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Overview

The purpose of the qui tam provisions of the False Claims Act is to encourage private individuals who are aware of health care fraud being perpetrated against the government to bring such information forward.

According to a General Accounting Office (GAO) report, instances of Medicare fraud, including upcoding, cost report fraud, DRG fraud, PPS fraud and false claims. Stark and kickback violations causing over-utilization, can be found in all segments of the healthcare industry in every geographical area of the country. Healthcare consumes approximately 40% of federal spending, with Medicare spending approximately $350 billion, and Medicaid totaling approximately $320 billion.

The three largest health care programs which the federal government funds are the Medicare Program, the Medicaid Program (partially funded) and the TRICARE Program. Below is a thumbnail sketch of the programs and the types of fraud that can occur.

In 1965, Title XVIII of the Social Security Act established the Medicare Program. Medicare is a system of health care cost reimbursement established by federal statute and regulations issued by HHS. Medicare helps pay for the costs of certain health care expenses for individuals 65 years of age or older.

Part A

Part A payments are made to institutional providers such as hospitals, skilled nursing facilities, home health agencies, etc. Payment is generally made under the Prospective Payment System (PPS). Institutional providers (including all hospitals) are also reimbursed in part on a reasonable cost basis. Part A False Claims Act violations include the following:

1. Inflating costs relating to patient care; i.e. including cost of non-covered services, supplies or equipment;
2. Seeking reimbursement for costs apportionable to non-Medicare patients; i.e. manipulating statistics to obtain additional payment, such as increasing the square footage of Medicare certified areas;
3. Seeking reimbursement for costs that are not related to in-patient care;
4. Failing to disclose the related nature or the relationship between business entities with whom the provider is dealing;
5. Improperly manipulating statistics (e.g. patient census, cost center allocations, square footage);
6. Failure to report overpayments;
7. DRG fraud;
8. Stark law and kickback violations.
9. Failure to return a Medicare Overpayment.
10. Inappropriate Hospital Admissions.

Part B

Part B services provided by physicians, suppliers, and other health care providers are generally paid on the basis of a Medicare fee schedule. Under Part B, the Medicare beneficiary is responsible for any applicable deductible or co-insurance requirements. When services are covered under Part B, Medicare will use one of the two following methods of payment: (1) payment to the patient; (2) payment to the doctor (or supplier or other health care entity) – the “assignment” method. Part B Medicare fraud includes:

1. Billing for services not rendered or products not delivered;
2. Billing for services or supplies not ordered;
3. Misrepresenting services rendered or product provided e.g. Upcoding, inappropriate coding;
4. Billing for medically unnecessary services – this includes furnishing services in excess of the patient’s needs, or furnishing a battery of diagnostic tests, where, based on the diagnosis, only a few were needed; it also includes misrepresenting the diagnosis to justify the services or products;
5. Duplicate billing;
6. Falsifying records to meet or continue to meet the conditions of participation; this includes the alteration of dates, the forging of physician signatures, and the adding of additional information after the fact;
7. Increasing units of service, which are subject to a payment rate;
8. Billing procedures over a period of days when all treatment occurred during one visit i.e. split billing;
9. Laboratory unbundling – in this scenario, tests and other services that are automatically performed as a panel, group or set, should be billed as a single service. When a provider breaks these services out of the bundled group and bills them individually, the provider is deemed to be “unbundling;”
10. Unlawfully providing kickbacks to health care providers in exchange for referrals or prescriptions.
11. Stark law violations.
12. Durable Medical Equipment (DME) Fraud.

Part C

A third Medicare program that expands managed care options for beneficiaries who are entitled to Part A and enrolled in Part B was created under the Balanced Budget Act of 1997 and is called “Medicare + Choice” or “Medicare Part C,” or a Medcare supplemental (or Medigap) policy. Under this program, Medicare beneficiaries may select a managed care plan certified under Medicare. Payments Medicare makes to the private carrier replaces the amounts Medicare otherwise would have paid under Parts A and B.

Areas of Part C managed care false claims, fraud and abuse include:

1. Inflated general and administrative costs;
2. The intentional failure to pay providers;
3. MCO and physician relationships that are driven by cost-containment at the expense of patient care;
4. Failure to provide necessary services for patients.

Medicaid is a joint federal-state entitlement program that provides health care for low income people.

Medicaid enables the states to provide health care assistance and related services to needy individuals. Within broad federal rules, each state decides who is eligible for Medicaid, the services covered, payment levels for services and administrative and operation procedures. Each state’s Medicaid program is administered through a specific state entity, and the program itself is not always called “Medicaid” per se. For instance, in California, the program is called “Medi-Cal.” The state directly reimburses health care providers for services rendered, with the state obtaining the federal share of the payment from accounts which draw on funds of the United States Treasury.

Medicaid is the second-largest health care program in the federal budget and the second-largest state spending item, surpassed only by elementary and secondary education. The GAO has reported Medicaid fraud losses of over $20 billion. Unlike Medicare, which is one large system, Medicaid is 50 different ones, which makes Medicaid more vulnerable to fraud. Although the federal government provides matching funds for enforcement against Healthcare fraud and abuse, it is up to the individual states to protect their Medicaid program from fraud.

Medicaid Healthcare fraud can take many forms, including:

1. Billing for services not rendered or products not delivered;
2. Billing for services or supplies not ordered;
3. Misrepresenting services rendered or product provided e.g. Upcoding, inappropriate coding;
4. Billing for medically unnecessary services – this includes furnishing services in excess of the patient’s needs, or furnishing a battery of diagnostic tests, where, based on the diagnosis, only a few were needed; it also includes misrepresenting the diagnosis to justify the services or products;
5. Duplicate billing;
6. Falsifying records to meet or continue to meet the conditions of participation; this includes the alteration of dates, the forging of physician signatures, and the adding of additional information after the fact;
7. Increasing units of service;
8. Billing procedures over a period of days when all treatment occurred during one visit i.e. split billing;
9. Laboratory unbundling – in this scenario, tests and other services that are automatically performed as a panel, group or set, should be billed as a single service. When a provider breaks these services out of the bundled group and bills them individually, the provider is deemed to be “unbundling;”
10. Unlawfully providing kickbacks to health care providers in exchange for referrals or prescriptions.

TRICARE (f/k/a CHAMPUS), is the component agency of the U.S. Department of Defense that administers and supervises the health care program for certain military personnel and their dependents. TRICARE contracts with a fiscal intermediary that receives, adjudicates, processes and pays health care claims submitted to it by TRICARE beneficiaries or providers.

Fraud against the TRICARE program can take many forms, including:

1. Billing for services not rendered or products not delivered;
2. Billing for services or supplies not ordered;
3. Misrepresenting services rendered or product provided e.g. Upcoding, inappropriate coding;
4. Billing for medically unnecessary services – this includes furnishing services in excess of the patient’s needs, or furnishing a battery of diagnostic tests, where, based on the diagnosis, only a few were needed; it also includes misrepresenting the diagnosis to justify the services or products;
5. Duplicate billing;
6. Falsifying records to meet or continue to meet the conditions of participation; this includes the alteration of dates, the forging of physician signatures, and the adding of additional information after the fact;
7. Increasing units of service;
8. Billing procedures over a period of days when all treatment occurred during one visit i.e. split billing;
9. Laboratory unbundling – in this scenario, tests and other services that are automatically performed as a panel, group or set, should be billed as a single service. When a provider breaks these services out of the bundled group and bills them individually, the provider is deemed to be “unbundling;”
10. Unlawfully providing kickbacks to health care providers in exchange for referrals or prescriptions.

Previous Office of Inspector General  Department of Health and Human Services audits of Medicare claims have found that well in excess of 10% of spending was lost to Healthcare Fraud and abuse, from illegal conduct including upcoding, cost report fraud, DRG fraud and false claims, PPS fraud and false claims, and Stark and kickback violations causing over utilization.

Our Healthcare fraud qui tam attorneys have the knowledge and experience to discuss in depth areas of healthcare fraud, including: Stark law violations, Pharmaceutical kickbacks, Pharmaceutical fraud, Medical device fraud, and Medical equipment fraud.