Medicare Fraud: One Item Every Physician Should Avoid

May 28, 2015
Rachel V. Rose, JD, MBA
Rachel V. Rose, JD, MBA

Rachel V. Rose, JD, MBA, advises clients on compliance and transactions in healthcare, cybersecurity, corporate and securities law, while representing plaintiffs in False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.

Recent court rulings underscore the importance of maintaining compliance with Medicare billing.

As many regular readers know, I often write on HIPAA and other legal areas that physicians and other providers should be aware of. Before I delve into Medicare fraud and some recent actions, I wanted to borrow a practice from HIPAA and M&A transactions - due diligence. When looking at billing companies, send out a request for proposal (RFP) for information and fully vet the coding and billing companies that are part of the process of submitting claims. Because Medicare fraud carries both criminal and civil fines, this should not be overlooked. And, more than one party may be sued or indicted in the process - including the physician, sales representatives, and claims submission companies.

According to CMS, "Medicare fraud is typically characterized by:

• Knowingly submitting false statements or making misrepresentations of fact to obtain a federal healthcare payment for which no entitlement would otherwise exist;

• Knowingly soliciting, paying, and/or accepting remuneration to induce or reward referrals for items or services reimbursed by federal healthcare programs; or

• Making prohibited referrals for certain designated health services."

These items came to fruition recently when a California federal court refused to dismiss a whistleblower action against a hospital and physicians for alleged improper billing, and when the U.S. Sixth Circuit Court of Appeals upheld the convictions of a medical clinic CEO and an adult day care program director.

On May 12, a federal court in California found the complaint by a whistleblower adequately alleged with particularity that two of the hospital's affiliated physicians improperly billed Medicare and Medi-Cal for inadequate service supervision, double billing and the utilization of contaminated or expired chemotherapy drugs. According to the court, Medicare's "reasonable and necessary" requirement for payment mandates that drugs are "safe and effective." The relator's theory was found viable by the court on the basis that allegedly billing for expired drugs that are mixed with viable drugs is a medically unnecessary and unsafe procedure.

In another case, on May 4, Glenn English, the former CEO and Richard Hogan, the former program director of New Century Adult Day Program in Flint, Mich., were convicted by a jury of Medicare fraud and of conspiracy to commit Medicare fraud. The FBI became involved when it evaluated the clinic's billing practices and found bills for dates and services when the clinic was closed, for example. The Court of Appeals upheld the convictions.

Physician take-aways:

• More than one person can be considered as being a co-conspirator and end up in jail.

• Perform adequate due diligence on the companies that you are contracted with and be sure to include HIPAA questions.

• Conduct background checks on your employees and independent contractors. If working with a third-party company, obtain assurances that they conduct background checks for their employees on a regular basis.