Medicare Fraud

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

The Medicare law has been amended and expanded many times since it was enacted in 1965. Medicare payment is divided into three parts.

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 on a reasonable cost basis for services they provide under Part B, such as outpatient services. 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 upcoding.

Part B

Part B services provided by physicians, suppliers, and other healthcare 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 healthcare entity) – the “assignment” method. Common false claims include:

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 services. When a provider breaks these services out of the bundled group and bills them individually, the provider is deemed to be “unbundling.”

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.” Under this program, Medicare beneficiaries may select a managed care plan certified under Medicare + Choice. Payments Medicare makes to Medicare + Choice Plan 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 for cost-based MCOs;

2. The intentional failure to pay providers;

3. Signing up beneficiaries after surreptitiously disenrolling them from other plans;

4. MCO and physician relationships that are driven by cost-containment at the expense of patient care.

5. Failure to provide necessary services for patients