What Is Medical Billing Fraud?

What is Medical Billing Fraud?

It contributes to rising health care costs for all of us. It’s any attempt to fraudulently obtain payment from and insurance carrier. Medicare and Medicaid are especially susceptible to fraud due to their payment arrangement.

With all the discussion by politicians these days about health care reform, reducing fraud to contain costs is getting a lot of attention. When you look at what’s spent on Medicare and Medicaid, not to mention private insurance, there are a lot of opportunities for fraud.

Most commercial and government insurance carriers take measures to identify and prevent the most flagrant attempts at fraud (such as up-coding). You may have had claims rejected because the carrier determines a treatment is unnecessary – even though you’re not deliberately trying to – because of unintended coding mistakes.

However it’s much harder to identify unethical practices that providers, pharmaceutical companies, and DME (durable medical equipment) supplier engage in subversively.

The following list some of the more popular forms of fraud. As you can imagine with the amount of money spent on healthcare, health care or medical billing fraud can take many creative forms.

  • Submitting claims for services or equipment not provided or necessary
  • Kickbacks in exchange for referrals or false claims
  • Up-coding
  • Ordering unnecessary procedures
  • Inflated pricing of drugs
  • Misuse of certificates of medical necessity for DME
  • Inflating costs for inpatient and outpatient care
  • Scheduling unnecessary patient visits
  • Self referrals between physicians
  • False diagnosis
Established By HIPAA

Probably the most extensive efforts to combat medical billing fraud have been undertaken by the federal government. In 1996, the Health Insurance Portability and Accountability Act of 1996 (HIPAA) established the Health Care Fraud and Abuse Control Program (HCFAC).

This program is intended to coordinate federal, state, and local efforts to combat medical billing and health care fraud. The program is directed jointly by the U.S. Attorney General, Department of Health and Human Services (HHS) Office of Inspector General (OIG).

OIG Reports
The OIG reports periodically on health care fraud and abuse. In the last year information is available, 2007; the federal government won or negotiated $1.8 billion in settlements and judgments. A portion of this money went to the Medicare Trust fund. Since its inception the program has returned over $11 billion to the Medicare Trust fund.

In 2007, the Attorney General began almost 900 investigations, had over 1600 pending investigations, and filed 434 criminal charges. The Department of Justice also started almost 800 civil fraud investigations. This is according to the OIG’s 2007 Health Care Fraud and Abuse Control Program Report.

What is Medical Billing Fraud – Medicare Task Force
Of particular significance in 2007 a Medicare Fraud Strike Force was created in Miami Florida to investigate and prosecute a very coordinated effort to fraudulently bill Medicare for HIV/AIDS infusions and durable medical equipment (DME) fraud.

As a result of this task force were over 75 cased indicted against 120 defendants. As a result of this effort, Medicare saw a substantial decrease in the billing for DME claims. Over a 7 month period (March 1, 2007 to September 30, 2007) claim amounts decreased by more than $1.2 billion. A quite effective effort!

What is Medical Billing Fraud – Examples
The Federal Health Care Abuse program report has specific cases that led to the successful prosecution and conviction for:

  • Physician self referrals and referrals between two physicians to increase Medicare reimbursement.
  • Kickbacks from pharmaceutical companies to favor their drugs.
  • Kickbacks paid to physicians to admit patients for hospital admissions.
  • Consulting agreements with surgeons in exchange for purchase of surgical implant products.
  • Ambulance companies providing kickbacks to hospitals in exchange for referrals.
  • Billing for skilled nursing services that were not provided.
  • Enlisting immigrants to accept unneeded treatments and billing Medicaid.
  • Illegal pricing by inflating drug prices knowing federal programs such as Medicare and Medicaid used these prices for reimbursement.
  • Pharmacy owners submitting false claims and receiving kickbacks for referrals.
  • Suppliers hiring recruiters to enlist elderly Medicare patients to use unnecessary DME like power wheelchairs using false certificates of medical necessity.
  • Doctors performing psychiatric evaluations and providing certificates of medical necessity for motorized wheelchairs.

What is medical billing fraud - February 2012:
In February 2012, a doctor in DeSoto Texas, Dr. Jacques Roy, was accused by federal authorities of selling his signature to collect Medicare and Medicaid to the tune of $375 Million dollars! Him and his accomplices face up to 100 years in prison if convicted of health care fraud and conspiracy. The accused owned three home health care agencies.

Authorities from the departments of Justice and Health and Human Services claim this is the largest dollar amount for fraud by a single doctor that has been discovered by the task force on Medicare fraud.

Several years of medical billing charges were not detected on the provider because the Department of Health and Human Services which is responsible for Medicare didn’t have the tools to detect the fraud. The department now has the tools to analyze billing data to detect suspicious billing patterns.

The scary thought is how many other cases are out there that haven’t been - or will never be - detected because the federal agencies didn’t have the tools or resources to detect it. Apparently Dr. Roy submitted something like 11,000 bills. Seems like this would raise a flag with Medicare - how can one provider see this many patients - its not practical.

The home health care agencies allegedly visited homeless shelters in the Dallas area to recruit homeless “patients” by paying them $50 for each person the recruited. The accused and his accomplices would also make home visits and provide unneeded durable medical equipment and services which would then be billed to Medicare.

Hopefully our federal agencies will focus their efforts to detect this type of fraud that’s costing the American taxpayer. What is medical billing fraud costing us? According to some estimates ten’s of billions of dollars a year.

These are just some of the examples of fraud that were caught and prosecuted. Unfortunately these are only a small example of the fraud that is a large contributor to the rising health care costs bared by everyone.

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What Is Medical Billing Fraud?

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