The difference comes down to which program is defrauded, who runs it, and who investigates. Medicare is a federal health insurance program serving people 65 and older and some younger people with disabilities.
Medicaid is a joint federal-state program serving low-income individuals and families. The fraudulent conduct itself is often the same, and the distinction lies in the jurisdiction, the enforcement agencies, and the laws under which charges are brought.
How the Two Programs Differ
- Medicare is funded and administered entirely at the federal level. Fraud against it is a federal matter, investigated by agencies such as the Department of Health and Human Services Office of Inspector General and the FBI, and prosecuted by the Department of Justice.
- Medicaid is administered by each state under federal rules, with shared funding. Fraud against it can be prosecuted federally, under state law, or both. Every state operates a Medicaid Fraud Control Unit, and state attorneys general play a major enforcement role alongside federal agencies.
For a person or provider under investigation, this is the difference that matters most. A Medicare case means federal court, federal prosecutors, and federal sentencing rules. A Medicaid case in North Carolina can involve state charges, federal charges, or investigations by both at the same time.
Types of Fraud
Most healthcare fraud schemes can target either program, and the majority of cases involve providers rather than patients. Common allegations include:
- Billing for services never provided, including submitting claims for treatments, tests, or equipment the patient did not receive
- Upcoding, which means billing for a more expensive service than the one actually performed
- Unbundling, or billing separately for procedures that should be billed together at a lower combined rate
- Providing medically unnecessary services by ordering treatments, prescriptions, or equipment solely to generate program payments
- Kickbacks, which refer to paying or receiving anything of value in exchange for patient referrals or prescriptions
How Patient-Level Fraud Differs
Beneficiary fraud looks different between the programs because eligibility works differently.
Medicaid eligibility depends on income and personal circumstances, so Medicaid sees more eligibility fraud, like misstating income, household size, or residency to qualify for benefits, along with allegations of sharing or misusing benefit cards.
Medicare eligibility is primarily age-based, so patient-side Medicare fraud more often involves identity theft, where someone’s Medicare number is used by a third party to submit false claims.
Potential Penalties for Medicaid and Medicare Fraud
Medicare and Medicaid fraud both carry serious consequences at the state and federal level. Depending on the charges, these can include:
- Federal criminal charges under statutes covering healthcare fraud, false claims, and kickbacks
- State criminal charges for fraud against the Medicaid program
- Civil liability under the False Claims Act, with penalties calculated per false claim
- Restitution, fines, and imprisonment
- Exclusion from federal healthcare programs, which, for a provider, can end a practice regardless of the criminal outcome
For licensed professionals, a fraud investigation also puts medical, nursing, and pharmacy licenses at risk, along with hospital privileges and payer contracts.
Why the Distinction Matters if You’re Under Investigation
Which program is involved determines who is investigating you, which laws apply, and where the case will be prosecuted. Healthcare fraud investigations often begin months before charges are filed, through audits, data analysis, subpoenas, and records requests.
If you’ve received a subpoena, an audit notice, or contact from investigators regarding Medicare or Medicaid billing, speak with a defense attorney before responding. At Marcilliat & Mills PLLC, we can help if you have any questions. Reach out today to schedule your free case evaluation.