Given the limited resources of the Government to oversee the billing details in our nation’s health care system, it is inevitable that unscrupulous individuals and businesses will attempt to manipulate the system for their own financial benefit.
One of the most prevalent forms of Medicare fraud concerns billing — that is, the reimbursements that physicians, hospitals and other providers seek for treatments, medications and services rendered to patients. Our firm has prosecuted many billing fraud cases and worked closely with federal prosecutors in parallel criminal prosecutions.
Our firm is one of the most successful in the nation for handling qui tam prosecutions. In one case, we recovered $36 million for medical research billing fraud. In another, we recovered $16.6 million against a nursing home chain for inflating nursing hours.
What Does Fraudulent Billing Look Like?
Billing fraud in the Medicare system can take many forms. Some of the most common examples include:
- Services not rendered: Perhaps the most basic form of fraud, this involves providers charging for services, supplies, devices or lab work that was simply never ordered or provided to patients.
- Upcoding: Providers seek reimbursement for more expensive services or supplies by using an incorrect HCPCS code.
- Unbundling: When bundled services — certain lab work, for example — are reimbursed at a lower rate than the services would be reimbursed for if invoiced individually, providers may seek to use the individual codes rather than the appropriate “bundled” code.
- Fraudulent cost reports: Providers are allowed to seek reimbursement for costs other than direct patient care, including for capital improvements and overhead. These reimbursements are based on the percentage of a provider’s services attributable to Medicare patients (as opposed to non-Medicare patients). Providers may attempt to mask nonreimbursable costs in their cost reports.
Real-world examples of billing fraud include:
- An Arkansas nursing home chain agreed to pay $170 million for a variety of falsifications, including falsification of nursing logs to make it appear that the nurses delivered a disproportionately higher number of hours of nursing care to Medicare patients in the “Medicare distinct” beds, when in fact they were attending to Medicaid and indigent or private pay patients.
- A Michigan corporation agreed to a $1.9 million settlement for having falsely billed for doctor supervision of nurse anesthetists when no such supervision was provided.
- A Texas orthopedic surgeon billed for services performed while he was out of the country and while he was playing golf at medical conventions. He also billed for services performed by unlicensed therapy personnel. He agreed to pay a total of $886,000 to settle charges of submitting false claims for Medicare reimbursement and was convicted of theft from the Medicaid program for filing similar false claims.
- A Florida ophthalmologist agreed to pay $2,531,000 for submitting false claims for laser surgeries performed as part of post-cataract removal surgery by indicating that the surgeries were performed after the 90-day post-operative period; submitted claims for services that were either never rendered or upcoded; and submitted claims for two evaluations and management services per patient visit.
- A Hawaii physician agreed to pay a $2.1 million settlement for submitting false claims to Medicaid. The physician operated a pharmacy in his clinic. He billed Medicaid for dispensing expensive brand name drugs when in fact his clinic provided cheaper generic substitutes. Additionally, he billed for drugs not dispensed and billed for medications that were expired or were drug samples.
- In Tennessee, a medical home health company paid $1.8 million for submitting claims to Medicare for pension expenses that the company did not actually incur. The company submitted cost reports seeking reimbursement from Medicare for over $600,000 in compensation expenses for 397 employees under a deferred stock bonus profit sharing plan. However, the company had only 57 employees at the time, and none of those employees had any money or stock in their individual plan accounts. All of this resulted in a false claim under the cost report to be reimbursed for expenses the company never incurred.
- A corporation in Alabama paid a $7.9 million settlement of a qui tam lawsuit where the corporation overcharged Medicare for equipment and supplies. The corporation bought the equipment and supplies that were the subject of the lawsuit from a related company owned by the parents of the CEO of the defendant. The lawsuit alleged that the corporation billed the items at a price above the supplier’s cost basis, in violation of the rules governing transactions with related entities. In addition, the corporation overbilled Medicare for rental payments and the costs of an abandoned computer system, all of which were improperly claimed on the cost report.
- A Tennessee company paid $95.5 million to settle a lawsuit alleging that it engaged in cost-shifting on its cost reports. The company included unallowable costs in its Medicare cost reports, and routinely kept a secret set of “reserve” cost reports that specifically identified improper claims in case the fraud was ever discovered. The company shifted its hospital’s costs onto the Medicare cost reports of its home health agency, and therefore received more reimbursement than that to which it was entitled because the home health agency was virtually all Medicare-related, whereas the hospital was not. As a result, the percentage of reimbursement from Medicare for the cost report expenses was a much higher percentage than if the expenses had been reported under the hospital’s cost report. The expenses included rental costs of a building owned by the hospital’s former CEO, sales transaction payments disguised as consulting fees, and kickbacks to physicians.
- A California home oxygen therapy company paid a $3.5 million settlement for wrongful billings to Medicare. The company billed Medicare for home oxygen therapy provided by the company’s centers in locations throughout California. However, the company’s billings for home oxygen therapy were for patients purportedly qualified for the procedure under tests that the company itself administered. Medicare prohibits suppliers of home oxygen equipment to use their own tests to qualify patients for coverage because of their interest in the outcome of such tests.
What Can I Do If I Have Information On Billing Fraud?
If you have information that leads to a successful qui tam prosecution, you may be entitled to receive a portion of recovered funds. To speak with one of our attorneys in a confidential consultation, email us or call 800-844-4406.