Healthcare Fraud

Examples of health insurance and medical billing fraud are:

• Billing for services not actually performed
• “Upcoding,” or billing for a more expensive service than the one actually performed
• “Unbundling,” or billing each stage of a procedure as if it were a separate procedure
• Falsifying a patient’s diagnosis to justify procedures that aren’t medically necessary
• Accepting kickbacks for patient referrals
• Waiving patient co-pays or deductibles and over-billing the insurance carrier

The primary federal health care fraud laws are:

• The False Claims Act, 31 U.S.C. §§ 3729–3733
• The Anti-Kickback Statute, 42 U.S.C. § 1320a–7b(b)
• The Physician Self-Referral Law, 42 U.S.C. § 1395nn
• The Exclusion Authorities, 42 U.S.C. §§ 1320a–7, 1320c–5
• The Civil Monetary Penalties Law, 42 U.S.C. § 1320a–7a
• Criminal Health Care Fraud Statute, 18 U.S.C. §§ 1347, 1349

The False Claims Act is a federal law that imposes civil penalties on persons that “knowingly” submit false or fraudulent claims for reimbursement to the federal government. Specific intent to defraud is not necessary to trigger a violation; rather, the “knowing” requirement can be met by (1) actual knowledge, (2) deliberate ignorance of the truth or falsity of information in the claim, or (3) reckless disregard for the truth or falsity of information in the claim. While this is the most common violation, the government can also pursue actions for reverse false claims, implied false certification, and conspiracy to violate the FCA. The FCA applies to all government contracts or submissions to the government for reimbursement except for tax claims.

Two parties have the power to bring an action for violation of the Act: (1) the United States, and (2) qui tam relators. Qui tam relators are private parties that have direct knowledge of the fraud—that is, they did not acquire knowledge of the infringing activity through public disclosure, such as news reports. If the United States Department of Justice decides to pursue the cause of action after the qui tam relator files suit in federal court, then the qui tam relator may receive a share of the government’s monetary recovery against the violator.

The Stark law and its implementing regulations prohibit physician self-referrals for certain health services that may be paid for by Medicare or Medicaid. Under the Stark law, if (1) a physician (or an immediate family member of a physician) has a “financial relationship” with an entity, the physician may not make a referral to the entity for the furnishing of these health services for which payment may be made under Medicare or Medicaid, and (2) the entity may not bill the federal health care program or any individual or entity for services furnished pursuant to a prohibited referral. ACA, among other things, limits certain exceptions to the Stark law.

What are examples of healthcare coding violations?

Examples of healthcare coding violations (i.e., false coding) include intentional “upcoding” to utilize billing codes that reflect more severe illness or expensive treatment as well as the following examples:

• billing for services that not provided;
• billing for services that were not medically necessary;
• billing separately for services already included in a global fee

Under the federal anti-kickback statute, it is a felony for a person to knowingly and willfully offer, pay, solicit, or receive anything of value (i.e., “remuneration”) in return for a referral or to induce generation of business reimbursable under a federal health care program.  The statute prohibits both the offer or payment of remuneration for patient referrals, as well as the offer or payment of anything of value in return for purchasing, leasing, ordering, or arranging for, or recommending the purchase, lease, or ordering of any item or service that is reimbursable by a federal health care program.