Employer Fraud

The False Claims Act (FCA) is designed to combat and prevent healthcare fraud, including pharmaceutical or medical providers that illegally solicit or accept kickbacks [1].

Persons who become aware of illegal solicitation or acceptance of kickbacks in the healthcare industry can act as a whistleblower on behalf of the government and file an FCA lawsuit. Under the “qui tam” provisions of the FCA, these individuals can receive financial compensation for their efforts and legal protection from retaliation. In many cases, individuals who report kickbacks and other forms of healthcare fraud are current or former employees, patients, or others with unique opportunities to know about the alleged misconduct. They are motivated by a desire to do what is right. Whistleblowers thus serve an integral role in protecting patients, American taxpayers, and the integrity of our nation’s healthcare system.

Why are Kickbacks Illegal?

The primary reason why kickbacks are illegal in the healthcare industry is that they have a potent ability to interfere with a healthcare provider’s independent judgment resulting in treatment decisions that are made to serve the provider’s interest rather than the best interest of the patient. For example, a Yale study[2] found that cardiologists were between two and 11 times more likely to implant a defibrillator made by the device company that paid them the most money compared to physicians who did not receive payments. Another study showed that giving physicians even one free meal during which a particular drug was discussed resulted in a higher prescription rate. [3]

Accordingly, kickbacks are illegal for many reasons:

• • Kickbacks compromise the quality of patient care.
  • Kickbacks induce health care providers to consider their own interests before those of their patients.
  • Kickbacks drive up health care costs for patients and health insurance providers.
  • Kickbacks lead to medically-unnecessary treatments, medications, and other supplies/services.
  • Kickbacks and other forms of health care fraud cost taxpayers billions of dollars each year. [4]

In one of the largest health care fraud cases in American history [5], the government recovered $1.7 billion from HCA Inc., a provider that engaged in several unlawful practices, including providing kickbacks. This landmark case was sparked by nine FCA lawsuits brought by whistleblowers who ended up receiving a combined share of more than $151 million in financial rewards. These nine people helped initiate a course of action that ended the provider’s shocking record of criminal activity and fraud.

Federal Laws Prohibiting Kickbacks in Healthcare

While the FCA provides a process for whistleblowers to file lawsuits on behalf of the government, there are two specific federal laws that make healthcare kickbacks illegal in the United States—the Anti-kickback Statute (AKS) and the Stark Law. Violations of both these laws can be prosecuted under the FCA.

The Anti-Kickback Statute, 42 U.S.C. § 1320a–7b(b)

The AKS is one of several fraud and abuse laws that apply to the healthcare industry. [6]
The AKS makes it illegal to offer, solicit, or accept anything of value to motivate or reward referrals in any capacity. Essentially, a medical provider or company is committing fraud when incentives are provided to encourage the use of certain products or services for which payment is made via federally-funded programs, such as Medicare, Medicaid, and Tricare.

Examples of kickbacks include:

• • Cash payments
  • Gifts
  • Travel and entertainment
  • Free or discounted services or supplies

 

It is not unusual for organizations and providers to disguise illegal kickbacks as legitimate medical payments. For example, a pharmaceutical company may hide illegal activity by paying a doctor an inflated rate for a speaking engagement. Regardless of the basis of a specific payment, the arrangement as a whole can still be categorized as fraudulent if its intent is to influence behavior.

Both the payers and recipients of kickbacks can be prosecuted under the AKS. Penalties for kickbacks can include criminal and civil measures, including fines, jail, and removal from federal healthcare programs. A conviction does not require the government to prove that the conduct harmed patients or caused financial loss.

Violations of the AKS can be prosecuted under the FCA and may result in an award of damages up to three times the full amount the government paid for the kickback-tainted products or services as well as civil penalties.

The Stark Law, 42 U.S.C. § 1395nn

The Stark Law focuses specifically on physicians. It prohibits them from referring Medicare/Medicaid patients to medical providers for particular health services if the referring doctor has a financial relationship with that provider. Financial relationships include ownership, investment interests, or other compensation arrangements. Unless an exception applies under the Stark Law, it is illegal to make these referrals and submit claims for any payments related to these prohibited referrals.

Violations of the Stark Law can be prosecuted under the FCA and may result in an award of damages up to three times the full amount the government paid for the Stark-tainted services as well as civil penalties.

Key Difference between the Anti-Kickback Statute and the Stark Law

The most important difference between the Anti-Kickback Statute and the Stark Law is each law’s focus.

The Anti-Kickback Statute covers referrals from anyone for any services or items paid for by any federal healthcare programs. However, the Stark Law is more specific, focusing on referrals from a physician made for designated health services under Medicare or Medicaid.

Under both of these federal laws, violations can also be considered a violation of the FCA. Therefore, individuals with knowledge of AKS or Stark law violations can bring a “qui tam” lawsuit through the FCA.

Report Medical Kickback Schemes and Stark Violations through the FCA with Help from Halunen Law

If you suspect a healthcare provider of soliciting or accepting illegal kickbacks, Halunen Law can review your case and provide professional guidance about next steps to take and whether a False Claims Act case may be viable.

Our False Claims Act attorneys at Halunen Law practice nationwide, advocating for whistleblowers who speak up against healthcare industry misconduct. With extensive expertise and a proven track record of success, the anti-kickback lawyers at Halunen Law are well-equipped to protect you from illegal retaliation and ensure the best possible outcome.

If you feel you’ve experienced illegal action in your workplace, we encourage you to submit a Case Review Form to our firm. One of our attorneys will review your information, and you’ll receive a response from our firm in a timely manner. There is no charge for this confidential process. And, if we take your case, as a contingency-based law firm, there is no cost unless we win.

We’re here to help you navigate your lawful rights and ensure you get the treatment you deserve. Together, we can hold employers accountable and create a fairer workplace for everyone.

 

Sources:
[1]  https://www.justice.gov/civil/false-claims-act
[2] https://www.icij.org/investigations/implant-files/heart-doctors-more-likely-to-implant-devices-from-manufacturers-that-pay-them-new-study-finds/
[3] https://www.nbcnews.com/health/health-news/free-lunches-pay-drug-companies-study-shows-n595906
[4]  https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Fraud-Abuse-MLN4649244.pdf
[5]  https://www.justice.gov/archive/opa/pr/2003/June/03_civ_386.htm
[6]  https://oig.hhs.gov/compliance/physician-education/fraud-abuse-laws/

 

 

Featured Image: Lisa-S / Shutterstock

Upcoding and unbundling in healthcare are two forms of improper medical coding. Both fall under the federal government’s definition of healthcare fraud when the government is paying for the care and can be pursued through the False Claims Act.

With serious implications that can cause harm to patients, taxpayers, and the American healthcare system as a whole, fraudulent practices such as these are aggressively investigated, prosecuted, and penalized.

What is Upcoding?

Considered a serious form of fraud, upcoding occurs when a healthcare provider inflates bills to the government by submitting false medical codes to Medicare, Medicaid, TRICARE, or other government payers—that is, the provider bills for diagnoses and services that are more serious and expensive than the actual services rendered.

Many kinds of healthcare providers have been investigated for upcoding, including physicians, healthcare facilities, providers of home health care, physical therapy providers, and even entire healthcare networks.

Providers and insurers use billing codes to communicate the services provided to various patients. Each billing code corresponds to a specific diagnosis or service while simultaneously labeling the complexity of work required by the provider and, thus, the associated costs. Government (and private) insurers use these billing codes to calculate and issue payments to healthcare providers.

The consequences of upcoding are serious and affect both the patients involved and insured patients as a whole. Because upcoding leads to an unnecessary increase in insurer spending, it can be a catalyst for increased rates or reduced coverage. In addition, upcoding involving government payors such as Medicare and Medicaid steal vital funds from taxpayer-funded healthcare programs. On an individual patient level, upcoding fraud has an impact on the integrity of a patient’s medical records and may prevent them from receiving proper care in the future.

Doctors and Upcoding

All doctors must document provided care and services and then utilize standardized medical billing codes to bill insurers for the procedure(s). This expectation applies to both primary care and specialty physicians.

Doctors engage in upcoding when they manipulate medical coding to obtain financial compensation that exceeds what they have fairly earned. There are generally three types of upcoding fraud committed by doctors

• • A physician may perform a simple, routine procedure, then use a different code to indicate that a more complex (and higher-paying) procedure was completed.
  • A physician may use incorrect Evaluation & Management (E&M) codes to suggest that a patient’s visit required more of their time/expertise than it actually did.
  • A physician may attempt to apply modifier codes to bill for specific additional services, despite those services being covered under the standard code for the visit in question.

Hospitals and Upcoding

Upcoding can also occur on a larger scale, such as at the hospital/healthcare facility level. The costs associated with hospital-provided inpatient care are governed using pre-determined rates, which depend on the diagnosis-related group (DRG) to which they belong. The DRG is directly tied to the severity of a patient’s diagnosis, as well as the type of stay they require, which are determined according to diagnosis codes (ICD codes).

Two of the most common types of upcoding committed by hospitals are:

• • When a hospital bills for physician-provided care, even though the care was actually provided by a lower-paid professional, such as a nurse or physician’s assistant
  • When a hospital bills an inpatient stay at the highest-possible severity level, even though the patient received routine care with no secondary diagnosis, major complication, or comorbidity (additional patient condition).

Upcoding and Other Healthcare Providers

In addition to doctors and hospitals, upcoding fraud can also be committed by other entities. For example, federal medical fraud cases include upcoding carried out by urgent care facilities, home healthcare agencies, and durable medical equipment (DME) providers.

What is Unbundling?

Another form of improper medical coding and fraud is unbundling, also referred to as “fragmentation.” This fraudulent activity most commonly occurs in bills submitted to Medicare and Medicaid because the federal insurers often provide lower reimbursement rates for specific types of medical procedures that tend to be performed together. For example, incisions and closures related to surgical procedures will be bundled or combined with the procedure itself – or multiple blood tests from a single specimen will be bundled at a specific billing amount. Typically, the total reimbursement rate will be lower than it would have been for the procedures billed separately.

Unbundling in medical coding occurs when a healthcare provider fragments or unbundles billing codes to receive a higher reimbursement amount. Providers may utilize electronic health records (EHR) software to falsify treatment notes or alter the displayed codes, thus justifying the unbundled billing at the higher rate.

Like upcoding, unbundling is an act of fraud committed against the federal government. It carries serious penalties that can include fines, loss of medical license, and jail time.

Reporting Upcoding and Unbundling or Other Forms of Healthcare Fraud under the False Claims Act

Medical upcoding fraud and unbundling fraud are illegal, can cause patient harm, and line the pockets of those who would cheat the government at the cost of government health systems and all taxpayers. The Government relies on persons with knowledge of upcoding or unbundling, such as employees, coding personnel, and even patients themselves, to bring these illegal practices to light when they involve government-provided healthcare.

Persons with knowledge of upcoding or unbundling may challenge this illegal coding conduct by bringing a lawsuit under the False Claims Act. The FCA is a federal statute designed to reward whistleblowers who bring “qui tam” lawsuits against companies and individuals defrauding the government. If the Government succeeds in getting money damages or civil penalties from the coding claim, the person reporting the fraud is generally entitled to between 15-30% of the money recovered. Additionally, the False Claims Act can protect whistleblowers from retaliation for reporting the illegal conduct.

The Government may also prosecute upcoding or unbundling criminally, and a conviction can result in severe penalties. Fines, revocation of medical licensure, and jail time are all possible outcomes of a conviction.

Private individuals must be represented by counsel to file an FCA lawsuit. If you are aware of upcoding, unbundling or other types of federal fraud, your first step should be to contact a law firm with deep experience in bringing False Claims Act lawsuits. Most FCA attorneys work on a contingency basis, meaning that you pay nothing unless your case is successful.

The healthcare fraud attorneys at Halunen Law have worked extensively with cases such as these, providing legal expertise, advocacy, and protection to the courageous individuals that speak out against corporate fraudulent conduct. Every case is unique, but we have built the experience and skill necessary to fight on your behalf.

If you feel you’ve experienced illegal action in your workplace, we encourage you to submit a Case Review Form to our firm. One of our attorneys will review your information, and you’ll receive a response from our firm in a timely manner. There is no charge for this confidential process. And, if we take your case, as a contingency-based law firm, there is no cost unless we win.

We’re here to help you navigate your lawful rights and ensure you get the treatment you deserve. Together, we can hold employers accountable and create a fairer workplace for everyone.