Medicare fraud in the United States is rampant.

This is billing for services not delivered and perhaps the most common type of health care fraud and includes billing the government for services that were never given. Common examples include false billing for x-rays, blood tests, and supplies that were never provided to the patient.

Some hospitals have fraudulently performed tests or procedures that are not medically necessary. In the worst cases, this type of conduct is not only fraudulent, but can also endanger patient health.

Some providers may try to gain extra money by falsifying records to prove the necessity of more expensive procedures or surgeries.

Unbundling is the process of separately billing for services that should be combined to receive reimbursement from the federal health care benefit program at a higher rate. When billing for services separately, the provider is usually able to receive higher payment. Unbundling, or “fragmentation” billing practices are fraudulent.

When a physician or hospital bills federal health care twice for the same service, this is known as double billing.

The Stark Law prohibits kickbacks for patient referrals. This law includes any entity with which a provider has a financial relationship (absent certain exceptions applying), and also applies to labs, medical providers, and pharmaceutical companies may offer illegal kickbacks or incentives for using their products or for referrals.

Federal law prohibits physicians from referring patients to themselves or to immediate family members.

Upcoding refers to the practice of exaggerating services rendered to a patient. Medicare and Medicaid reimburse hospitals and healthcare providers at a rate that varies with the type of treatment or procedure provided. Upcoding fraud occurs when a federal health care program is billed with a code for a more expensive diagnosis or procedure than the patient actually received.

Adding additional expenses or padding reports to Medicare is an example of falsifying cost reports, which the law defines as a criminal offense. Personal expenses or costs necessary to run the healthcare setting are NOT able to be submitted to Medicare.

The Stark Law statute, with some exceptions, prohibits physicians from referring a Medicare or Medicaid patient for certain health services (like lab work or physical therapy) to any organization in which the referring physician has a financial relationship. It also prohibits those entities from submitting claims for payment to Medicare based on those forbidden referrals. The law is intended to prevent physicians from ordering unnecessary testing for patients that could increase healthcare costs.

The penalties and consequences for physicians and entities that violate the Stark Law can be incredibly costly:

• The provider or organization may be forced to refund the amount
• The provider or organization can face a civil monetary penalty of $15,000 for each service and a civil assessment of three times the amount claimed
• The provider or organization may also be excluded from claiming anything from Medicare or Medicaid

Plain violations of the Stark Law do not require an intent to break the law. However, for civil monetary penalties, program exclusion, civil assessments, and False Claims Act Liability (FCA), the violation must have been done knowingly.

The False Claims Act allows private citizens, or whistleblowers, to sue any individual, or company that is deceiving the government or receiving reimbursement through government healthcare programs. Whistleblowers can receive financial rewards as well as job protection against retaliation.

The FCA covers submitting claims for procedures that were not performed and wrongful conduct like upcoding and unbundling. In short, the FCA makes unlawful the knowing submission of a false claim for payment to the government by a government contractor.

There are significant criminal and civil penalties for violating the FCA:

• Total penalties can total three times the amount paid on the fraudulent claim, plus fines
• The FCA also has criminal enforcement penalties for those who engaged in Medicare fraud

The Anti-Kickback Statute (AKS) is a criminal statute that prohibits providers from intentionally accepting or paying anything of value to induce the referral of Medicare or Medicaid business. Violating the AKS can result in:

• Fines of $25,000 and up to $50,000 per violation and prison sentence of five years per violation
• Exclusion from Medicare and Medicaid programs for at least five years

There are numerous exceptions, called “safe harbors,” from AKS liability, which may otherwise give immunity to providers. An experienced Medicare fraud attorney can help whistleblowers navigate the complexities of laws like AKS.

The Social Security Act contains anti-fraud provisions related to Medicare and Medicaid. It prohibits false and fraudulent claims for payment as well as representations regarding a person’s eligibility to receive a benefit. Similar to other statutes it imposes civil monetary penalties and treble (triple) damages in some situations. It also includes a criminal enforcement provision allowing for five years in prison and $25,000 per violation.