitation of our analysis is that we generally reviewed 

charging documents, which represent allegations of fraudulent conduct 

and may or may not have been the basis on which the case was 

adjudicated or settled. We chose to use charging documents (when 

available) as these documents generally tend to provide a more complete 

description of all of the alleged fraud schemes compared to schemes that 

were adjudicated. Third, the cases we reviewed were prosecuted and 

resulted in a favorable outcome. These cases represent a fraction of the 

potential fraud cases that could have occurred or that were identified by 

DOJ and HHS OIG for possible investigation and prosecution.14 As a 

result, our findings are not generalizable to all fraud cases. Fourth, our 

analysis of the potential effects of smart cards assumed a particular set of 

smart card characteristics—specifically, that the identity of both providers 

and beneficiaries would be verified—and our findings could be different if 

we had made different assumptions about the capabilities or 

implementation of smart cards. We believe our assumptions are 

reasonable given the challenges associated with implementing smart card 

technology.15

We conducted this performance audit from December 2014 to January 

2016 in accordance with generally accepted government auditing 

standards. Those standards require that we plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for 

our findings and conclusions based on our audit objectives. We believe 

that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives.

 14As we have previously reported, not all health care fraud investigations are pursued and 

not all subjects of the fraud cases are prosecuted. GAO-12-820.

15See GAO-15-319 for additional information on the challenges associated with 

implementing smart cards.
Page 7 GAO-16-216 Health Care Fraud

There are multiple statutes that concern health care fraud, including the 

following:

16

• The False Claims Act is often used by the federal government in 

health care fraud cases and prohibits certain actions, including the 

knowing presentation of a false claim for payment by the federal 

government.17

• Civil monetary penalty provisions of the Social Security Act apply to 

certain activities, such as knowingly presenting a claim for medical 

services that is known to be false and fraudulent.18 In addition, the 

Social Security Act also provides for criminal penalties for knowing 

and willful false statements in applications for payment.19

• The Anti-Kickback statute makes it a criminal offense for anyone to 

knowingly and willfully solicit, receive, offer, or pay any remuneration 

in return for or to induce referrals of items or services reimbursable 

under a federal health care program, subject to statutory exceptions 

and regulatory safe harbors.20

• The Stark law and its implementing regulations generally prohibit 

physicians from making “self-referrals”—certain referrals for 

“designated health services” paid for by Medicare to entities with 

 16The statutes included here provide examples of those that may be relevant to health 

care fraud cases. Other statutory provisions, including those located in title 18 of the 

United States Code, may also be relevant to such cases. See, e.g., 18 U.S.C. §§ 669 

(concerning theft or embezzlement in connection with health care), 1035 (concerning false 

statements relating to health care matters), and 1347 (concerning health care fraud).

1731 U.S.C. §§ 3729-3733. 

1842 U.S.C. § 1320a-7a. 

1942 U.S.C. § 1320a-7b. 

2042 U.S.C. § 1320a-7b(b). 

Kickbacks are a type of illegal remuneration under the statute. Examples of kickbacks 

include providing identifying information to a provider allowing the provider to bill for 

services not provided, receiving services in exchange for cash, or compensating 

individuals for recruiting beneficiaries to receive treatment at a specific clinic. 

Background

Health Care Fraud 

Statutes
Page 8 GAO-16-216 Health Care Fraud

which the physician (or an immediate family member) has a financial 

relationship—nor may the entities that perform the “designated health 

services” present claims to Medicare or bill for these services.21

These prohibitions also extend to payments for Medicaid-covered 

services to the same extent and under the same terms and conditions 

as if Medicare had covered them.22

• The Federal Food, Drug, and Cosmetic Act, as amended, makes it 

unlawful to, among other things, introduce an adulterated or 

misbranded pharmaceutical product or device into interstate 

commerce.23

Health care fraud takes many forms, and a single case can involve more 

than one fraud scheme. Schemes may include fraudulent billing for 

services not provided, services provided that were not medically 

necessary; and services intentionally billed at a higher level than 

appropriate for the services that were provided, called upcoding. Other 

fraud schemes include providing compensation—kickbacks—to 

beneficiaries or providers or others for participating in the fraud scheme 

and schemes involving prescription drugs (including prescription drugs 

that contain controlled substances), such as the submission of false 

claims for prescription drugs that have been improperly marketed for nonFDA-approved uses and the illicit diversion of prescription drugs for profit 

or abuse.24 Fraud cases may involve more than one scheme; for 

 2142 U.S.C. § 1395nn(a)(1). 

22The statutory provisions commonly known as the Stark law are applicable to Medicare 

under section 1877 of the Social Security Act, and to Medicaid under section 1903(s) of 

the Social Security Act (codified at 42 U.S.C. § 1396b(s)).

2321 U.S.C. § 331(a). Those who misbrand or promote drugs for non-FDA approved 

indications may be subject to penalties under the Federal Food, Drug, and Cosmetic Act. 

21 U.S.C. § 333. Such conduct may also involve health care fraud if, for example, it 

results in a false claim to a federal health care program under the False Claims Act. 

24A controlled substance is one that is included in one of five schedules under the 

Controlled Substances Act. A controlled substance is placed in a respective schedule 

based on whether it has a currently accepted medical use in the United States and its 

potential for abuse and physical or psychological dependence. 21 U.S.C. §§ 802(6), 812. 

Types of prescription drugs that contain controlled substances that play an important role 

in health care and could be involved in health care fraud cases include narcotics, 

stimulants, and sedatives. In this report, we use the term controlled substances when 

referring to such prescription drugs.

Types of Health Care 

Fraud and Provider and 

Beneficiary Involvement
Page 9 GAO-16-216 Health Care Fraud

example, an infusion clinic may pay kickbacks to a beneficiary for 

receiving care at the clinic, and the care that was provided and billed for 

may not have been medically necessary.

Providers may be complicit in the schemes or unaware of the schemes.25

For example, providers who are complicit may willingly use their provider 

identification information to bill fraudulently, misrepresent services 

provided to receive higher payment, or receive kickbacks to provide their 

identification information for others to bill fraudulently. In other cases, 

providers may be unaware that their identification information has been 

stolen and used in various fraud schemes. Similarly, beneficiaries can be 

either complicit in or unaware of the fraud. Beneficiaries who are complicit 

may willingly provide their identification information to a provider for the 

purposes of committing fraud or receive kickbacks in exchange for 

providing their information to or receiving services from a provider. In 

contrast, they also may be unaware of fraud schemes in which the 

provider bills for services not medically necessary or uses beneficiaries’ 

identification information without their knowledge. Additionally, both 

beneficiaries and some providers may not be involved in the fraud 

scheme, in the sense that the fraud schemes involved circumstances 

other than a provider giving care to a beneficiary. For example, a 

pharmaceutical manufacturing company that marketed prescription drugs 

for non-FDA approved uses does not involve a provider giving care 

directly to a beneficiary. Individuals and entities that commit fraud do so in 

federal health care programs and private insurance programs, and may 

commit fraud in more than one program simultaneously.

Several agencies are involved in investigating and prosecuting health 

care fraud cases, including CMS; HHS OIG; DOJ’s U.S. Attorneys’ 

Offices, Civil and Criminal Divisions; and the FBI. HHS OIG and the FBI 

primarily conduct investigations of health care fraud, and DOJ’s divisions 

 25Providers can include those who actually deliver care and services directly to 

beneficiaries (such as physicians) or those who provide supplies to beneficiaries ordered 

by the provider (such as pharmacies).

Agencies That Investigate 

and Prosecute Health 

Care Fraud
Page 10 GAO-16-216 Health Care Fraud

typically prosecute or litigate the cases.26 DOJ prosecutes fraud cases 

that affect both federal health programs and private health insurance.

Amid concerns about identify theft, proposals have been put forward to 

replace Medicare’s paper identification cards that contain the 

beneficiary’s Social Security numbers with electronically readable cards, 

such as smart cards.27 Some proposals have suggested that such cards 

should be issued to providers as well. Electronically readable cards 

include those that store information on magnetic stripes and bar codes 

and cards called smart cards that use microprocessor chips to store and 

process data. In March 2015, we identified three key uses for 

electronically readable cards: (1) authenticating beneficiary and provider 

presence at the point of care, (2) electronically exchanging beneficiary 

medical information, and (3) electronically conveying beneficiary identity 

and insurance information to providers.28 We also found that smart cards 

could provide more rigorous authentication of beneficiaries and providers 

at the point of care than cards with magnetic stripes and bar codes, 

though all three types of cards can electronically convey identity and 

insurance information. Proponents of smart cards have suggested that, 

among other benefits, using smart cards may reduce health care fraud in 

the Medicare program. For example, some proponents claim that the use 

of smart cards to identify the beneficiary and provider at the point of care 

could potentially curtail certain types of fraud such as schemes in which 

providers misuse another provider’s information to bill fraudulently.

 26CMS and its contractors, such as the Zone Program Integrity Contractors, conduct 

activities related to health care fraud, including investigating potential fraud in Medicare 

fee-for-service in specific geographic areas. These contractors identify suspect claims and 

provider billing patterns, investigate fraud leads, and refer suspected fraud cases to HHS 

OIG.

27The Medicare Access and CHIP Reauthorization Act of 2015, enacted into law in April 

2015, included a provision requiring and providing funding for the Secretary of Health and 

Human Services, in consultation with the Commissioner of Social Security, to establish 

procedures to ensure that a Social Security account number is not displayed, coded, or 

embedded on Medicare beneficiary cards and that any identifier displayed on such cards 

is not identifiable as a Social Security account number. Pub. L. No. 114-10, § 501, 129 

Stat. 87, 163 (Apr. 16, 2015). 

In July 2015, CMS started an initiative in response to this law and was in the process of 

establishing a program to plan and implement system changes to remove the Social 

Security numbers from Medicare cards. 

28GAO-15-319.

Use of Smart Cards
Page 11 GAO-16-216 Health Care Fraud

However, our March 2015 report also found that there are several 

limitations associated with the use of smart cards. Specifically, it is 

possible that individuals may still be able to commit fraud by adapting and 

altering the schemes they use to account for the use of smart card 

technology. In addition, the use of smart card technology could introduce 

new types of fraud and ways for individuals to illegally access beneficiary 

information. For example, malicious software could be written onto a 

smart card and used to compromise provider IT systems. Further, various 

factors may limit the implementation of smart card technology in the 

Medicare program. As we found in our March 2015 report, while the use 

of smart cards to verify the beneficiary identity at the point of care could 

reduce certain types of fraud, it would have limited effect on Medicare 

fraud since CMS policy is to pay claims for Medicare beneficiaries even if 

they do not have a Medicare identification card at the time of care.29 CMS 

officials noted that it would not be feasible to require the use of smart 

cards because of concerns that this would limit beneficiaries’ access to 

care given that there may be legitimate reasons why a card might not be 

present at the point of care. For example, beneficiaries who experience a 

health care emergency may not have their Medicare cards with them at 

the time care is rendered. Additionally, we concluded that the use of 

smart cards to verify the beneficiary and provider presence at the point of 

care would require addressing costs and implementation challenges 

associated with card management and information technology system 

enhancements. These enhancements would be needed to update both 

CMS’s and providers’ claims processing and card management systems 

in order to achieve a high level of provider and beneficiary authentication 

as well as meet security requirements.30

The majority of the 739 cases resolved in 2010 that we reviewed had 

more than one fraud scheme. Fraudulent billing schemes, such as billing 

for services that were not provided and billing for services that were not 

medically necessary, were the most common fraud schemes. Over 20 

percent of the cases included kickbacks to providers, beneficiaries, or 

other individuals. Providers were complicit in the fraud schemes in over 

half of the cases. In contrast with providers, only about 14 percent of the 

 29See GAO-15-319.

30For additional information on the costs and challenges associated with implementing 

electronically readable cards in Medicare, see GAO-15-319.

Fraudulent Billing 

Schemes Were Most 

Common Schemes in 

Cases Reviewed
Page 12 GAO-16-216 Health Care Fraud

739 cases we reviewed had beneficiaries who were complicit in the 

schemes.

Using cases from 2010, we identified 1,679 fraud schemes in the 739 

cases that we reviewed. The majority of the 739 cases (about 68 percent) 

included more than one scheme; 61 percent of the cases had 2 to 4

schemes, about 7 percent had 5 or more schemes. Thirty-two percent 

had only one scheme. The most common schemes used in the cases we 

reviewed were related to fraudulent billing, such as billing for services that 

were not provided (42.6 percent of cases), billing for services that were 

not medically necessary (24.5 percent), and upcoding, which is billing for 

a higher level of service than the service actually provided (17.5 percent). 

Additionally, schemes used to support other fraud were also common, 

such as falsifying a substantial portion of records to support the fraud 

scheme (25.2 percent) and paying kickbacks to participants in the 

scheme (20.6 percent). Schemes related to prescription drugs (including 

prescription drugs that contained controlled substances), such as 

fraudulently obtaining or distributing prescription drugs or marketing 

prescription drugs for non-FDA approved uses in order to commit fraud, 

were found in about 21 percent of the cases we reviewed. (See table 1 for 

the number and percentage of cases in which these schemes were used 

and app. II, table 6, for additional details on schemes we identified in 

cases.)

Table 1: Number and Percentage of Health Care Fraud Cases Reviewed, by Fraud Scheme

Scheme

Number of cases in 

which scheme

was used 

Percentage

of 

all cases

Fraudulent billing schemes

Billing for services or supplies that were not provided 315 42.6

• Billing for services or supplies that were not provided, along with services that 

were provided

54 7.3

• Billing for services or supplies that were never provided, and no legitimate 

services were provided

94 12.7

• Billing for services or supplies that were not provided, and we were unable to 

determine whether other services were provided 

167 22.6

Billing for services that were not medically necessary 181 24.5

Upcoding services to be paid at a higher rate than the services that were actually 

provided

129 17.5

Billing for services not prescribed or referred by a physician 104 14.1

Most Cases Had More 

than One Scheme, and 

Fraudulent Billing 

Schemes Were the Most 

Common
Page 13 GAO-16-216 Health Care Fraud

Scheme

Number of cases in 

which scheme

was used 

Percentage

of 

all cases

Billing for services provided by an unqualified, uncertified, unlicensed, or ineligible 

provider

83 11.3

Unbundling of services to receive higher total payment when billed separately 31 4.2

Billing for services provided to an individual who was not eligible to receive them 24 3.3

Billing for prescription drugs that were not provided to beneficiaries 24 3.2

Lying about eligibility to obtain benefits or services 19 2.6

Billing for services as if they were provided by a physician, which are paid at higher 

rate, though services were provided by another provider, such as a nurse practitioner, 

who would be paid at a lower rate

15 2.0

Schemes that generally support other fraud schemes

Falsifying a substantial portion of records to support fraudulent claims 186 25.2

Receiving or paying kickbacks 152 20.6

Misusing a beneficiary’s or provider’s identification information to fraudulently bill 

(such as for a deceased beneficiary or under the name of a retired physician) 

39 5.3

Fraud schemes related to prescription drugs 

Fraudulently obtaining, distributing, or prescribing drugs containing controlled 

substances

79 10.8

Fraudulently obtaining, distributing, or misbranding prescription drugs 43 5.8

Marketing of prescription drugs for non-FDA-approved uses 30 4.1

Other schemes

Self-referral of certain health services by providers in violation of the Stark law 17 2.3

Billing for services provided by an excluded provider or employing an excluded 

provider

17 2.3

Miscellaneous schemesa 66 9.0

Other health care fraud-related schemesb 125 16.9

Total 1,679 —

Source: GAO analysis of court and other documents. | GAO-16-216

Notes: We reviewed 739 health care fraud cases that were resolved in 2010.

Percentages add to more than 100 because each case can have more than one scheme. 

Percentages were calculated using the total number of cases reviewed (739 cases).

a

Miscellaneous includes the remaining schemes identified in our review that each represented less 

than 2 percent of the cases. These include schemes such as billing for services as if they were 

provided in a setting for a higher level of care than actually provided, inappropriately waiving 

copayments for beneficiaries to receive care or services, and inflating prescription drug prices.

b

These health care fraud-related schemes included a large variety found in the cases we reviewed 

but that did not fall within the categories of identified schemes, such as violating Medicare policy 

requirements by failing to document care provided, billing for services that did not meet standard-ofcare requirements, and inflating or misreporting costs on cost reports submitted to Medicare.

Many different combinations of schemes were present in the 68 percent 

of cases with more than one scheme. The most common schemes were 
Page 14 GAO-16-216 Health Care Fraud

also the ones that were most often used together: billing for services not 

provided along with billing for services that were not medically necessary, 

billing for services or supplies that were not prescribed by a physician and 

falsifying a substantial portion of records in order to support the fraud 

scheme. (See app. II, table 7, for additional analysis of the number of 

schemes per case.) For example, according to the indictment in a fraud 

case we reviewed, a DME supplier used two schemes to commit fraud: 

(1) billing Medicare for medical equipment, such as orthotic braces, that 

were not provided to Medicare beneficiaries and (2) billing for supplies 

that had not been prescribed by physicians for these beneficiaries.

Many different federal programs and private insurers were affected by 

fraud schemes in the cases we reviewed. In one-quarter of the cases, 

more than one program was affected. Medicare was affected in about 63 

percent of the 739 cases reviewed, Medicaid and/or CHIP in about 32 

percent, TRICARE in about 5 percent, and the Federal Employees Health 

Benefits Program (FEHBP) in 3 percent of the cases.31 In over 11 percent 

of the cases, private health insurers were affected. Other programs 

affected included Department of Veterans Affairs programs, Social 

Security programs, worker’s compensation programs, and other benefit 

plans.32

Among the fraud cases we reviewed, one-third—262 cases—had 

information in the documents we reviewed about the amount of fraudulent 

payments made by the programs and insurers. For the 262 cases, the 

total paid was $801.5 million. The amounts of the fraudulent payments in 

these cases typically ranged from $10,000 to $1.5 million.

 31TRICARE is health coverage offered by the Department of Defense’s military health 

system for eligible beneficiaries including active duty personnel and their dependents, 

Reserve and National Guard personnel and their dependents, and retirees and their 

dependents and survivors. FEHBP provides health care coverage to millions of federal 

employees, retirees, and their dependents through health insurance carriers that contract 

with the Office of Personnel Management.

32Additionally, for 66 cases (about 9 percent), we could not determine the program or 

programs affected, as the document reviewed did not provide this information.
Page 15 GAO-16-216 Health Care Fraud

In about 20 percent of the 739 cases we reviewed, kickbacks were paid to 

providers, beneficiaries, or other individuals. The most common schemes 

used in cases where providers were paid kickbacks were marketing 

prescription drugs for non-FDA-approved uses, billing for services that 

were not medically necessary, upcoding, and self-referring. Many 

different types of providers received or provided kickbacks in these cases; 

the most common provider types were DME suppliers, hospitals, and 

pharmaceutical manufacturers. The most common schemes used in 

cases where beneficiaries were paid kickbacks were billing for services 

that were not medically necessary and billing for services that were not 

provided. In addition, kickbacks were paid to both beneficiaries and 

providers for their involvement in a fraud case or to other individuals, such 

as “recruiters,” who connect providers and beneficiaries in exchange for a 

fee. For 23 of the cases we reviewed, there was information in the 

documents we reviewed about the amount of kickbacks paid to 

beneficiaries, providers, and other individuals, which totaled $69.7 million. 

About 20 Percent of 

Cases Reviewed Included 

Kickbacks to Providers, 

Beneficiaries, or Other 

Individuals

Examples of health care fraud cases in 

which kickbacks were used

According to a complaint in a civil fraud case 

we reviewed, a prescription drug 

manufacturer paid millions of dollars in 

kickbacks to a nursing home pharmacy to 

encourage the pharmacy to purchase and 

recommend prescription drugs from that 

manufacturer. As a result of these kickbacks, 

false claims were submitted to and paid by 

Medicaid in violation of the Anti-Kickback 

Statute.

An indictment in a criminal fraud case we 

reviewed stated that a medical clinic that 

provided injection and infusion treatments 

paid kickbacks to individuals who recruited 

Medicare beneficiaries to provide their 

identification information so that the clinic 

could bill Medicare for treatments, which the 

clinic did not provide to these beneficiaries. 

The beneficiaries who provided their 

information also received kickbacks. The clinic 

also paid kickbacks to the physicians who 

signed the required documentation to support 

billing Medicare for these services. 

Source: GAO analysis of court documents. | GAO-16-216
Page 16 GAO-16-216 Health Care Fraud

In about 62 percent of the 739 cases we reviewed, providers were 

complicit in the cases, either by submitting fraudulent claims or by 

supporting the fraud schemes.33 (See table 2 and app. II, table 8, for 

additional information on the role of the provider, by fraud scheme.) For 

example, a physician would be complicit when billing for higher level 

services than those actually provided in order to receive a higher payment 

rate (upcoding). A physician may also be complicit in a case by receiving 

kickbacks for referring beneficiaries to a particular clinic, even though the 

physician did not bill for the services provided by that clinic.

Table 2: Number and Percentage of Health Care Fraud Cases Reviewed, by Provider’s Role

Provider role Number of cases Percentage

Provider was complicit

Provider was biller 425 57.5

Provider was not biller but was complicit in fraud scheme 31 4.2

Provider was not complicit

Provider’s information was stolen, sold, or used without his or her knowledge 55 7.4

Provider’s information was obtained under false pretenses (such as through a 

telemarketer)

17 2.3

Provider was not involved in the fraud scheme (including where no care was provided directly 

to the beneficiary)

72 9.7

Fictitious provider information was used in fraud scheme 2 0.3

Unknown (insufficient information to determine the role of the provider) 137 18.5

Total 739 99.9

Source: GAO analysis of court and other documents. | GAO-16-216

Notes: We reviewed 739 health care fraud cases that were resolved in 2010.

Percentages do not add to 100 due to rounding.

Among the cases in which providers were complicit, the most common 

fraud schemes were billing for services that were not medically 

necessary, falsifying records to support the fraud schemes, upcoding 

services to receive a higher payment, and billing for services that were 

not provided. For these cases, medical centers, clinics, and practices as 

 33For our analysis, we considered the provider to be the individual who gives the actual 

care or would have provided care, such as a physician. If at least one provider was 

complicit in the scheme, we considered the provider to be complicit even if other providers 

within the same case were not complicit. We collected information on whether a DME 

supplier was involved in the case separately from whether the provider was complicit.

Providers Were Complicit 

in Fraud Schemes in More 

than Half of the Cases 

Reviewed
Page 17 GAO-16-216 Health Care Fraud

well as hospitals, other clinics, home health agencies, and pharmacies 

were the most common types of providers that were complicit.

Providers were not complicit in about 10 percent of the cases we 

reviewed. In those cases, providers’ information had been stolen or used 

without their knowledge to carry out the fraud schemes. The most 

common schemes in these cases were falsifying records and billing for 

services or supplies that were not prescribed by the physicians. 

Additionally, in two cases, a fictitious provider was created to support the 

fraud schemes.

No provider was involved in another 10 percent of the cases that we 

reviewed. For example, no provider gave care directly or billed for 

services provided to a beneficiary in cases where a prescription drug 

manufacturer marketed prescription drugs for non-FDA-approved uses. In 

the remaining 18.5 percent of cases, we were unable to determine how 

the provider was involved as the court documents did not include this 

information.

In contrast with providers, only about 14 percent of the 739 cases we 

reviewed had beneficiaries that were complicit in the schemes. For 

example, there were cases in which the beneficiary willingly provided 

identification information so a provider could fraudulently bill, or the 

beneficiary received kickbacks for receiving treatment at a specific clinic. 

Among the cases in which the beneficiary was complicit, the most 

common schemes were billing for services that were not medically 

necessary, billing for services that were not provided, and falsifying 

records to support the fraud schemes.

Example of health care fraud case in which 

providers were complicit

According to an indictment in one of the cases 

we reviewed, a physician conspired with the 

owner of a medical testing company that 

performed diagnostic ultrasound tests to bill 

Medicare and private insurance companies for 

tests that were either never provided or were 

not medically necessary. The physician 

signed orders for these ultrasound tests for 

beneficiaries that he had not actually treated 

and received kickbacks from the medical 

testing company for the orders. 

Source: GAO analysis of court document. | GAO-16-216

Example of health care fraud case in which 

provider was not complicit

According to a complaint, a DME supplier 

billed Medicare for supplies prescribed by a 

physician. However, those supplies were not 

prescribed by the physician the DME supplier 

had listed on the claims. During an interview 

with investigators, the physician indicated his 

practice was not to prescribe DME supplies to 

his patients and instead to refer them to a 

specialist. When reviewing a list of 200 

Medicare beneficiaries for whom the DME 

supplier had listed him as the prescribing 

physician on the claims, the physician 

identified that only 12 of those listed had ever 

been his patients. In this case, the DME 

supplier was using the physician’s information 

without his knowledge to bill for DME supplies 

that were not provided. 

Source: GAO analysis of court document. | GAO-16-216

Beneficiaries Were 

Complicit in about 14 

Percent of Cases 

Reviewed
Page 18 GAO-16-216 Health Care Fraud

In about 62 percent of the 739 cases we reviewed, beneficiaries were not 

complicit in the schemes. Among beneficiaries that were not complicit, 

most received services from the provider, but there was no evidence that 

the beneficiary was aware of the fraud (54.8 percent). For example, 

beneficiaries who were not complicit in the schemes received services 

from the provider but were unaware that the provider billed for upcoded 

services or that they received services that were not medically necessary. 

In 39 cases (5.3 percent), court documents we reviewed indicated that 

the beneficiaries’ information was stolen or sold without their knowledge. 

In an additional 12 cases (1.6 percent) we reviewed, the beneficiaries’ 

information was obtained through false pretenses, such as through a 

telemarketer. (See table 3 and app. II, table 9, for additional information 

on the role of the beneficiary, by fraud scheme.)

Table 3: Number and Percentage of Health Care Fraud Cases Reviewed, by Beneficiary’s Role

Beneficiary role Number of cases Percentage

Beneficiary was not complicit

Beneficiary received services from provider, but there was no evidence that beneficiary 

was involved in fraud scheme

405 54.8

Beneficiary’s information was stolen or sold without his or her knowledge 39 5.3

Beneficiary’s information was obtained under false pretenses (such as through a 

telemarketer)

12 1.6

Beneficiary was complicit 105 14.2

Beneficiary was not involved (including where no care was provided directly) 97 13.1

Unknown (insufficient information to determine the role of the beneficiary) 80 10.8

Fictitious beneficiary’s information used in the fraud scheme 1 0.1

Total 739 99.9

Source: GAO analysis of court and other documents. | GAO-16-216

Notes: We reviewed 739 health care fraud cases that were resolved in 2010.

Percentages do not add to 100 due to rounding.

Example of health care fraud case in which 

beneficiary was complicit

According to an information document filed by 

prosecutors in one case we reviewed, an 

employee of a medical clinic asked a 

beneficiary to visit the clinic complaining of 

ailments that the beneficiary did not have in 

order to receive prescriptions for drugs 

containing controlled substances. The 

beneficiary visited the clinic complaining of a 

toothache and obtained a prescription for a 

controlled substance. The employee then 

purchased that medication from the 

beneficiary. 

Source: GAO analysis of court document. | GAO-16-216
Page 19 GAO-16-216 Health Care Fraud

Additionally, the beneficiary was not involved in about 13 percent of the 

739 cases we reviewed. The beneficiary may not have been involved in 

the fraud schemes because the schemes did not involve billing for care 

provided to a beneficiary. For instance, in one case, a pharmaceutical 

drug manufacturer marketed drugs for non-FDA-approved uses and paid 

kickbacks to providers for prescribing those drugs to beneficiaries. This 

scheme did not involve billing for care provided to the beneficiary. For the 

remaining 11 percent of cases we reviewed, we were unable to determine 

whether the beneficiary was complicit or not, and in 1 case, a fictitious 

beneficiary’s information was created to support the fraud scheme.

Among the 739 cases, we found 165 cases (22 percent) in which the 

entire case (2 percent) or part of the case (20 percent) could have been 

affected by the use of smart cards. The remaining 574 cases (78 percent) 

had schemes that would not have been affected by smart cards. (See fig. 

1.)

Figure 1: Percentage of 2010 Health Care Fraud Cases Reviewed That Could Have 

Been Affected by Use of Smart Card Technology

Example of health care fraud case in which 

beneficiary was not complicit

According to an information document filed by 

prosecutors in one case we reviewed, an 

individual obtained names and dates of birth 

for two individuals enrolled in Federal 

Employees Health Benefits Program (FEHBP) 

who had flexible spending accounts. The 

individual created counterfeit prescriptions for 

drugs containing controlled substances for 

these beneficiaries, submitted them to a 

pharmacy to fill, and received the controlled 

substances.

Source: GAO analysis of court document. | GAO-16-216

Smart Cards Likely 

Would Not Have 

Affected the Majority 

of Cases Reviewed
Page 20 GAO-16-216 Health Care Fraud

Among the 739 cases we reviewed, we found 165 cases in which the 

entire or part of the case could have been affected by the use of smart 

cards. These cases included at least one of six schemes smart cards 

could have affected as the schemes involved the lack of verification of the 

beneficiary or the provider at the point of care. These six schemes were 

(1) billing for services that were never actually provided and no legitimate 

services were provided; (2) misusing a provider’s identification 

information to bill fraudulently (such as using a retired provider’s 

identification information); (3) misusing a beneficiary’s identification 

information to bill fraudulently (such as using a deceased beneficiary’s 

identification information or stealing a beneficiary’s information); (4) billing 

more than once for the same service (known as duplicate billing) by 

altering a small portion of the claim, such as the date, and resubmitting it 

for payment; (5) providing services to ineligible individuals; and (6) 

falsifying a substantial part of the records to indicate that beneficiaries or 

providers were present at the point of care.34

In 18 cases (2.4 percent of all cases resolved in 2010 that we reviewed), 

the entire case could have been affected because all of the schemes on 

those cases involved the lack of verification of the beneficiary or provider 

at the point of care. For these 18 cases, either the beneficiary or the 

provider was complicit in the scheme, while the other was not, or neither 

the beneficiary nor the provider was complicit in the scheme. The use of 

smart cards could have had an effect because the card would have been 

able to verify at least one identity.

 34For our analysis of the falsified records scheme, we determined that smart cards would 

have an effect in cases in which the falsification of records was used to document the 

beneficiary’s and provider’s presence at the point of care. All other cases that included the 

falsified records scheme were included in the schemes that would not have been affected 

by smart cards as discussed in the next section. 

Health Care Fraud 

Schemes That Could Have 

Been Affected by the Use 

of Smart Cards

Example of health care fraud case in which 

the provider was complicit but the 

beneficiary was not

According to a complaint document in one 

case we reviewed, the provider submitted 

duplicate claims for the same service provided 

to a beneficiary. The beneficiary received the 

service from the provider the first time but was 

unaware that a second claim had been 

submitted as if the service had been provided 

a second time when it had not.

Example of health care fraud case in which 

neither the beneficiary nor the provider 

was complicit

According to a complaint document in one 

fraud case we reviewed, a DME supplier used 

the identification information for several 

beneficiaries to submit a bill for DME supplies. 

The DME supplier also used a physician’s 

identification information to allege that the 

supplies had been prescribed when that 

physician had not prescribed the DME 

supplies. In this case, neither the beneficiaries 

nor the provider were aware of the fraud 

schemes. 

Source: GAO analysis of court documents. | GAO-16-216
Page 21 GAO-16-216 Health Care Fraud

Smart cards could have partially affected an additional 147 cases (19.9 

percent) in which at least one of the six schemes was present. However, 

because other fraud schemes were used, the entire case would not have 

been affected. (See table 4.)

Table 4: Number of Health Care Fraud Cases GAO Reviewed in Which Schemes Could Have Been Affected by Use of Smart 

Cards, by Scheme 

Entire case could 

have been affected 

Case could have been 

partially affected 

Billing for services that were never provided, and no legitimate services were 

provided

6 34

Misusing a provider’s identification information to bill fraudulently (such as using a 

retired physician’s information)

0 15

Misusing a beneficiary’s identification information to bill fraudulently (such as 

using a deceased beneficiary’s information)

2 8

Duplicate billing 1 8

Billing for services provided to an individual who was not eligible to receive care 8 2

Falsifying records to support any of the schemes listed abovea 2 111

Total 18b 147c

Percentage of all 739 cases reviewed 2.4 % 19.9%

Source: GAO analysis of health care fraud cases resolved in 2010. | GAO-16-216

Note: This table includes cases in which neither the beneficiary nor the provider was complicit in the 

scheme and cases in which either the beneficiary or provider was complicit while the other was not. 

Additionally, we determined that the entire case could have been affected if the schemes listed were 

the only scheme in the fraud case or were only used in conjunction with at least one of the other 

schemes that could have been affected by smart cards. We also determined that a case could have 

been partially affected by the use of smart cards if the schemes listed were used in conjunction with 

other schemes that would not have been affected by smart cards.

a

We determined that the smart cards could have an effect on cases in which the falsification of 

records was used to document the beneficiary’s and provider’s presence at the point of care.

b

In 1 case, several of the six schemes were used. The total reflects the unique number of cases in 

which these schemes were present.

c

In 31 cases, several of the six schemes were used in the same case. The total reflects the unique 

number of cases in which these schemes were present.

Example of health care fraud case that 

may have been partially affected by the 

use of smart cards

According to a complaint in one case we 

reviewed, a physical therapy provider was 

billing for services that were not medically 

necessary and was submitting duplicate bills 

for the same service. This case could have 

been partially affected by the use of smart 

cards, as the smart card would have verified 

that the beneficiary was present for only one 

service in which a duplicate bill was submitted 

but would not have affected the ability of the 

provider to bill for services that were not 

medically necessary.

Source: GAO analysis of court documents. | GAO-16-216
Page 22 GAO-16-216 Health Care Fraud

Smart card technology would not have affected the majority of fraud 

schemes we identified, which represented 574 of the 739 cases that we 

reviewed (78 percent).35 In these instances, the schemes would not have 

been affected by the smart cards because although the beneficiary and 

provider were present at the point of care, the provider misrepresented 

the services rendered after the smart cards would have registered their 

identities. These schemes included the following:

• billing for services that were not provided along with services that 

were provided legitimately,

• billing for services that were not medically necessary,

• upcoding,

• unbundling of services,

• billing for services that were not prescribed or not referred by a 

physician, and

• billing for services as if they were provided by a physician to receive a 

higher payment rate when they were actually provided by another 

provider in which the payment rate would have been lower.

In these schemes, smart cards would not be able to detect that the

provider misrepresented the actual services provided even if the cards 

verified the beneficiary’s and provider’s presence. Similarly, schemes that 

involved a provider misrepresenting eligibility to provide services would 

not have been affected by smart cards, including schemes in which bills 

were submitted for services provided by an excluded provider or by an 

unlicensed, uncertified, or ineligible provider. Many of these schemes 

involved health care entities that billed for services provided by 

 35For five of these cases, we could not determine whether smart cards could have had an 

effect. These cases involved only the scheme of billing for services that were not provided, 

and there was insufficient information to determine whether legitimate services were 

actually provided. As a result, we were unable to determine if smart cards could have had 

an effect on the scheme in these cases.

Health Care Fraud 

Schemes That Likely 

Would Not Have Been 

Affected by the Use of 

Smart Cards
Page 23 GAO-16-216 Health Care Fraud

employees or contractors that were not licensed or were excluded from 

providing care.36

In addition, smart card technology would not have affected schemes in 

which the beneficiary was not present or the verification of the beneficiary 

and provider was not relevant to the scheme. These fraud schemes 

involved improper marketing of prescription drugs, including drugs for 

non-FDA-approved uses; misbranding prescription drugs; inflating 

prescription drug prices; and physician self-referrals. In addition, smart 

cards would not have affected schemes related to improperly obtaining or 

distributing prescription drugs (including drugs that contained controlled 

substances), regardless of whether the beneficiary’s or provider’s identity 

was verified, such as cases in which individuals visited multiple providers 

complaining about pain to obtain prescriptions.

Further, smart cards would not have had an effect on cases in which the 

beneficiary and provider were complicit in the scheme, regardless of the 

schemes used on the case. For instance, smart cards would not have an 

effect on the billing for services never provided if both the beneficiary and 

provider were willing participants in the scheme. Similarly, smart cards 

would not have an effect on cases in which kickbacks were paid to a 

beneficiary or to a provider that allowed his or her smart card to be used 

for fraud.

HHS and DOJ provided technical comments on a draft of this report, 

which we have incorporated as appropriate. In its comments, HHS 

reiterated that it would be difficult for CMS to implement smart cards in 

the Medicare program because implementation would require significant 

changes. For example, CMS stated that it would need to require that 

Medicare beneficiaries present smart cards at the point of care, which is 

contrary to current CMS policy and which CMS believes could create 

access to care issues. Additionally, CMS officials noted that implementing 

smart cards in Medicare would be a significant business process change, 

 36For example, in one case we reviewed, a hospital contracted with a physical therapy 

group to provide physical therapy services, but the physical therapists that provided these 

services were not licensed. In cases similar to this, it is not clear which provider may have 

a smart card and whether cards would be given to any provider that gives care (such as 

physical therapists or nurses) or only those providers who directly submit bills (such as 

physicians).

Agency Comments
Page 24 GAO-16-216 Health Care Fraud

requiring substantial resources and time to implement. This report, as well 

as our past work on smart cards in Medicare, recognizes the concerns 

raised by CMS.

37

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of Health 

and Human Services, the Attorney General, and other interested parties. 

In addition, the report is available at no charge on the GAO website at 

http://www.gao.gov.

If you or your staffs have any questions about this report, please contact 

me at (202) 512-7114 or kingk@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Major contributors to this report are listed in appendix III.

Kathleen M. King

Director, Health Care

 37See GAO-15-319.
Page 25 GAO-16-216 Health Care Fraud

List of Requesters

The Honorable Orrin G. Hatch

Chairman

The Honorable Ron Wyden

Ranking Member

Committee on Finance

United States Senate

The Honorable Ron Johnson

Chairman

The Honorable Thomas R. Carper 

Ranking Member

Committee on Homeland Security and Governmental Affairs

United States Senate

The Honorable Charles E. Grassley

Chairman

Committee on the Judiciary

United States Senate

The Honorable Sander Levin

Ranking Member

Committee on Ways and Means

House of Representatives

The Honorable Earl Blumenauer

House of Representatives

The Honorable Peter J. Roskam

House of Representatives
Appendix I: Methodology for Describing the 

Types of Health Care Fraud and Their 

Prevalence

Page 26 GAO-16-216 Health Care Fraud

This appendix provides details on the methodology we used to describe 

the types of health care fraud and their prevalence among cases resolved 

in 2010 that we reviewed.

To describe types of health care fraud, we reviewed our prior reports, as 

well as reports from the Department of Health and Human Services 

(HHS) Office of Inspector General (OIG) and the Department of Justice 

(DOJ) to develop a list of schemes and definitions for these schemes, and 

then reviewed cases resolved in 2010 that we obtained through the 

course of work for our 2012 report.1 Specifically, we reviewed several 

government reports, such as reports produced by HHS and DOJ on the 

Health Care Fraud and Abuse Control Program, and DOJ and HHS OIG 

press releases to identify fraud schemes that were commonly included in 

the reports and to develop definitions for these schemes. See table 5 for 

the health care fraud schemes developed for our case review.

Table 5: Health Care Fraud Schemes by Category and Description, for Cases Reviewed

Category Description

Fraudulent billing schemes

Billing for services or supplies that were not 

provided

This scheme includes three subtypes: (1) services or supplies were provided along 

with fraudulent services or supplies; (2) services or supplies were never provided 

despite billing for those services or supplies; and (3) services or supplies were not 

provided and it is unknown whether other services or supplies were actually 

provided.

Billing for services that were not medically 

necessary

Billing for services or supplies provided that were not medically necessary or for 

services that were excessive (such as extending a hospital stay when not medically 

necessary).

Upcoding services to be paid at a higher rate 

than the services that were actually provided

Upcoding for services or supplies, including time-based upcoding (e.g., billing for 60 

minutes instead of the 30 minutes actually provided) or service-based upcoding 

(e.g., billing for evaluation and management services when a lower level of service 

was provided).

Billing for services not prescribed or referred by 

a physician

Submitting a claim for services or supplies when a physician had not prescribed or 

completed a necessary referral. 

Billing for services provided by an unqualified, 

uncertified, unlicensed, or ineligible provider

Submitting a claim for services provided by an uncertified, unqualified, unlicensed, 

or ineligible provider.

Unbundling of services to receive higher total 

payment when billed separately 

Billing separately for services that should be in a bundled payment.

 1

See GAO, Health Care Fraud: Types of Providers Involved in Medicare, Medicaid, and 

the Children’s Health Insurance Program Cases, GAO-12-820 (Washington, D.C.: Sept. 7, 

2012).

Appendix I: Methodology for Describing the 

Types of Health Care Fraud and Their 

Prevalence
Appendix I: Methodology for Describing the 

Types of Health Care Fraud and Their 

Prevalence

Page 27 GAO-16-216 Health Care Fraud

Category Description

Billing for prescription drugs that were not 

provided to beneficiaries

Billing by a pharmacy for a prescription drug that a physician never prescribed or a 

beneficiary never received.

Billing for services provided to an individual not 

eligible to receive services or supplies

Submitting a claim for services or supplies provided to an individual (who is not a 

beneficiary) under a beneficiary’s name.

Lying about eligibility to obtain benefits or 

services

Schemes that involve misrepresenting information to obtain services, lying on 

application for benefits, not reporting information that would affect benefit status, etc.

Billing for services as if they were provided by a 

physician but were actually provided by another 

provider

Schemes that involve billing for services as if they were provided by a physician in 

order to receive a higher payment when they were provided by another provider 

(such as a nurse practitioner or physician’s assistant), who would have been paid at 

a lower rate.

Duplicate billing Altering a small portion of a claim to submit it again for payment.

Double billing Billing for a claim to more than one payer (such as Medicare and Medicaid for the 

same service).

Billing for services as if they were provided in 

higher-care setting

Billing for services as if they were provided in a higher level-of-care setting (such as 

an inpatient hospital) for higher payment even though service was provided in lower 

level-of-care setting (such as an outpatient facility).

Schemes that generally support other fraud schemes

Falsifying a substantial portion of records in 

order to support fraudulent claims

Creating falsified medical records, invoices, orders, and prescriptions, etc., to 

support fraud scheme.

Receiving or paying kickbacks Kickbacks—financial compensation for participating in the fraud scheme, such as 

receiving services in exchange for cash—to beneficiaries, providers, or other 

individuals. 

Misusing a provider’s identification information 

to bill fraudulently 

Includes misusing another provider’s identification, stealing a provider’s 

identification, and using a retired or deceased provider’s identification to bill 

fraudulently.

Misusing a beneficiary’s identification 

information to bill fraudulently 

Misusing a beneficiary’s health information and identification, for example, to bill for 

services, including using identification of a deceased beneficiary.

Fraud schemes related to prescription drugs 

Fraudulently obtaining, distributing, or 

prescribing drugs containing controlled 

substances

Schemes involve drugs containing controlled substances and include stealing, 

writing fake prescriptions, distributing, and diluting. Additionally, these schemes 

include situations where those involved obtain large quantities of controlled 

substances to sell illegally and where a beneficiary or individual visits multiple 

providers to obtain prescriptions for controlled substances (more than are medically 

necessary).

Fraudulently obtaining, distributing, and 

misbranding prescription drugs

Schemes involve prescription drugs (not controlled substances) including wholesale 

issues, pricing issues, prescribing drugs, misbranding, and adulterating.

Marketing of prescription drugs for off-label or 

unapproved uses

Marketing drugs for off-label uses (i.e., uses not approved by the FDA); also known 

as false or misleading labeling or misbranded prescription drugs.

Inflating prescription drug prices Misrepresenting the manufacturer’s actual cost or the number of doses in a 

container.

Pharmacy shorting Pharmacy manipulates the quantity or price of a prescription that was billed, such as 

filling a lower quantity than what was billed, charging the beneficiary the full price of 

the drug instead of only the copayment, and submitting a bill for a more expensive 

version of prescription than what was filled.
Appendix I: Methodology for Describing the 

Types of Health Care Fraud and Their 

Prevalence

Page 28 GAO-16-216 Health Care Fraud

Category Description

Other schemes

Self-referral of certain health services by 

providers in violation of the Stark law

Self-referral of services or facilities in which the provider had a financial interest 

(often referred to as a Stark law violation).

Stealing of funds or products by employees Schemes involve employees stealing, misappropriating, or embezzling bank funds, 

funds, and premium refunds, etc.

Inappropriately waiving copayments for services 

or supplies provided

Schemes include waiving copayments for services provided and providing free 

supplies.

Provider exclusions - lying on application about 

exclusion status, billing for services provided by 

or employing an excluded provider

Schemes involve providers that are excluded from participating in health care 

programs. Schemes include lying on applications, concealing exclusion status, and 

working with excluded providers.

Other health care fraud-related schemes Schemes do not fall into other categories but are health care-related.

Source: GAO analysis of information from the Department of Health and Human Services and Department of Justice. | GAO-16-216

Using the list of fraud schemes identified, we reviewed court documents 

for the health care fraud cases resolved in 2010 to determine the 

prevalence of health care fraud schemes. The data we obtained for the 

2012 report were for fraud cases, including investigations and 

prosecutions, from HHS OIG and DOJ’s U.S. Attorneys’ Offices and Civil 

Division and included a variety of information such as information on the 

subjects of the fraud case and outcomes of the case (such as prison or 

probation). We obtained data from both HHS OIG and DOJ, as HHS OIG 

conducts investigations but DOJ does not prosecute all of the cases that 

are investigated. Also, because HHS OIG often works jointly with DOJ on 

fraud cases, for our 2012 report, we reduced duplication of fraud cases 

from the data we received from HHS OIG and DOJ by comparing 

subjects of the fraud cases that were in more than one data set we 

received.

Although the cases we obtained for the 2012 report included 

investigations as well as prosecutions, judgments, and settlements, for 

this engagement, we included only cases that had been adjudicated 

favorably for the United States, meaning criminal cases in which the 

subjects were found guilty, pled guilty, or pled no contest to at least one 

of the charges, and civil cases that resulted in a judgment for the United 

States or a settlement. There were 834 cases that resulted in a favorable 

outcome for the United States, though we only reviewed 739 of these 

cases. We excluded 95 cases because they were duplicative of another 

case in our data set (18 cases), they were not health care fraud cases (21 

cases), the data were insufficient to determine the fraud schemes used 

on the cases (15 cases), the cases were administrative actions rather 

than criminal or civil cases (9 cases), or we could not locate information 
Appendix I: Methodology for Describing the 

Types of Health Care Fraud and Their 

Prevalence

Page 29 GAO-16-216 Health Care Fraud

on the cases, such as a court document or a press release, to determine 

the fraud schemes involved in the cases (32 cases).

To determine the health care fraud schemes used in the 739 cases 

included in our report, we reviewed court documents associated with the 

charging stage of the case (such as indictment, information, or complaint) 

unless the charging document for a case was not available. We used 

court documents that we had previously obtained through our work on the 

2012 report. For that report, we obtained court documents from the Public 

Access to Court Electronic Records (PACER) database for the DOJ 

cases. However, we did not have a charging document for all of the DOJ 

cases and did not have a charging document for any of the HHS OIG 

cases. As a result, we searched in PACER for charging documents for 

any cases for which we were missing a charging document. If the 

charging document was not available, we reviewed case details as 

described in a DOJ or Federal Bureau of Investigation (FBI) press 

release. For several HHS OIG cases, we were unable to locate a 

charging document or a press release and obtained other court 

documents, such as settlement agreements and plea agreements, from 

HHS OIG.

When reviewing the court documents, we collected information on the 

health care fraud schemes that were used in the cases along with 

information about the beneficiary’s role, the provider’s role, whether a 

durable medical equipment supplier was involved, the programs that were 

affected by the fraud, and any monetary amounts associated with the 

fraud schemes (such as the amounts paid). For each case we reviewed, 

two reviewers independently categorized all information obtained for the 

case, including the relevant health care fraud schemes used on the case, 

and resolved any differences in the categorization. To assess the 

reliability of the data, we reviewed relevant documentation and examined 

the data for reasonableness and internal consistency. We found these 

data were sufficiently reliable for the purposes of our report.
Appendix II: Additional Details on Health Care 

Fraud Schemes in Cases GAO Reviewed

Page 30 GAO-16-216 Health Care Fraud

Tables 6 through 9 provide detailed information on health care fraud 

schemes for cases we reviewed, including whether the scheme was the 

only scheme in the case or used in combination with other schemes, the 

number of schemes used in cases, the role of the provider, and the role of 

the beneficiary.

Table 6: Number and Percentage of Health Care Fraud Cases Reviewed, by Fraud Scheme

Number of cases in which

Scheme

Scheme was 

the only one 

used in the 

case

Scheme was 

used in 

combination 

with other 

schemes

Scheme 

was used 

Percentage 

of all cases

Billing for services or supplies that were not provided 29 286 315 42.6

• Billing for services or supplies that were not provided along 

with services that were provided

2 52 54 7.3

• Billing for services or supplies that were never provided, and 

no legitimate services were provided

22 72 94 12.7

• Billing for services or supplies that were not provided, and we 

were unable to determine whether other services were 

provided 

5 162 167 22.6

Falsifying records in order to support fraudulent claims 5 181 186 25.2

Billing for services that were not medically necessary 9 172 181 24.5

Receiving or paying kickbacks 20 132 152 20.6

Upcoding to be paid at a higher rate than the services that were 

actually provided

21 108 129 17.5

Billing for services not prescribed or referred by a physician 1 103 104 14.1

Billing for services provided by an unqualified, uncertified, 

unlicensed, or ineligible provider

13 70 83 11.3

Fraudulently obtaining, distributing, or prescribing drugs containing 

controlled substances

31 48 79 10.8

Fraudulently obtaining, distributing, or misbranding prescription 

drugs 

20 23 43 5.8

Misusing a beneficiary’s or provider’s identification information to 

fraudulently bill (such as billing under a deceased beneficiary’s 

name or billing under a retired physician’s identification)

7 32 39 5.3

Unbundling of services to receive higher total payment when billed 

separately 

3 28 31 4.2

Marketing of prescription drugs for non-FDA-approved uses 6 24 30 4.1

Billing for services provided to an individual who was not eligible to 

receive services

0 24 24 3.3

Billing for prescription drugs that were not provided to beneficiaries 2 22 24 3.2

Lying about eligibility to obtain benefits or services 3 16 19 2.6

Appendix II: Additional Details on Health 

Care Fraud Schemes in Cases GAO 

Reviewed
Appendix II: Additional Details on Health Care 

Fraud Schemes in Cases GAO Reviewed

Page 31 GAO-16-216 Health Care Fraud

Number of cases in which

Scheme

Scheme was 

the only one 

used in the 

case

Scheme was 

used in 

combination 

with other 

schemes

Scheme 

was used 

Percentage 

of all cases

Self-referring by providers 2 15 17 2.3

Billing for services provided by or employing an excluded provider 6 11 17 2.3

Billing for services as if they were provided by a physician to be paid 

at a higher rate when the services were actually provided by another 

provider (such as a nurse practitioner), which would have been paid 

at a lower rate

0 15 15 2.0

Miscellaneous schemesa 16 42 58 7.9

Other health care fraud-related schemesb 45 80 125 16.9

Total 239 schemes 1,440 schemes 1,679 

schemes 

in 739 

cases

—

Source: GAO analysis of court and other documents. | GAO-16-216

Notes: We reviewed 739 health care fraud cases that were resolved in 2010.

Percentages add to more than 100 because each case can have more than one scheme.

a

Miscellaneous schemes include the remaining schemes that were identified in our review but each 

individual scheme represented less than 2 percent of the cases and thus is not included in the table. 

These schemes include billing for services as if they were provided in a higher level-of-care setting 

than actually provided, waiving copayments for beneficiaries to receive care or services, and inflating 

prescription drug prices.

b

These health care fraud-related schemes included a variety of schemes, such as violating Medicare 

policy requirements by failing to document care provided, billing for services that did not meet 

standard-of-care requirements, and inflating or misreporting costs on cost reports submitted to 

Medicare.

Table 7: Number and Percentage of Health Care Fraud Cases Reviewed, by Number 

of Fraud Schemes Used

Number of schemes Number of cases Percentage

1 scheme 239 32.3

2 schemes 246 33.3

3 schemes 146 19.8

4 schemes 57 7.7

5 schemes 35 4.7

6 schemes 11 1.5

7 schemes 1 0.1

8 schemes 2 0.3

9 schemes 1 0.1

10 schemes 1 0.1
Appendix II: Additional Details on Health Care 

Fraud Schemes in Cases GAO Reviewed

Page 32 GAO-16-216 Health Care Fraud

Number of schemes Number of cases Percentage

Total 739 99.9

Source: GAO analysis of court and other documents. | GAO-16-216

Notes: We reviewed 739 health care fraud cases that were resolved in 2010.

Percentages do not add to 100 due to rounding.

Table 8: Number and Percentage of Health Care Fraud Cases Reviewed, by Role of Provider

Provider was complicit

Scheme

Provider 

was the 

biller and 

complicit 

Provider was not 

the biller but was 

complicit 

Provider’s 

information was 

stolen or sold 

without his or her 

knowledge or was 

obtained under false 

pretenses

Provider 

was not 

involved

Unknown 

how 

provider’s 

information 

was 

obtained

Total 

cases 

with this 

scheme

Billing for services or supplies 

that were not provided

186 12 41 3 71 315

• Billing for services or 

supplies that were not 

provided along with 

services that were 

provided 

44 2 6 0 2 54

• Billing for services or 

supplies that were 

never provided, and 

no legitimate services 

were provided

53 7 15 2 15 94a

• Billing for services or

supplies that were not 

provided, and we were 

unable to determine if 

other services were 

actually provided or 

not

89 3 20 1 54 167

Falsifying a substantial portion 

of records in order to support 

fraudulent claims

112 13 32 12 15 186a

Billing for services that were 

not medically necessary

117 10 18 1 35 181

Receiving or paying kickbacks 105 21 7 9 9 152a

Upcoding services to be paid

at a higher rate than the 

services that were actually 

provided

111 6 5 0 7 129

Billing for services not 

prescribed or not referred by a 

physician

26 2 25 0 51 104
Appendix II: Additional Details on Health Care 

Fraud Schemes in Cases GAO Reviewed

Page 33 GAO-16-216 Health Care Fraud

Provider was complicit

Scheme

Provider 

was the 

biller and 

complicit 

Provider was not 

the biller but was 

complicit 

Provider’s 

information was 

stolen or sold 

without his or her 

knowledge or was 

obtained under false 

pretenses

Provider 

was not 

involved

Unknown 

how 

provider’s 

information 

was 

obtained

Total 

cases 

with this 

scheme

Billing for services provided by 

an unqualified, uncertified, 

unlicensed, or ineligible 

provider

73 1 7 0 2 83

Fraudulently obtaining, 

distributing, or prescribing 

drugs containing controlled

substances

31 1 15 8 24 79

Fraudulently obtaining, 

distributing, or misbranding 

prescription drugs 

9 1 3 21 9 43

Misusing a beneficiary’s or 

provider’s identification 

information to fraudulently bill 

(such as billing under a 

deceased beneficiary’s name 

or billing under a retired 

physician’s identification)

22 1 6 3 7 39

Unbundling of services to 

receive higher total payment 

when billed separately 

31 0 0 0 0 31

Marketing of prescription drugs 

for non-FDA-approved uses

10 10 1 9 0 30

Billing for services provided to 

an individual who was not 

eligible to receive care

11 0 4 5 4 24

Billing for prescription drugs 

that were not provided to 

beneficiaries

13 0 6 1 4 24

Lying about eligibility to obtain 

benefits or services 

3 0 2 9 5 19

Self-referral of certain health 

services by providers in 

violation of the Stark law

17 0 0 0 0 17

Billing for services provided by 

or employing an excluded 

provider

14 0 2 0 1 17
Appendix II: Additional Details on Health Care 

Fraud Schemes in Cases GAO Reviewed

Page 34 GAO-16-216 Health Care Fraud

Provider was complicit

Scheme

Provider 

was the 

biller and 

complicit 

Provider was not 

the biller but was 

complicit 

Provider’s 

information was 

stolen or sold 

without his or her 

knowledge or was 

obtained under false 

pretenses

Provider 

was not 

involved

Unknown 

how 

provider’s 

information 

was 

obtained

Total 

cases 

with this 

scheme

Billing for services as if they 

were provided by a physician 

to be paid at a higher rate 

when the services were 

actually provided by another 

provider (such as a nurse 

practitioner) that would have 

been paid at a lower rate

13 0 2 0 0 15

Miscellaneous schemesb 43 0 3 13 6 66a

Other health care fraud-related 

schemesc 90 2 2 13 18 125

Total 1,037 80 181 107 268 1,679

Source: GAO analysis of court and other documents. | GAO-16-216

Note: We reviewed 739 health care fraud cases that were resolved in 2010.

a

For these schemes, there were cases in which a fictitious provider was created to commit fraud. For 

the schemes of billing for services or supplies that were never provided, and no legitimate services 

were provided and falsifying records in order to support the fraud scheme, there were two cases that 

had fictitious providers created to commit the fraud. For the schemes of kickbacks and one 

miscellaneous scheme, there was one case that had fictitious providers created to commit the fraud.

b

Miscellaneous schemes include the remaining schemes that were identified in our review but each 

individual scheme represented less than 1 percent of the cases and thus is not included in the table. 

These schemes include billing for services as if they were provided in a higher level-of-care setting 

than actually provided, waiving copayments for beneficiaries to receive care or services, and inflating 

prescription drug prices.

c

These health care fraud-related schemes included a variety of schemes, such as violating Medicare 

policy requirements by failing to document care provided, billing for services that did not meet 

standard-of-care requirements, and inflating or misreporting costs on cost reports submitted to 

Medicare.
Appendix II: Additional Details on Health Care 

Fraud Schemes in Cases GAO Reviewed

Page 35 GAO-16-216 Health Care Fraud

Table 9: Number and Percentage of Health Care Fraud Cases Reviewed, by Role of Beneficiary

Beneficiary was not complicit

Scheme

Beneficiary 

was 

complicit in 

scheme

Beneficiary’s 

information was 

stolen or sold 

without his or her 

knowledge or was 

obtained under false 

pretenses 

Beneficiary 

received service 

or supply from 

provider, but 

there was no 

evidence to 

indicate that the 

beneficiary was 

aware of the fraud

Beneficiary 

was not 

involved

Unknown 

how 

beneficiary’s 

information 

was 

obtained

Total 

cases 

with this 

scheme

Billing for services or 

supplies that were not 

provided

52 28 193 8 34 315

• Billing for services or 

supplies that were 

not provided along 

with services that 

were provided

4 0 50 0 0 54

• Billing for services or 

supplies that were 

never provided, and 

no legitimate 

services were 

provided

17 17 31 6 23 94

• Billing for services or 

supplies that were 

not provided, and we 

were unable to 

determine if other 

services were 

actually provided or 

not

31 11 112 2 11 167

Falsifying a substantial 

portion of records in order to 

support fraudulent claims

41 18 99 15 12 186

Billing for services that were 

not medically necessary

43 11 117 5 5 181

Receiving or paying 

kickbacks

60 14 55 21 2 152

Upcoding services to be 

paid at a higher rate than 

the services that were 

actually provided

5 4 119 1 0 129

Billing for services not 

prescribed or referred by a 

physician

6 15 74 2 7 104
Appendix II: Additional Details on Health Care 

Fraud Schemes in Cases GAO Reviewed

Page 36 GAO-16-216 Health Care Fraud

Beneficiary was not complicit

Scheme

Beneficiary 

was 

complicit in 

scheme

Beneficiary’s 

information was 

stolen or sold 

without his or her 

knowledge or was 

obtained under false 

pretenses 

Beneficiary 

received service 

or supply from 

provider, but 

there was no 

evidence to 

indicate that the 

beneficiary was 

aware of the fraud

Beneficiary 

was not 

involved

Unknown 

how 

beneficiary’s 

information 

was 

obtained

Total 

cases 

with this 

scheme

Billing for services provided 

by an unqualified, 

uncertified, unlicensed, or 

ineligible provider

5 1 72 2 3 83

Fraudulently obtaining, 

distributing, or prescribing 

drugs containing controlled 

substances

26 6 11 13 22 78a

Fraudulently obtaining, 

distributing, or misbranding 

prescription drugs 

4 2 10 24 3 43

Misusing a beneficiary’s or 

provider’s identification 

information to fraudulently 

bill (such as billing under a 

deceased beneficiary’s 

name or billing under a 

retired physician’s 

identification)

4 14 14 2 5 39

Unbundling of services to bill 

separately for services that 

were bundled to be billed as 

a bundle

0 0 31 0 0 31

Marketing of prescription 

drugs for non-FDA-approved 

uses

1 0 12 17 0 30

Billing for services provided 

to an individual who was not 

eligible to receive care

14 1 8 0 1 24

Billing for prescription drugs 

that were not provided to 

beneficiaries

5 5 11 1 1 24a

Lying about eligibility to 

obtain benefits or services 

14 1 2 0 2 19

Self-referral of certain health 

services by providers in 

violation of the Stark law

0 0 17 0 0 17

Billing for services provided 

by or employing an excluded 

provider

0 0 16 1 0 17
Appendix II: Additional Details on Health Care 

Fraud Schemes in Cases GAO Reviewed

Page 37 GAO-16-216 Health Care Fraud

Beneficiary was not complicit

Scheme

Beneficiary 

was 

complicit in 

scheme

Beneficiary’s 

information was 

stolen or sold 

without his or her 

knowledge or was 

obtained under false 

pretenses 

Beneficiary 

received service 

or supply from 

provider, but 

there was no 

evidence to 

indicate that the 

beneficiary was 

aware of the fraud

Beneficiary 

was not 

involved

Unknown 

how 

beneficiary’s 

information 

was 

obtained

Total 

cases 

with this 

scheme

Billing for services as if they 

were provided by a 

physician to be paid at a 

higher rate when the 

services were actually 

provided by another provider 

(such as a nurse 

practitioner), which would 

have been paid at a lower 

rate

0 0 15 0 0 15

Miscellaneous schemesb 2 1 46 13 4 66

Other health care fraudrelated schemesc 6 4 77 24 14 125

Total 288 125 999 149 115 1,679

Source: GAO analysis of court and other documents. | GAO-16-216

Note: We reviewed 739 health care fraud cases that were resolved in 2010.

a

For these schemes, there was one case in which a fictitious beneficiary was created to commit fraud.

b

Miscellaneous schemes include the remaining schemes that were identified in our review but each 

individual scheme represented less than 1 percent of the cases and thus is not included in the table. 

These schemes include schemes, such as billing for services as if they were provided in a higher 

level-of-care setting than actually provided, waiving copayments for beneficiaries to receive care or 

services, and inflating prescription drug prices.

c

These health care fraud-related schemes included a variety of schemes, such as violating Medicare 

policy requirements by failing to document care provided, billing for services that did not meet 

standard-of-care requirements, and inflating or misreporting costs on cost reports submitted to 

Medicare.
Page 38 GAO-16-216 Health Care Fraud

Kathleen M. King, (202) 512-7114 or kingk@gao.gov

In addition to the contact named above, Martin T. Gahart, Assistant 

Director; Christine Davis; Laura Elsberg; Christie Enders; Matt Gever; 

Jackie Hamilton; Dan Lee; Elizabeth T. Morrison; and Carmen RiveraLowitt made key contributions to this report.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(291246)
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