‘F’ is for Fraud: How to Avoid Medicare and Medicaid Fraud

This segment is rated “F” for fraud. It is not for the meek of heart. How many of you have read a newspaper or seen the news about Medicare and Medicaid provider fraudsters? There is a gray area between civil and criminal prosecutions of fraud. Some innocent providers get caught in the wide fraud net because counsel doesn’t understand the idiosyncrasies of Medicare regulations.

Medicare and Medicaid fraud is a federal offense with both civil and criminal penalties. The difference between a civil penalty and a criminal one is that criminal penalties allow for fines, prison, and an order to pay restitution (compensate the victim for any money lost as a result of the fraud). Civil penalties result in an order to pay restitution (but no jail time or fine).

Criminal health care fraud charges, both at the state and federal level, can lead to serious consequences for anyone convicted. Making a false statement in relation to a Medicaid or Medicare claim can result in a 5-year prison sentence per offense, while a conviction for federal health care fraud can result in a 10-year sentence for each offense. If the health care fraud results in serious bodily injury to someone there is a potential sentence of up to 20 years in prison, while an act of health care fraud that results in someone's death has a potential life sentence.

The Forms Health Care Fraud Can Take and How It Can Impact Clinics

Health care fraud generally exists as one of the following:

1.    Billing for services not rendered
2.    Billing for a non-covered service as a covered service
3.    Misrepresenting the date of service
4.    Misrepresenting location of service
5.    Misrepresenting provider of service
6.    Waiving deductibles and/or co-payments
7.    Incorrect reporting of diagnoses or procedures
8.    Overutilization of services
9.    Kickbacks/referrals for money
10.    False or unnecessary issuance of prescription drugs

The mere accusation of health care fraud can put a provider out of business. The statute 42 C.F.R. §455.23 mandates that all reimbursements be suspended upon a credible allegation of fraud. Sadly, “credible” means only an indicia of reliability, which is a low bar. In other words, you can be accused of fraud and immediately your reimbursements cease, despite you continuing to render medically necessary services. The concept of due process somehow was lost in 42 C.F.R. §455.23.

Fifteen behavioral health care providers know this all too well. In June 2013, the State of New Mexico accused 15 behavioral health care providers of civil Medicaid fraud.¹ The alleged fraud involved $33.8 million in Medicaid overpayments to the behavioral providers. The providers comprised 87.5% of New Mexico’s behavioral health care services. In one blanket decision, they were all put out of business. Eventually, years later, it was determined that no fraud existed, but it was too late for the providers.² If you want to learn more about the New Mexico fiasco, there is a documentary called The Shake Up.

I represented four of the providers in their administrative actions defending against alleged overpayments. One provider was accused of owing over $12 million. After a two-week trial, the judge decided we owed $896.35. We appealed.

Fraud can be civil or criminal. Sometimes, if you are under investigation, you will have no idea whether you are being investigated criminally or civilly. Obviously, the penalties differ from monetary penalties and terminations or suspensions of Medicare and Medicaid contracts versus prison time. Another example of a civil fraud action is a Virginia diagnostic laboratory that agreed to pay $1.4 million for allegations of violating the False Claims Act (FCA) by submitting claims for genetic tests to Medicare without valid physician oversight.³

Providers have the benefit of the “treating physician” rule when it comes to investigations of medical necessity.

The treating physician rule is based on the premise that the opinion of a treating physician should be accorded more weight because the physician has intimate and first-hand knowledge about a patient's specific medical condition. The federal regulatory scheme permits giving a treating physician's opinion special weight only if it is “well-supported by medically acceptable clinical and laboratory diagnostic techniques and ... [is] not inconsistent with the other substantial evidence in the record ....” In other words, documentation to support the physician’s determination of medical necessity is instrumental.

One Plastic Surgeon’s Experience With a Medicare Fraud Accusation

To err is human—or so Alexander Pope says. I am here to attest that many of those accused providers are innocent and victims of unspecialized criminal attorneys. One plastic surgeon knows this only too well.

A plastic surgeon was audited for removing lesions from the eye area and accused of billing Medicare for removing cancerous lesions even when the biopsies came back benign. Yet Medicare instructs physicians not to go back and change a CPT code after the fact. The physician is supposed to make an educated guess as to whether the lesion removed is benign or malignant based on experience and education. No one can tell whether skin is cancerous by the naked eye, so, per Medicare policy, he makes an educated determination and codes accordingly.

Since plastic surgery is highly specialized and the physician is highly educated. Deference should be given to the physician regardless. Federal regulations do give deference to the treating physician.

This plastic surgeon was accused of upcoding and billing for services not rendered. He performed biopsies around the eye of possible, cancerous lesions. Once removed, he would send the samples to lab. Meanwhile, before knowing whether the samples were cancerous, because he believed them to be cancerous, billed for removal of cancerous lesion to Medicare. Correct coding for skin procedures is not impossible.

In a Local Coverage Determination (LCD), beginning 2008, Medicare instructed physicians to not go back and change codes depending on the pathology. “If a benign skin lesion excision was performed, report the applicable CPT code, even if final pathology demonstrates a malignant or carcinoma diagnosis for the lesion removed. The final pathology does not change the CPT code of the procedure performed.”⁴ This plastic surgeon relied on CMS’ Medicare regulations and policies, including the Medicare Provider Manual and LCD 2008, which are published by the government and on which plastic surgeon relied.

The doctor hired two criminal attorneys who did not specialize in Medicare. He got charged, and attorneys convinced him to plead guilty claiming that he cannot fight the government. And that the government will seize his property if he doesn’t settle. Out of fear, he took the plea.

He pleaded guilty to a crime that he did not do. He paid millions in restitution, was under house arrest for 15 months, the Medical Board revoked his medical license, and he lost his career.

The lesson here is always fight the government. But wisely choose who you fight.

Knicole Emanuel is an attorney and a partner at Practus, LLP in Raleigh, NC. She blogs at https://medicaidlawnc.com/.

To download a PDF of this article, click here.

References

1. Frosch D. Fraud investigation unsettles mental health care in New Mexico. New York Times. Published September 16, 2013.
2. Jennings T. AG clears final two behavioral orgs accused of fraud. New Mexico in Depth. Published April 5, 2016.
3. United States Attorney’s Office District of New Jersey. Virginia diagnostic testing lab agrees to pay $1.4 million to resolve False Claims Act allegations. Published July 9, 2021.
4. Centers for Medicare and Medicaid Services. Local Coverage Determination: Removal of benign skin lesions (L34938).