By Mathew J. Levy, Esq.

Today, the sensationalized stories of FBI agents and criminal indictments are the day to day realities of Medicare enforcement faced by every physician. What is Medicare Fraud?

First, there are the obvious cases of greed, such as physicians billing for fictitious patients and services never performed and the rendering of unnecessary medical procedures.  However, there is more to Medicare fraud than the obvious like widely practiced rule-bending to assist patients, including exaggerating either the severity of a patient’s condition, changing a patient’s billing diagnosis or reported signs or symptoms that a patient did not have, to help the patient secure coverage for needed care.  Recent events make clear that these infractions can result in serious problems. The truth is that all well-meaning practitioners who bend the rules are placing their careers, indeed their very freedom, at risk.

The Healthcare Portability Act of 1996 authorized several hundred million dollars in funding, exclusively designated for the investigation of allegations of Medicare Fraud. These funds are not being used to simply audit providers and seek reimbursement where the audit demonstrates improper billing.  These funds are being used by the FBI to conduct criminal investigations which are then referred to the United States Attorney for prosecution.

Longstanding notions that the Government’s efforts are limited to the classic “Medicare and

Medicaid mills” submitting claims for fictitious patients are dispelled by an examination of the pending criminal and civil Medicare Fraud actions.  Many of the pending actions involve individual practitioners and their interpretations of the ICD 10 codes, modifiers 25 or 59, unbundling of fees, and other purported billing infractions.

In addition, broad definitions of fraud have provided prosecutors with a net wide enough to trap many well-meaning physicians who fail to interpret the Medicare guidelines or Local Coverage Determinations according to the latest interpretation offered by the Government. The Government no longer limits its activities to those who intentionally defraud the system.  While the False Claims Act prohibits only the “knowing” submission of false claims, the definition of “knowing” has evolved to encompass physicians who act in “deliberate ignorance” or engage in “reckless disregard” for the truth or falsity of the claim.  Delegating billing authority to an employee or to an outside agency, without regular monitoring of their activities, can fall within the Government’s definition of “deliberate ignorance” or “reckless disregard.”  Therefore, errors not detected through supervision of the billing department, or delegation of billing functions to a third party, can readily fall within the definition of “knowing” if services are not correctly documented, coded and billed.  Under the False Claims Act, a physician who violates the Act can be assessed penalties equal to three times the original amount of the claim along with mandatory penalties of $5,000 to $10,000 per claim.

Providers should also be aware that reports of Medicare fraud come from disgruntled patients, associates and employees.  These “whistleblowers” can receive as much as twenty-five percent of any recovery obtained by the government by providing the information the government relies upon to initiate its investigation.  An individual bringing a qui tam action against a current or former employer can receive an award of thousands or even hundreds of thousands of dollars.

In conclusion, the Government has made it clear that it intends to continue to combat Medicare fraud through the use of analytics and combined resources of Federal, State and local law enforcement.  We highly recommend the utilization of a certified coder retained by a law firm to review and analyze your documentation and coding on an annual basis to help avoid medical audits and investigations in the future.  In addition, we recommend that you implement a formal compliance program if you do not currently have one.

Mathew J. Levy, Esq. is a Principal of Weiss Zarett Brofman Sonnenklar & Levy, PC. Mr. Levy is nationally recognized as having extensive experience representing healthcare clients in transactional and regulatory matters. Mr. Levy has particular expertise in advising health care clients with respect to contract issues, business transactions, practice formation, regulatory compliance, mergers & acquisitions, professional discipline, criminal law, healthcare fraud & billing fraud, insurance carrier audits, litigation & arbitration, and asset protection-estate planning.  You can reach Mathew Levy at 516-926-3320 or mlevy@weisszarett.com.

Weiss Zarett Brofman Sonnenklar & Levy, P.C. is a Long Island law firm providing a wide array of legal services to the members of the health care industry, including corporate and transactional matters, civil and administrative litigation, healthcare regulatory issues, bankruptcy and creditors' rights, and commercial real estate transactions.

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