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Insurance companies negotiate rates for services at the best advantage to them. Companies with larger groups get the best rates becaues they have more economic leverage. Medicare is the 900 pound gorilla in the insurance world. So the short answer is no, it is not fraudulent. The reason is each insurance company will pay at their own negotiated rate regardless of how much the provider charges.

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8y ago
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Wiki User

9y ago

No.

What many people do not understand is that providers DO NOT determine their own reimbursement rate. When providers decide to join a network, for example Aetna, they are provided with what is called a fee schedule. The fee schedule has a list of pricing, set by Aetna that by signing the contract with Aetna, the provider is agreeing to the set fee structure set by Aetna.

Should the provider bill Aetna $525.00 for a procedure which is listed on the fee schedule at $250.00, the provider will be paid at $250.00 every time, nothing more.

Each insurance company sets their own pricing, so the overall answer to your question is, NO it is not fraud for a provider to bill Medicare at a higher rate than another insurance company for the same service, it is completely dependent on what the insurance company set the pricing at.

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Q: Is it Medicare fraud for a company to bill commercial insurance companies a higher fee-for-service than they are billing Medicare for the same service?
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