Defining “Fraud,” “Waste,” and “Abuse”

“Fraud” means an intentional deception or misrepresentation made by a person with the knowledge that the deception could result in some unauthorized benefit to himself or some other person.¹ It includes any act that constitutes fraud under applicable Federal or State law.² Generally, mistakes, errors, or negligence do not constitute fraud; rather fraud includes reckless or intentional conduct.³

“Waste” is the overutilization of services, or other practices that, directly or indirectly, result in unnecessary costs to the health care system.⁴ Waste is generally not considered to be caused by criminally negligent actions but rather the misuse of resources.⁵

“Abuse” means provider practices that are inconsistent with sound fiscal, business, or healthcare practices, and result in an unnecessary costs to the healthcare system, or in reimbursement for services that are not medically necessary or that fail to meet professionally recognized standards for health care.⁶ Abuse involves payment for items or services when there is no legal entitlement to that payment and the provider has not knowingly and/or intentionally misrepresented facts to obtain payment.⁷