What You Need to Know about the False Claims Act for Medicare

February 14th, 2018 by Mike Bothwell

False Claims Act for Medicare is a significant source of fraudulent activity against the government.

False Claims Act for MedicareIndividuals looking to defraud the federal government often find themselves dealing with the False Claims Act for Medicare. But how is a major government social welfare program connected to a federal law aimed at stopping fraud? We’ll explain how and what it could mean for those on Medicare and taxpayers in general.

What Is Medicare?

Medicare is a medical insurance program run by the federal government. It provides health insurance benefits mostly to individuals over the age of 65. However, individuals younger than 65 can sometimes receive benefits. Medicare is important because unlike private health insurance, individuals receive guaranteed benefits at a very low cost. It is the government, through taxes, that foots the majority of the bill. It’s the government that pays for the bulk of medical services and products. Therefore, Medicare is a prime target for fraud, especially kickbacks.

What Are Kickbacks and How Do They Work with Medicare?

Kickbacks refer to a type of commission or payment that one party pays to another to obtain business or other benefits. Let’s use an example to explain how kickbacks work.

Let’s say you have a clinic that treats older patients, often those who receive Medicare benefits. This clinic treats the patients. Then they file a Medicare claim and receives payments from the federal government for the medical services provided. This is a pretty good arrangement for the clinic. However, it wants to make more money, so it devises a kickback scheme.

Under the clinic’s plan, it recruits Medicare-eligible individuals to serve as fake patients. These fake patients will go to the office and claim they need medical care, even if they really don’t. The clinic then bills the federal government through the Medicare program for non-existent treatment. Not knowing what’s really going on, the federal government sends the clinic Medicare payments. Those payments result in fraudulent gains for the clinic. In return, the fake patients receive a cut of the fraudulent Medicare payments. The cut (or commission) received by the fake patients is the kickback. Here, the clinic has “kicked back” some of its ill-gotten gains to the fake patients.

Another Example

A more common example of kickbacks doesn’t involve any fake patients. Instead of a clinic and a fake patient, let’s pretend we have a clinic and a doctor’s office. Medicare-eligible patients go to their doctor. The clinic and doctor have a special arrangement where the doctor will always send the unsuspecting patients to the clinic for medical care. That’s even if the patient doesn’t need it or the doctor could send the patient to a different clinic or hospital instead. In return for this “guaranteed business,” the clinic gives a cut of its profits from the referred patient back to the doctor. Basically, the clinic pays the doctor to give it patients so the clinic can then bill the federal government and receive reimbursement through Medicare. In this second example, the payment the doctor receives is the kickback.

How Does This Affect You?

For any taxpayer, Medicare fraud means wasted government money. From a big picture perspective, the vast majority of tax revenue collected by the federal government goes to two places. They are the military and social welfare programs, such as Social Security, Medicaid, and Medicare.

With so much taxpayer money paying for Medicare benefits, whenever Medicare fraud takes place, it means taxpayers paid for fraudulent medical services. Ultimately, this means the taxpayer paid taxes it didn’t really need to.

Two Problems Here

For those on Medicare, fraud is a problem for two reasons. First, it jeopardizes the future of Medicare because too much waste from fraud might mean a cut in Medicare benefits. More importantly, it also means Medicare patients may not receive the medical services they actually need.

In the second example from above, there’s a good chance that patients sent to the clinic are not receiving the proper medical care they need. Some patients might be better off going to a hospital. But instead, their doctor sends them to the clinic. In some cases, this could lead to physical harm to the patient. For example, the patient might need a specific procedure or test that can only take place at a hospital, but the doctor sends them to the clinic anyway. As a result, a disease goes undiagnosed. By the time the patient finds out what’s really going on it’s, too late. Or the patient doesn’t need any further testing or medical care but is still sent to the clinic anyway. This could subject the patient to a medical procedure that causes harm.

While these more extreme examples are less likely and most patients involved in a Medicare fraud scheme probably don’t get hurt, the possibility is there. And at the very least, there is a tremendous amount of wasted taxpayer dollars, which is never a good thing. Luckily we have laws such as the False Claims Act. It punishes fraudsters and provides rewards to individuals to investigate fraudulent activity. This helps the federal government recovery lost money due to fraud.

Want to Learn More About Medicare and the False Claims Act?

Contact our team of skilled False Claims Act for Medicare attorneys at Bothwell Law Group by calling 770.643.1606 today.

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