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Lack of Medical Necessity For Claims Reported is Considered

Medical necessity fraud represents a significant issue within the healthcare sector, particularly concerning the justification of services deemed medically necessary for patient care. This type of fraud involves healthcare providers submitting claims for treatments or procedures that do not meet accepted standards of medical necessity, leading to wasted resources and potentially harming patients by exposing them to unnecessary medical care. As healthcare systems strive to provide coverage that is both effective and necessary, addressing the lack of medical necessity in billing practices is crucial to protect both the integrity of health services and patient safety.

This blog explores the complexities surrounding medical necessity—how it is defined by health plans and regulated by entities like Medicare and private insurers. It also delves into the consequences of submitting claims for frivolous or unnecessary procedures under federal laws such as the False Claims Act and the Affordable Care Act. Additionally, we will look at how whistleblowers play a pivotal role in identifying and preventing this fraudulent behavior, ultimately safeguarding patients and ensuring that healthcare providers maintain rigorous standards in determining medical necessity.

What is Medical Necessity

To define medical necessity, it encompasses services or treatments that are crucial for diagnosing or treating a medical condition according to accepted medical standards. It is a key criterion used by health plans and insurance providers, including Medicare and Medicaid, to determine coverage.

Key Points:

  • Definition:
    • Services deemed necessary for diagnosis or treatment of illness, injury, condition, or disease.
    • Must align with accepted standards of medical practice.
  • Medicare Coverage Implications:
    • Medicare and Medicare Advantage plans require services to be medically necessary for coverage.
    • Must avoid unnecessary procedures and ensure treatments are appropriate.
  • Healthcare Provider Requirements:
    • Healthcare providers must ensure services meet medical necessity criteria.
    • Requires thorough documentation to prevent false claims and denials.
    • Often involves obtaining prior authorization from insurance plans.
  • Legal and Policy Framework:
    • Governed by the Affordable Care Act, which mandates coverage for essential health benefits.
    • Enforced by laws such as the False Claims Act to prevent fraud.
    • Supported by guidelines from institutions like the American Medical Association.

Understanding and adhering to the principles of medical necessity helps healthcare providers deliver ethical, effective care while ensuring compliance with health care policy and protecting patients from unnecessary medical care.

What is Lack of Medical Necessity Fraud

Lack of medical necessity fraud involves healthcare providers submitting claims for treatments or services that are not medically necessary. This type of fraud occurs when services or procedures are billed despite not meeting the accepted standards of medical necessity, often including treatments that are not required for the patient’s diagnosis or condition.

Forms of Medical Necessity Fraud

Providers may engage in this fraud through various means:

  • Conscious disregard: Providers knowingly ignore medical necessity standards and bill for unnecessary services.
  • Outright fraudulent claims: Submitting claims for procedures that were either not performed or not needed, such as unnecessary surgeries or tests.

Impact on Resources and Patients

The consequences of lack of medical necessity fraud are significant. Financially, it strains healthcare resources and increases costs for insurers, patients, and government programs like Medicare and Medicaid. More importantly, it harms patients by subjecting them to unnecessary procedures, which can lead to complications, stress, and overall harm.

Legal Frameworks Addressing Fraud

Legal frameworks such as the Fraud Enforcement and Recovery Act and the Patient Protection and Affordable Care Act address this issue by enhancing the government’s ability to combat healthcare fraud. These laws strengthen requirements for medical necessity and increase penalties for fraudulent activities, aiming to protect patients and ensure fair use of healthcare funds.

Addressing lack of medical necessity fraud is crucial for maintaining the integrity of the healthcare system, protecting patient health, and ensuring the appropriate and effective use of healthcare resources.

Examples of Medical Necessity Fraud

1. United States v. Fresenius Medical Care Holdings, Inc. (2019)

In one of the largest healthcare fraud settlements, Fresenius Medical Care Holdings, Inc. agreed to pay $5.2 million to resolve allegations that it submitted claims for medically unnecessary dialysis treatments and unnecessary diagnostic testing. This case highlighted the company’s practice of billing for services that did not meet medical necessity standards, thereby defrauding Medicare and Medicaid.

2. United States ex rel. Wilkins v. UnitedHealth Group (2017)

UnitedHealth Group, one of the nation’s largest health insurers, faced a whistleblower lawsuit alleging that it submitted false claims to Medicare by inflating risk adjustment scores, leading to higher payments from Medicare. The case settled for $32 million, emphasizing the fraudulent practices related to falsely claiming medical necessity to increase reimbursements.

3. United States v. Adventist Health System (2015)

Adventist Health System agreed to pay $115 million to settle allegations of improper billing practices, including claims for medically unnecessary services. The lawsuit revealed that the healthcare provider billed for services and procedures that were not necessary, leading to substantial financial loss for Medicare and Medicaid.

4. United States ex rel. Druding v. Care Alternatives (2016)

In this case, Care Alternatives, a hospice care provider, was accused of submitting false claims to Medicare for hospice care services that were not medically necessary. The case, which resulted in a $1 million to $5.25 million settlement, showcased the company’s disregard for medical necessity standards, impacting patient care and misusing federal funds.

These cases illustrate the various forms of medical necessity fraud, where healthcare providers submitted claims for services that did not meet the criteria for medical necessity. The legal actions and settlements in these cases underscore the importance of adhering to medical necessity standards to protect patients and preserve the integrity of healthcare funding.

Role of Whistleblowers and Qui Tam Lawsuits

Whistleblowers play a crucial role in identifying and reporting fraudulent activities related to lack of medical necessity. These individuals, often insiders like employees or contractors, have access to information that reveals when healthcare providers are engaging in fraudulent practices such as billing for unnecessary medical care or frivolous procedures.

Identifying and Reporting Fraud

Whistleblowers can identify fraud by recognizing patterns where healthcare services do not meet the criteria of being medically necessary. They may notice discrepancies in healthcare provider billing practices, such as repeated claims for services that are not supported by patient diagnoses or obtaining prior authorization under false pretenses. By reporting these activities, whistleblowers help to protect patients and ensure that health care services are appropriately utilized and reimbursed.

Qui Tam Lawsuits under the False Claims Act

Under the False Claims Act, whistleblowers can file Qui Tam lawsuits on behalf of the government. These lawsuits allow whistleblowers to present evidence of false claims submitted by healthcare providers for Medicaid services, Medicare patients, and other health insurance plans. The False Claims Act provides financial incentives to whistleblowers, offering a percentage of any recovered funds as a reward for their efforts.

Impact of Whistleblower Actions

The actions taken by whistleblowers have a significant impact on curbing medical necessity fraud. Their reports and subsequent legal actions help to uncover and address fraudulent practices, ensuring that only services deemed medically necessary are reimbursed by insurance plans and government programs. This not only helps to reduce unnecessary costs but also protects patients from being subjected to unnecessary procedures and treatments.

Whistleblower cases, supported by legal frameworks such as the Affordable Care Act and national institute guidelines, help to enforce accepted standards in medical practice and healthcare policy. These actions ensure that healthcare providers adhere to the highest standards of care, thereby maintaining the integrity of health services and preventing the misuse of health plan resources.

By utilizing the capabilities of Qui Tam lawsuits and the safeguards provided by the False Claims Act, whistleblowers, with the assistance of qui tam whistleblower lawyers, play a vital role in combating lack of medical necessity fraud. Their efforts are crucial in fostering a more efficient and ethical healthcare system.


Combating medical necessity fraud is crucial for maintaining the integrity of the healthcare system. Addressing this type of fraud not only protects patients from unnecessary medical procedures but also conserves valuable healthcare resources. Ensuring that healthcare providers adhere to standards of medical necessity helps to prevent the misuse of funds and improves overall patient care.

Stopping fraud has a dual benefit: it safeguards patients’ well-being and ensures that healthcare resources are used effectively, positively impacting health affairs overall. By reducing instances of fraudulent billing, we can enhance the quality of care provided to Medicare and Medicaid patients and protect the financial health of these essential programs.

A call to action is needed for vigilant reporting and robust legal enforcement. If you suspect instances of medical necessity fraud, consulting with a Medicare fraud lawyer can provide guidance on how to proceed. Additionally, seeking the expertise of an experienced False Claims lawyer can ensure that whistleblowers are supported in their efforts to expose and stop fraudulent activities.

By working together, we can foster a more ethical and efficient healthcare system, benefiting patients and preserving vital healthcare resources.

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