The most recent Centers for Medicare and Medicaid Services (CMS) statistics estimate that healthcare expenditures total $2.4 trillion, representing 14 percent of the gross domestic product (GDP). By the year 2016, CMS estimated total healthcare spending would exceed $4.14 trillion, thereby representing 19.6 percent of the GDP.
Since healthcare expenditures are consistently increasing, it is important for law enforcement authorities to combat fraud within the healthcare system. The FBI is the primary investigative agency in the fight against healthcare fraud, with jurisdiction over both federal and private insurance programs.
Healthcare fraud increases healthcare costs for the nation as a whole and is considered as dangerous as identity theft. Activities that are considered healthcare fraud include:
- Fabricated medical bills
- Billing fraud such as duplicate charges, charging for services not provided, and charging for services that are more expensive than actually provided
- Exaggerated or false medical disability
- Collecting benefits from multiple policies for the same injury or illness
According to the Federal Bureau of Investigation, between the years of 2007 and 2011, the number of healthcare fraud cases that were pending increased significantly.
Source: FBI
Fraud & Abuse Law
There are five important federal fraud and abuse laws that can be applied to physicians. These five laws are as follows:
1) The Anti-Kickback Statute (AKS) – According to this criminal law, it is legally prohibited to knowingly and willfully pay to generate business involving any item or service that is payable by the Federal healthcare programs. This includes offering drugs and health care services.
It is illegal to offer remuneration for patient referrals, where remuneration can include anything of value such as expensive hotel stays, meals, overcompensating for medical consultations, and even offering rent-free accommodation. Paying for referrals in federal healthcare programs is a crime.
If found guilty of violating the AKS, criminal penalties include fines, jail sentences, and exclusion from participation in the federal healthcare programs. If a physician pays or accepts remuneration of any sort, he or she will face penalties of up to $50,000 per remuneration given or accepted in addition to three times the amount of remuneration.
2) Physician Self-Referral Law (Stark Law) – Named after United States Congressman Pete Stark, the Stark Law is in fact three separate provisions that control physician self-referral for Medicare and Medicaid patients.
The Stark Law, also known as the physician self-referral law, prohibits any physician from referring patients to receive certain designated health services that are payable by Medicare or Medicaid from entities with which the physician has a financial relationship.
When a physician refers a patient to a medical facility in which he/she has a financial interest through ownership, structured compensation arrangements, or investments, it is called physician self-referral. By doing this, the physician could be encouraging over-utilization of services which would increase healthcare costs while also creating a captive referral system thereby limiting other providers from being able to compete.
3) Exclusion Authorities – The Office of Inspector General (OIG) has the authority to exclude individuals and entities from federally funded healthcare programs and maintains the List of Excluded Individuals and Entities (LEIE). If someone hires an individual or entity from the LEIE may be subject to monetary penalties.
4) Civil Monetary Penalties Law (CMPL) – This law authorizes the Secretary of Health and Human Services to impose civil monetary penalties for various forms of fraud and abuse involving the Medicaid programs and Medicare. Each violation could lead to a penalty ranging from $2,000 to $100,000 depending on the misconduct that was involved.
5) False Claims Act (FCA) – This is when you knowingly submit false claims of payment to Medicare or Medicaid. Filing such illegal claims could lead to fines up to three times the loss incurred by the program along with $11,000 per claim that was filed. Under this rule, each item or service that was billed to either Medicare or Medicaid will count as a claim, so the fines can quickly add up and become extremely high. In addition to fines, the criminal penalties for FCA can include imprisonment as well as criminal fines.
Legal Defense
Medical fraud and abuse is a constantly evolving area when looked at from a legal point of view. Healthcare practitioners must be well-informed on this topic as they could unknowingly be violating regulations. Not only can medical professionals face severe penalties for violating the law, but the results could even end a career. Especially tricky are the areas of Stark Law, Anti-Kickback Law and abuse of Medicaid rules. If you do find yourself under scrutiny for any of these offense, it is important to hire a qualified attorney to represent you, for example, a Stark Law defense attorney would specialize in that particular area of law.
Since its initial publication in 1995, the Stark Law, or physician self-referral prohibition has become much more complex. When it was introduced, this law only applied to clinical lab services but today, healthcare has grown so the law has too. Today this law focuses on the financial relationships that exist between the physician and the entity responsible for billing the services provided by the physician.
If a medical practice is being setup, it would be beneficial to contact an attorney during the business-planning stage to examine the billing relationship that will exist in detail to avoid any future encounter with the law. It is common to unknowingly be in violation of the Stark Law.
An experienced attorney will also be knowledgeable on the different laws in your state, as they can vary. Medical fraud affects both individual practitioners as well as large hospitals, so when it comes to medical fraud and abuse, it is essential to hire a seasoned professional to defend you.
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