Health Care Providers and the FCA Steamroller

The Department of Justice has been making headlines recently with its nonstop action against fraudulent claims and following up on whistleblowers filing suits throughout the country. In the year 2014 alone, the DOJ managed to recover nearly a record $6 billion from false claim cases alone. There are no signs of them stopping anytime soon as they are actively cracking down on housing fraud, health care fraud, and various other frauds that attempt to cheat out on government resources.

The False Claims Act Explained

What exactly is the FCA? The FCA, known as the False Claims Act, is the government’s primary tool to recover any false claims for government funds under government contracts, such as national defense contracts and government programs such as veterans’ benefits, disaster assistance, and Medicare. It was first passed in 1863 to punish and prevent contractors from selling faulty and fraudulent supplies to the military. Although initially a weak law, it gained power in 1986, after reports of massive fraud amongst military contractors ran rampant.

A substantial amount of false claims suits are filed under the act’s qui tam, or whistleblower, provision. Qui tam, a shortened version of the Latin phrase qui tam pro domino rege quam pro se ipso in hac parte sequitur, translates into “he who brings a case on behalf of our lord the King, as well as for himself.” This allows individuals to file lawsuits alleging any false claims on the government’s behalf. If the government were to win the action, then the whistleblower receives roughly around 15-30% of the recovered damages. In 2014 alone, 700 whistleblowers filed false claims lawsuits, leading to recoveries of approximately $3 billion and $435 million in compensation to the whistleblowers. As one can see, individuals are largely incentivized to report and file lawsuits for any potential fraud they encounter. Whistleblowers are also protected by the act from any form of retaliation from employers such as harassment, termination, demotion, suspension, and are given the option to sue for remedies in the event that they are subjected to any of these.

Putting the HEAT on Health Care

Health care providers have recently faced numerous lawsuits filed against them. For five years straight, the Department of Justice has recovered more than $2 billion in fraud against Medicare, Medicaid, and other government programs. This recent increase can be attributed to the creation of the powerhouse Health Care Fraud Prevention and Enforcement Action Team, or HEAT. This special task force is solely dedicated to the investigation of health care practices that are deemed suspicious and susceptible to fraud. Since its birth, over $14.5 billion in federal health care have been recovered thanks to the combined efforts of individual whistleblowers and the government.

In spite of the great importance and efforts of the government in preventing false claims, what exactly does the FCA classify as actual fraud?  Whenever an employer knowingly presents a false claim to the government for payment, uses a false record for reimbursement, conspiring with others to create a fraudulent claim, or uses a false record that conceals or decreases any obligation to pay the federal government. Of course, this list is quite vague especially when one considers it applies to numerous fields and various types of fraud. There are particular actions that health care providers should be aware of in order to help prevent fraud from occurring. Whenever the DOJ investigates health care providers, they are often closely scrutinizing a specific list of medical practices. These practices include:

• Improper billing of minutes (billed in intervals, billed below minimum in order to meet reimbursement levels, billing for more minutes than what was provided)
• Billing unskilled services as skilled services
• Misrepresenting the nature of the patient’s illness
• Placement of patients at maximum reimbursement levels
• Misrepresenting the type of goods or services rendered
• Providing substandard care
• Rewarding employees that seemingly incentivize excessive billing

These are just a few of the many practices that, if spotted by investigators or a potential whistleblower, would guarantee a financially crippling lawsuit with the Department of Justice. Thankfully, there are steps health care providers can take in order to prevent fraud and protect themselves from any legal issues they may encounter along the way.

5 Steps towards Prevention and Protection

1. Identify areas of risk

It is important to keep a close eye on certain activities that are usually prone to fraud. Increasing supervision and enforcing strict rules will help ensure that the procedures are done in accordance with the law. The hotspots of fraud are: coding and billing, documentation for government programs, referrals, and physician financial arrangements.

2. Establish internal control

The next step providers can do is to establish a set of rules and regulations that help regulate and maintain a set standard within these hotspot activities. Things such as creating policies for coding, standards for inpatient and outpatient care, and random testing and internal audits of risky activities help prevent any potential fraud that may occur.

If fraudulent behavior were to occur, having an established plan of correction is the next best thing. Returning overpayments, submitting revised and corrected reports, terminating physician agreements, or referring matters to law enforcement are all effective methods of fixing a mistake before it gets out of control and develops into a lawsuit.

3. Employee Training

 The third step within this process is to create a plan of habitual employee training to educate employees on fraud and avoiding risky situations. Be sure to develop trainings to match job-specific responsibilities, as well has creating a long term plan for continuing education in order to reinforce these critical ideas.

4. Internalize whistleblowers

Healthcare providers should create a system promoting openness and rewarding accurate reportingwithin the company itself. This allows providers to solve any problems before the involvement of the federal government. Be sure to establish a strict anti-retaliation policy in order to gain the trust and confidence of potential internal whistleblowers.

5. Partner with outside counsel

Lastly, the final step is to partner with an outside counsel who specializes in fraud prevention. They act as another set of eyes that can help spot and give advice on risks to the organization. They will also help serve as a reliable source of knowledge and resources to support in-house training and provide the latest information on anti-fraud policies and controls.

During a time where the search and punishment for fraud is incredibly high, it is crucial that health care providers take the necessary steps in order to protect themselves, their employees, and their patients from suffering the massive consequences of false claims. If you are a health care provider and have any questions regarding preventing fraud and following the FCA, feel free to contact the Law Office of Mark Smith, PLLC.