Title XVIII of the Social Security Act, 42 U.S.C. § 1395 et
seq., enacted in 1965 Pub.L. 89-97 (July 30, 1965), 79 Stat. 286,
Federal Medicare and Medicaid programs and authorizes medical benefits for
aged, blind, and disabled. See generally United States v.
743 F.2d 800, 806 (11th Cir. 1984), cert. denied, 469 U.S.
(1985). Frauds executed against these aid programs may be prosecuted via a
number of criminal statutes. See Bucy, Health Care Reform and
by Health Care Providers, 38 Villa. L. Rev. 1002 (1993); Bucy, Fraud
Fright: White Collar Crime by Health Providers, 67 N.C.L.Rev. 855
The 1965 statute was designed to "to provide a hospital insurance program
aged under the Social Security Act with a benefits program and an expanded
program of medical assistance to increase benefits under the Old-Age,
and Disability Insurance System, to improve the Federal-State public
programs, and for other purposes."|
The Act included two programs popularly known as Medicare, 42
§ 1395ff (Title 18 of Social Security Act of 1935), and Medicaid, 42
§ 1396ff (Title 19 of Social Security Act of 1935). Medicare and
are administered by the Health Care Financing Administration (HCFA) of the
States Department of Health & Human Services (HHS). Investigations involving
either program are conducted by the Office of Inspector General of HHS, the
and other agencies.
Medicare is a health financing program for the elderly. Its
derives from a federally-administered trust fund. Claims for reimbursement
filed by beneficiaries or their health care providers and are paid by
and intermediaries (private insurance companies in each state which are the
Federal government's agents) under contracts to perform this service. The
carrier or intermediary is reimbursed for claims that are paid, and for
administrative costs, out of the Federal trust funds.
Medicaid is a health financing program for low-income individuals
administered by each state, pursuant to a state plan that must be approved
HHS. The states have some flexibility with regard to how they structure
respective programs. Each state is reimbursed by the federal government on
quarterly basis for a percent of the costs incurred in operating its
Beneficiaries and providers under either program can be prosecuted
under Federal law for (1) making material false statements, (2) submitting
claims, or (3) being a party to a kickback scheme. The first two offenses
prohibited by 18 U.S.C. §§ 287, 1001; all three are prohibited by
specific criminal provisions in the Medicare and Medicaid statutes. See
generally 42 U.S.C. § 1320a-7b.
In recent years, especially with the establishment of Federally
Medicare Fraud Control Units in many states, fraud in the Medicaid program
come to be viewed as a state concern. The Federal government program has
its attention more on its enforcement of fraud against its Medicare program.
Successful prosecution of a Medicare case will often require a
sophisticated understanding of the reimbursement principles involved in that
case. The reimbursement principles under Medicare have grown increasingly
complicated over the years. Different entities are paid under different
methodologies (e.g., cost-based, charge-based, or fee schedules) and may be
subject to limits based on a number of factors. Some providers are paid
directly, and some are paid by the patient, who is then reimbursed by
The Office of General Counsel at HHS should be relied upon for assistance.
Criminal Division's Fraud Section is also available to provide assistance.
[updated April 1998] [cited in USAM 9-42.001; USAM 9-42.451]