The largest bulk of recoveries under the False Claims Act have been for actions challenging health care fraud and abuse. Several billion dollars have been recovered in just the past five years against leading pharmaceutical companies, device manufacturers, and various medical providers for ever-inventive schemes of fraud.
Fraud and abuse on multibillion-dollar health care programs come in a variety of forms.
These can include the following: pharmaceutical and medical device companies marketing products unlawfully through off-label promotion for uses not approved or safe for patients; payments that violate the Anti-Kickback Statute; health care plans unlawfully providing false risk-adjustment or other data regarding patient-members; health care providers unlawfully billing through up-coding, improper unbundling, or billing for services not provided or medically unnecessary, among other examples.
Perhaps the most straightforward and common form of health care fraud concerns fraudulent billing by health care providers for services that are not provided or that are not necessary and proper.
Government health care plans, will generally cover qualified costs of “reasonable and medically necessary” services. Health care providers are required to provide services “economically and only when, and to the extent, medically necessary.” In order to be paid by health care for services provided, these providers must certify, on forms called CMS-1500, that the services it provided were “medically…necessary to the health of the patient.”
With respect to many procedures or treatments, health care requires a fixed sum be paid for a certain set of bundled services. Common among these are laboratory tests that are part of a single patient visit. The aggregate rate of reimbursement to medical providers for these services is generally less (and sometimes significantly so) than what would be paid by the government in total if each part of the bundled services were to be billed separately. For this reason, medical providers have a direct economic incentive to “unbundle” such services and bill government programs separately for their cost. This will often violate the False Claims Act.
The federal Anti-Kickback Statute broadly prohibits payments in exchange for the use of products or services by health care beneficiaries. In addition to violations and abuse of this statute, many financial arrangements among medical providers violate the federal Stark law, 42 U.S.C. § 1395nn. That law prohibits the referral of health care patients for designated health services to an entity with which a referring physician has a financial relationship, in the absence of any applicable safe harbor.
In particular, health care providers must routinely certify compliance with both the Anti-Kickback Statute and the Stark law. The certification provides: “I agree to abide by the health care laws, regulations, and program instructions that apply to this provider …. I understand that payment of a claim by health care is conditioned upon the claim and the underlying transaction complying with such laws, regulations, and program instructions (including but not limited to, the Federal anti-kickback statute and the Stark law), and on the provider’s compliance with all applicable conditions of participation in health care.”
