TRIALS AND APPEALS
Health Care Billing Fraud

Health Care Billing Fraud

Healthcare fraud is the type of fraud most commonly prosecuted under the False Claims Act. It is estimated to cost taxpayers anywhere from $68 to $226 billion per year, and because it is so widespread it is often very difficult to identify. The government relies on private individuals to come forward with knowledge of healthcare fraud in order to recover the vast amounts of money that would otherwise be lost.

With the help of whistleblowers across the country, including some of our clients, the federal government has recovered billions of dollars in False Claims Act cases.

We have helped our whistleblower clients earn awards for reporting this fraud through extensive investigation and documentation, diligent preparation of winning whistleblower lawsuits, and our solid working relationship with government attorneys.

To give you an idea of how you may be able to benefit from filing a whistleblower claim, here are a few recent whistleblower settlements and victories:

Types of Healthcare Fraud

The most common areas of healthcare fraud are:

Upcoding

Fraud known as “upcoding” occurs when a healthcare provider bills for services more expensive than those actually provided. Medical procedures are individually coded by Medicare and Medicaid under the Healthcare Common Procedure Coding System (HCPCS). By changing billing codes, an unscrupulous healthcare provider can receive a reimbursement for procedures more expensive than those actually performed. Patients’ treatment records may be falsified to indicate they suffer from more serious conditions than they actually do, which not only defrauds the government but also threatens patients’ well-being. Future treatment decisions may be made on the basis of falsified records and patients may be denied insurance coverage due to fictitious pre-existing conditions. Upcoding may also occur when a healthcare provider bills work performed by nurses or other medical staff as having been performed by a doctor in order to be reimbursed at the doctor’s higher rate.

Unbundling

Drugs or procedures that are commonly provided together are often combined under a single HCPCS code and are reimbursed at a lower rate than the individual drugs or procedures taken separately. “Unbundling” occurs when healthcare providers intentionally bill Medicare or Medicaid for individual treatments that should be billed together in an attempt to receive higher reimbursements than those authorized under the programs. Most commonly, CBC tests and other diagnostic panels are unbundled with each distinct test billed separately. Additionally, surgeons have been found to illegally bill for post-operative care that was included in the reimbursement for the initial surgery.

Unnecessary Treatment (Falsifying diagnoses/Lack of Medical Necessity)

Statutes govern which medical treatments will be considered “medically necessary,” as established by recognized standards of care, and Medicare will pay for only those drugs and procedures that qualify. When healthcare providers bill Medicare for treatments provided, they implicitly certify those treatments as medically necessary. Physicians are obligated to familiarize themselves with the legal standards of medical necessity, and intentionally or recklessly submitting claims for unnecessary treatment is fraud.

Off-label Marketing

When the Food and Drug Administration approves a drug for public use, it gives its authorization only with regard to certain limited uses. Physicians do often prescribe drugs for conditions not approved by the FDA and they are usually permitted to do so. But while doctors may have valid reasons for prescribing a drug for unapproved uses, doing so creates unknown risks and such decisions should be made based solely on medical need. In light of those unknown risks, pharmaceutical companies are prohibited from marketing their drugs for unapproved uses, and they may not seek to influence physicians to prescribe them for off-label uses. In numerous cases pharmaceutical companies have aggressively sought to persuade physicians to prescribe their drugs, often offering them illegal kickbacks, with no regard for patient safety.

Services Not Provided

The simplest and perhaps most widespread type of healthcare fraud is simply billing for services never performed. Such fraud cannot be easily summarized, but a number of illegal practices commonly encountered are billing for diagnostic tests not performed, medical supplies not delivered, physician time when only nurses provided treatment, and sub-standard care not sufficient to warrant reimbursement.

Inflated Drug Pricing

A number of pharmaceutical manufacturers have recently been accused of illegally inflating the prices of their drugs when they provided pricing information to the government. The annual cost of pharmaceutical price inflation is in the billions and in recent years the federal government has made increasingly large recoveries—$2.5 billion in 2010 alone. Medicaid payments for prescription drugs are based on a drug’s average wholesale price. If this price can be artificially inflated, a pharmaceutical company stands to gain more than it should under law each time the program covers the cost of the drug. Given the large-scale nature of pharmaceutical fraud, whistleblowers stand to receive extremely large rewards for reporting this kind of fraud.

Medicare Part D Fraud

Beginning in 2006, Medicare Part D began providing coverage for outpatient prescription medication costs for all those eligible under the Medicare program. The new program is structurally complex, with potentially endless coverage options under approved private plans. This complexity makes Medicare Part D particularly susceptible to fraud. In particular, the so-called “Donut Hole” in Medicare Part D prescription coverage especially invites abuse by healthcare providers, pharmacies, and pharmaceutical companies.

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