Types of Healthcare Fraud
Healthcare is essential but it is also big business in the United States, with costs approaching 18 percent of the country’s gross domestic product. Government healthcare programs make up a hefty portion of these costs. The Medicare and Medicaid programs alone insure nearly one in three Americans (over 100 million people) and their combined program spending totaled $1.3 trillion in 2018 alone. The large amount of money at stake in the healthcare industry makes it a field day for fraudsters with up to 10% of government healthcare spending lost to fraud.
Given the massive amount of healthcare claims submitted to the government, the government cannot possibly ferret out all of the fraud by itself. This is why courageous whistleblowers, with assistance from a healthcare fraud attorney, have been the driving force behind the government’s successful prosecution of healthcare fraud.
In the 2019 fiscal year, $2.1 billion of the $2.6 billion recovered in healthcare industry matters were the result of False Claims Act cases filed by whistleblowers, primarily identifying Medicare fraud. Although much of the focus is on Medicare and Medicaid, whistleblowers with an Atlanta healthcare fraud attorney can bring False Claims Act suits for all government-funded healthcare programs, including the TRICARE (military), Federal Employee Healthcare Benefits, and Veterans Administration programs.
ANYONE RECEIVING MEDICARE OR MEDICAID FUNDS CAN BE LIABLE; CONTACT A HEALTHCARE FRAUD ATTORNEY TO LEARN MORE
A dizzying array of people and entities can commit healthcare fraud. Whistleblowers who contact a medical fraud attorney can expose them via a False Claims Act complaint.
TYPES OF HEALTHCARE FRAUD:
Here are some of the common types of healthcare fraud that can lead to False Claims Act violations organized by participant:
Fraud by Healthcare Facilities and Providers
The primary purpose of the Anti-Kickback Statute is to ensure that the medical care and products patients receive are based on medical judgment and not financial incentives providers receive. Both the offeror and the recipient of the kickback are in violation of the statute.
An example of an Anti-Kickback Statute violation is when a hospital refers patients to a provider, or a provider prescribes a certain medication, in exchange for some form of compensation, such as cash, trips, etc. Kickbacks can be very creative, so the question is whether a provider is getting something for nothing that may be influencing their medical decision-making.
The Stark Law is a complicated set of rules that essentially prohibit self-dealing between commonly owned medical providers. An example of a Stark Law violation is when a doctor refers patients to a facility that she owns unless a “safe harbor” exception applies. Understandably, a doctor who makes money with every referral is likely to make more referrals, resulting in unnecessary procedures. The Stark Law prevents that from happening. Contact a healthcare fraud attorney if you suspect a Stark Law violation.
One of the most common False Claims Act violations, this occurs when the facility or provider fraudulently bills the government using incorrect billing codes that result in a higher reimbursement than the correct billing code. For example, a surgeon who performs a simple procedure but bills for an expensive, complicated surgery; a dentist who pulls one tooth but bills for three; a hospital that submits a false diagnosis that pays more; or an ambulance company bills a routine transport as emergency services.
Medicare, Medicaid, and other government insurance plans will only pay for services that are medically reasonable and necessary. Examples of this type of False Claims Act violation are a doctor billing for cancer treatments for a patient who does not have cancer; a facility admitting patients who do not meet admission criteria; or a pain management doctor who over-prescribes procedures and medications.
False Act violations based on “bundling” occur when the provider bills the government for a panel of tests or procedures when only a single test or procedure was performed. “Unbundling” occurs when instead of billing for a single code that includes all the services provided, a provider breaks the billing up into separate codes to increase their reimbursement.
The most blatant of all False Claims Act violations is billing for a service that was not actually performed. An example of this type of false claim is the doctor who fraudulently bills the government for the impossible feat of 70 half-hour patient visits in a single day or the practice that routinely tacks on a certain billing code without performing the associated procedure because they know it will always be paid.
Hospitals submit annual cost reports to the government to show how much it costs them to operate, which in turn affects how much Medicare will reimburse it for its patients. A hospital that knowingly submits a cost report with incorrect data resulting in additional government reimbursement may be liable for a False Claims Act violation.
Healthcare facilities and providers are often required to “certify” that the product or service they provided complied with the applicable law.
An example of a False Claims Act case based on false certifications is when a provider certifies that it has performed certain prerequisites or that the patient has certain conditions that qualify them for a procedure. Another standard certification on every Medicare claim is that the provider did not provide a kickback for the referral in violation of the Anti-Kickback Statute.
In this type of False Claims Act violation, the government is billed for a service, treatment, test, device, or drug for a non-existent patient or a patient who never received the service or item.
Providers may try to earn an extra buck by using non-approved or adulterated products, such as drugs and medical devices imported from foreign countries, but billing for the regular product. This not only is clear cut billing fraud, but it puts patients at risk because these products are not FDA-approved.
Medicare permits midlevel providers (nurse practitioners and physician assistants) or staff to perform certain services and have them billed under a supervising physician, which pays a higher amount. But if there is no physician present or they are not involved in the patient’s care, such billing may be fraudulent.
Healthcare Fraud by Pharmaceutical Organizations
Pharmaceutical manufacturers or distributors often try to give doctors a reason to prescribe their drugs besides the doctor’s medical judgment. One of the many ways they do so is by giving kickbacks to doctors like lavish vacations, meals, and so-called “consulting fees,” where the pharmaceutical companies pay the doctors to “consult” about their products.
The FDA only approves drugs for certain uses, marked as “indicated” uses on the label. Government healthcare programs only reimburse for those indicated uses of drugs. Off-label marketing happens when pharmaceutical companies market their drugs to doctors for non-indicated uses, usually to increase drug sales. False claims result if this marketing causes doctors to submit claims to the government for these off-label drug uses. A Medicare fraud whistleblower can help reduce the hundreds of millions of dollars of fraudulent submissions to Medicare and Medicaid.
These false claims arise from the violation of Medicaid rules requiring pharmaceutical manufacturers to give the government the lowest price of any purchaser. Ways that pharmaceutical manufacturers commit fraud include concealing the actual best price or by pricing deals between pharmaceutical companies and favored customers, such as chain drug stores.
Medicare and some Medicaid programs determine how much it will reimburse pharmacies based on a drug’s Average Wholesale Price (AWP), which it gets from the pharmaceutical manufacturer. By fraudulently inflating the price so Medicare and Medicaid over-reimburse for a drug, a pharmaceutical manufacturer can “market the spread,” i.e., promote the difference to a pharmacy. That pharmacy now has a financial incentive to dispense that drug versus its competitors. This is a violation of the Anti-Kickback Statute and should be discussed with a healthcare fraud attorney.
Compounding pharmacies prepare unique prescription drugs to meet the needs of individual customers. For example, if an elderly patient is unable to swallow, a compound pharmacy may crush her pills into a paste. Compound drugs are often reimbursed at many times the rate of standard drugs, making them an easy target for fraud.
One example of this type of fraud is when the compounding pharmacy markets to patients who do not need the specialized formula, which can result in both unlawful kickbacks and prescriptions that are not medically necessary. Another example is where a compound pharmacy uses generic bulk products in their formulas (which are not covered by Medicare) and bills for the brand-name prescriptions.
Pharmacies sometimes dispense a generic drug in place of the brand name drug on the patient’s prescription to get a better reimbursement rate from the government. Billing government healthcare programs for these substituted drugs can violate the False Claims Act.
Healthcare Fraud by Medical Device Manufacturers and Distributors
Some medical device companies develop financial relationships with doctors that amount to kickbacks for using the medical device or implant, such as having the medical device company pay for conferences, fellowships, and related items. Similarly, providers may form PODs (physician-owned distributorships), through which they use their own product and pay themselves a royalty.
Medical devices are similar to drugs in that the FDA only approves them for limited uses. Medical device companies, like pharmaceutical companies, often try to increase their revenues by marketing their devices for off-label uses, which often include kickbacks to doctors.
Sometimes medical device companies allow a medical device that they know or have reason to believe is defective to be put on the market. Government healthcare claims submitted for these defective devices may result in False Claims Act violations.
Medical device companies may be liable under the False Claims Act for lying or omitting information the FDA requires to approve their medical devices.