According to a recent Associated Press article published in the New York Times, healthcare fraud is estimated to cost the federal government at least $60 billion a year. These losses are mainly to Medicare and Medicaid and are said to involve “everything from sophisticated marketing schemes by major pharmaceuticals encouraging doctors to prescribe drugs for unauthorized uses to selling motorized wheelchairs to people who don’t need them.”
Despite intensive and increasing regulatory oversight, there seems to be no end to it, with health care fraud increasing and more and more economic pressure placed on providers through decreased reimbursements to save costs. But, the government is working hard and utilizing new high-tech data analysis technologies which have enabled it to track Medicare fraud more efficiently by identifying billing spikes.
The federal government unsealed its indictment on Tuesday, February 28, 2012, of a Texas physician, Dr. Jacques Roy, and his office manager, who were arrested on charges of running a $375 million fraud scheme, the largest in history by an individual physician. The indictment charged that, over a five-year period, Dr. Roy certified 11,000 Medicare beneficiaries for home health services from more than 500 agencies for services that were not medically necessary or were not performed.
The patients were recruited by runners, including home health agency owners, who went door-to-door to recruit Medicare and Medicaid beneficiaries for home health services. He had people sign forms that contained the physician’s electronic signature and a representation that the physician had seen the beneficiaries in their homes. Some recruiters were paid $50 for every signed form. Dr. Roy faces a maximum prison sentence of 100 years and over $18 million in fines and forfeitures. Millions in reimbursements to the home health agencies have been suspended and the agencies themselves who were knowingly involved in the scheme face exclusion from the Medicare program.
Healthcare providers who believe that they can skate under the radar undetected should be aware of the new tools being implemented by law enforcement to detect fraud. While they may find it easy to run around the statutes in the short run, they will be caught eventually and suffer draconian penalties which stiffen with each round of health care reform. On the other hand, because the various anti-fraud laws and safe harbors are complex and often counterintuitive, many providers unintentionally run afoul of the law without even knowing it, creating for themselves enormous overpayment obligations, fines, and possible prison time.
While most providers would never think of engaging in the fraudulent activities described in Dr. Roy’s indictment, many would be surprised to learn that transactions that are common within the business community, such as the payment of commissions for sales referrals, exchanging in-kind services for referrals of business, and similar transactions, may violate federal and state law.
We have found that most independent contractor arrangements among health care providers incorporate illegal or improper compensation terms, even though the parties intended to comply with the law. They, too, may find themselves ensnared in a legal tangle with government regulators which will be costly at the very least. That is why we encourage anyone engaged in the healthcare industry, either as a direct provider of healthcare services, or a vendor, to seek the counsel of a qualified health lawyer to review their transactions before they are formalized.