NCPA - National Center for Policy Analysis

Medicare Fraud

August 25, 1995

At least 10% of funds from the $177 billion Medicare program is squandered each year through fraud by some billing companies, providers, suppliers, drug dealers and even organized crime. For example:

  • Several Michigan pharmacists obtained large supplies of expired drugs and dispensed them to nursing homes at full cost to Medicare.
  • A pharmaceutical salesman peddled $6 million worth of expired, mislabeled, unsterileor second-hand pacemakers over an eight-year period.
  • One wheelchair van service billed Medicare for $62,000 over 16 months on behalf of one beneficiary - equal to one trip every two days for about $260 per trip.
  • A California supply company billed Medicare $5 million for surgical dressings for patients who never underwent surgery.

Medicare's centralized, noncompetitive single-payer system is at the heart of much of the waste and fraud. Eliminating this loss of resources requires that competitive market forces be introduced into the Medicare system.

Source: Thomas A. Schatz, "Medicare Fraud: Tales from the Gypped," The Wall Street Journal, August 25, 1995.


Browse more articles on Health Issues