Medicaid and Medicare Fraud

Medicaid & Medicare healthcare expenditures are approximately 33% of annual U.S. healthcare expenditures, amounting to more than $986.5 billion in 2011. While physicians are often involved, Medicaid and Medicare fraud can be committed by many different parties, including hospitals, nursing homes, home health care agencies, durable goods providers, pharmacies and laboratories. If a provider receives reimbursement from Medicare and Medicaid, then as a government contractor any fraud they commit is subject to being recovered under the False Claims Act.

Medicaid and Medicare fraud often involves issues such as:

  • payments to reward the referral of patients or healthcare services payable by Medicaid or Medicare, including, referral fees, finder’s fees, productivity bonuses, discounted leases, discounted equipment rentals, research grants, speaker’s fees, excessive compensation, and free or discounted travel or entertainment;
  • various types of billing-related fraud, including:
    • upcoding, which occurs when a health care provider submits a claim for health care services, treatments, diagnostic tests or items which misuse standardized billing codes so as to obtain more money than is allowed by law;
    • submission of a claim for health care services, treatments, diagnostic tests, medical devices or pharmaceuticals that were never delivered to a valid patient;
    • unbundling, which involves billing separately for groups of procedures typically performed together, so that a greater total reimbursement can be achieved than would be received from the group, or bundled, reimbursement rate alone;
    • lack of medical necessity, a fraud where a health care provider submits claims for services, treatments, diagnostic tests, prescription drugs and medical devices that are not medically necessary; and
    • false certification, which occurs when a health care provider or healthcare company states that they have complied with terms of a contract, or other standards of care, so as to get a health care claim paid or to obtain additional business, when they know that such statements are untrue.
  • research grant fraud, involving some combination of providing false information on a government grant application, overbilling costs and other expenses covered by a grant, falsifying research data and results, inappropriate utilization of grant funds and undisclosed conflicts of interest for the principal investigators;
  • the existence of an improper financial interest, whereby a physician or other health care provider has a direct or indirect financial interest in services provided to their patients, including a prohibition on investment interests and compensation arrangements with entities that perform services to which they refer patients or from which they order goods and services paid for by Medicare or Medicaid; and
  • hospitals inflating the costs on their Medicare Cost Reports, or otherwise falsifying the information on these reports to maximize their reimbursement.

Medicaid and Medicare fraud resulting in whistleblower rewards include:

St. Barnabas Health Care System Pays U.S. $265 Million to Resolve Allegations of Defrauding Medicare

The whistleblowers in the case received $66.2 million for helping the government to uncover allegations that St. Barnabas fraudulently increased charges to Medicare patients in order to obtain enhanced reimbursement from Medicare.

Tenet Healthcare Corporation to Pay U.S. $900 Million to Resolve False Claims Act Allegations

The whistleblowers in the case received $225 million for helping the government uncover allegations that Tenet Healthcare:

  • inflated charges substantially in excess of any increase in the costs associated with patient care and billing for services and supplies not provided to patients;
  • paid kickbacks to physicians to get Medicare patients referred to its facilities; and
  • engaged in upcoding of patient records in order to increase reimbursement to Tenet hospitals.

Amerigroup to Pay $225 Million to U.S.

The whistleblower in the case received $56.3 million for helping the government uncover allegations that Amerigroup systematically avoided enrolling pregnant women and other high-risk patients in its managed care program in Illinois.