Health care fraud is a major government priority right now. It may be that it's the most commonly prosecuted kind of white collar crime in federal court. The Department of Justice and the Department of Health and Human Services's Office of Inspector General are spending tremendous resources investigating and prosecuting health care fraud cases.
Consequences of health care fraud investigations & prosecutions
If you provide health care services and you're under investigation for health care fraud, you have two big concerns.
First, these cases are often prosecuted in federal court. If you're prosecuted in a federal criminal case you can go to a federal prison. Most people think that prison time is the most serious consequence of a health care fraud case – and for good reason.
Second, you can lose your ability to bill a federal health care program. For most medical providers, not taking federal health care payments is just not viable. Being a person suspended from Medicare can be career death. It's a serious consequence for anyone who practices medicine and is caught up in a federal health care fraud case.
How Health Care Fraud Cases Start
These cases start a few different ways.
One way is with the filing of a lawsuit under the False Claims Act. These suits – which are also called qui tam suits – are filed when someone learns about a company submitting false claims to the federal government for payment. That person can then bring a lawsuit, which is forwarded to the federal government. If the suit is successful, the person who brought it can be paid a significant amount of money as a percentage of whatever the federal government recovers.
Another way for these cases to start is when the OIG at Health and Human Services learns about a practice that's billing the federal government – usually Medicare – and the OIG thinks that there's something odd and possibly fraudulent about how these claims are being submitted. They sometimes bring in the FBI, and sometimes they don't. These cases then look a whole lot like normal criminal investigations.
For more information on how these kinds of investigations start generally, please see our page on how to know if you're under federal investigation.
What is health care fraud?
The most frequent kind of health care fraud involves false statements in bills submitted to Medicare. There are generally two ways this happens.
First, medical providers bill for procedures that weren't done. So, for example, there have been cases where Medicare is billed for fake patients – people who never received medical care at a facility. Or for patients who hadn't come in for a procedure in a long time.
The bottom line is that these are claims submitted to the federal government for procedures that were never done.
Second, sometimes medical providers will use a code for a procedure that pays more than the code for the procedure that was actually done. This is called upcoding.
To see how this works, suppose, for a second, that if a dermatologist removes a skin spot that's bigger than a quarter that's one code, which pays more than a procedure to remove a smaller spot. If a dermatologist systematically submits invoices for the procedure to remove a large spot when she only performs the procedure to remove a small spot, that could be fraud.
Who did the fraud?
A big issue in these cases is who was responsible for the false claims. In some cases, some one in the practice who was responsible for the billing took initiative and presented the false claims. This seems more likely to happen when that person is paid a percentage of revenue from the practice as a part of compensation.
In other cases, the government has proof that the medical professional knew about and participated in the fraud. In those cases, the doctor is the person in the government's cross hairs.