Fraud, waste, and abuse: what each word means on a NEMT trip

Fraud: a deception made on purpose

Under Medicaid’s definition, fraud takes two things: a deliberate lie or misstatement, and knowledge that it could win the person, or someone else, a benefit they have no right to (42 CFR 455.2). CMS’s Medicare plan guidelines use the federal health care fraud statute instead: knowingly and willfully running a scheme to defraud a health care program or to take its money by false pretenses.

The plainest NEMT case is billing for a ride that did not happen. CMS’s booklet on Medicaid transportation names a version operators should recognize: billing loaded miles for a rider who never got in the van because they did not show up. Paying for patient referrals is on CMS’s list of fraud examples too, and the kickback laws reach it. Our guide to NEMT fraud prevention lists the schemes investigators find most often.

Abuse: payment with no right to it, intent unproven

Abuse covers practices that are out of line with sound fiscal, business, or medical practice and cost the program money, or that get paid for services that were not medically necessary or fell short of professional standards (42 CFR 455.2). Medicaid’s definition also reaches riders whose practices run up unnecessary cost. CMS’s plan guidelines add the key difference from fraud: payment went out with no legal entitlement, but nobody has shown the provider knowingly misrepresented facts.

For example, a dispatcher who rounds every trip up to the next whole mile out of habit is billing miles that were never driven. Nobody planned a scheme, and the program still paid for miles it did not owe. CMS’s own abuse examples include charging too much and misusing codes on a claim.

Waste: overuse, usually not a crime

CMS defines waste as overusing services, or other practices, that directly or indirectly cause unnecessary costs, and says it generally comes from misused resources rather than criminally negligent acts. The term appears in CMS’s Medicare plan guidelines and in broker courses. Medicaid’s own regulation defines only fraud and abuse.

For example, booking a stretcher van for a rider who rides comfortably in a wheelchair van costs the payer more for the same trip. Programs push against this with the least costly mode rule.

Why the label changes what happens next

CMS draws the line as a scale: mistakes lead to errors, inefficiencies lead to waste, bending the rules leads to abuse, and intentional deception is fraud. Where a problem lands decides the response:

• Waste and honest errors. The payer recovers the money, and you fix the process. Once you identify an overpayment, the 60-day rule sets the refund deadline.
• Abuse. Recovery, plus possible administrative, civil, or criminal exposure, which CMS says abuse can also carry.
• Fraud. Cases under the False Claims Act, civil monetary penalties, criminal charges, and exclusion from federal programs.

The line moves with knowledge. The False Claims Act treats reckless disregard as knowing, so the rounding habit above stops looking like abuse once someone in the office knows about it and lets it continue.

Who requires a yearly FWA course

Your broker and health plan contracts do. No federal rule makes a ride company take one today. Medicare Advantage and Part D plans once had to make their downstream entities take CMS’s compliance training, but CMS deleted that requirement in a final rule published April 16, 2018 and applicable from January 1, 2019. CMS added that a plan may still require the training by contract.

Medicaid brokers write it into their agreements:

• MTM. Its Pennsylvania provider agreement (effective January 1, 2023) says driver training programs must include fraud, waste, and abuse and HIPAA, with training records kept in each driver’s file.
• Modivcare. Its 2025 compliance attestation has the company certify that every owner and driver finished Modivcare’s training, general compliance and FWA included, for the calendar year. New employees have 30 days from hire to finish it, and the company keeps the records for at least 10 years and hands them over on request.

Keep a dated roster or certificate for each person for each year, filed so you can pull it by name.

HealthRide stores GPS-recorded miles, timestamps, and the rider’s on-screen signature with every trip, so anyone in your office can hold the miles on a bill up against the trip record.