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Key Areas of Federal Healthcare Fraud Investigations


Want to know what the government looks for in healthcare fraud investigations? Here's some conduct you may want to avoid at your medical practice.

The government examines the same areas in every healthcare fraud investigation. In light of that, there are some things that a physician can do in order to minimize their liability if they find themselves under audit or investigation.


Services Not Rendered

The government often examines whether services that were billed were actually rendered. One of the government’s favorite techniques for doing so is examining the amount of time the physician spends with each patient. In other words, the government divides the number of hours the physician is in the office by the number of patients seen during that day. If the time per patient is unreasonable in the government’s opinion, it frequently takes the position that the physician did not see all of the patients and/or did not see the patients long enough to adequately provide the service. The government has an even stronger case in situations where the billing codes are time based. The government will frequently examine a physician’s travel and credit card records to determine which days he or she was in the office, and compare that analysis with their billing records.

Services not rendered are perhaps one of the most critical issues that the government will examine. If the government concludes that unqualified, non-physician personnel must be treating patients because of the number of patients seen and/or the physician is not spending adequate time with each patient, the government is much more likely to suspend payments or bring an indictment.


Necessity is another critical issue in government investigations. The person making the determination of necessity must be qualified. If the requirement in a particular area is that a doctor must make the determination, this task cannot be delegated to an assistant. The government will also examine how and if the person making the determination of necessity is compensated. If it is an unrelated individual, the government will examine whether there are improper payments, or potentially kickbacks. If it is someone affiliated with the entity, the government will examine whether the professional is being paid fair market value and whether the compensation is based on the number of patients approved for treatment or revenue. Again, such compensation arrangements can be viewed as a kickback.

Upcoding and Unbundling

The government often examines whether a physician is consistently coding a more complex procedure, for which the reimbursement is higher, rather than a less complex version of that same procedure. This is called upcoding. It is critical that the documentation in the patient chart supports the level of service that is being provided - particularly the more complex codes.

Unbundling is where one procedure is split up and billed as a number of individual procedures to maximize reimbursement. When two procedures are performed together and there is one lower paying “combination” billing code, that code must be billed.


Kickbacks can be gifts or benefits to referral sources, beneficiaries, or employees. These are typically easier cases for the government to prove than cases that turn largely on expert testimony regarding complex medical procedures. It is good practice not to make any substantial gifts to referral sources or any gifts at all to beneficiaries, such as rebates or gift cards. The government also sometimes takes the position that employee compensation based upon revenue is a kickback.

In healthcare fraud investigations, the government usually examines a physician’s marketing practices, and will review advertising and mailed materials. Physicians need to ensure that their marketing professionals know what is appropriate in the healthcare field. What is generally accepted in many other industries may be illegal in the healthcare industry. For example, giving government-paid beneficiaries gift cards for referrals could be a violation of federal and state law.

The government also examines referrals to and from related entities. The Physician Self-Referral Statute, commonly known as the “Stark Law,” limits physician referrals for “designated health services” when a physician or immediate family member has a financial relationship with the entity, unless an exception applies.


It is imperative that physicians be very careful, particularly when working with the government. One of the most basic things a physician can do to minimize liability is to thoroughly and accurately chart. Physicians and their staff must also take the time to learn and follow the often complex rules. They need to make sure they are following every procedure in order to minimize their liability if they find themselves in the government’s sights.

Sarah Q. Wirskyeis a partner with Dallas-based law firm Meadows, Collier, et. al. Her practice concentrates on healthcare, tax, and securities fraud. Ms. Wirskye is also a certified public accountant. E-mail her here.

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