• What is Fraud?

    Fraud generally is defined as an intentional deception or intentional misrepresentation that a person makes to gain a benefit for which that person is not entitled.

    Examples of fraud in health care may include:

    • Knowingly billing for services that were not furnished
    • Knowingly altering claim forms to receive a higher payment amount
    • Falsifying documentation
    • Using unlicensed individuals to provide services

    What is Abuse?

    Abuse involves payment for items or services when there is no legal entitlement to that payment, and the health care provider has not knowingly and/or intentionally misrepresented facts to obtain payment.

    Examples of abuse may include:

    • Misusing codes on a claim
    • Charging excessively for services or supplies
    • Billing for services that were not medically necessary
    • Unbundling and billing individual components of a service instead of the all-inclusive procedure

    What is Waste?

    Waste is overutilization of services or other practices that, directly or indirectly result in unnecessary costs to the health care system. It is not generally considered to be caused by criminally-negligent actions but by payment errors, referred to as "improper payments," and the misuse of resources. Deficient management, practices, or controls can result in waste. Given the complexity of payment systems, waste is much more common than fraud and abuse.

    Examples of waste may include:

    • Spending on services that lack evidence of producing better outcomes compared with less-expensive alternatives
    • Failures of care coordination that result in unnecessary hospital readmissions, avoidable complications, and declines in functional status
    • Ordering unnecessary tests to guard against liability in malpractice lawsuits
  • Last Updated: 9/11/2014
    Contact: advocacy@apta.org