Why Are Medicare False Claims Cases on the Rise?

July 20th, 2018 by Mike Bothwell

The instances of using the False Claims Act in Medicare cases are going up.

false claimsGiven its size and the amount of money at stake, Medicare has enormous potential for fraud and false claims. So it’s no wonder that the False Claims Act is a popular law to crack down on Medicare fraud. But what is the False Claims Act and why are Medicare fraud claims rising? Keep reading to get the scoop.

The False Claims Act

The False Claims Act is a federal law that fights fraud against the federal government. It imposes hefty fines on those who are responsible for improperly taking the government’s money. It also allows individuals, called relators, to bring civil lawsuits against those who commit fraud. These civil lawsuits are “qui tam actions” and enable relators not just to sue the responsible parties, but receive a reward for their efforts.

Depending on the facts of the case, such as the level of involvement of the relator in the qui tam action, a relator may recover anywhere from 10 to 30 percent of the total amount of money the government can recover. Most of the time, it will be around 15 or 20 percent. Thirty percent recovery is for situations where the relator has to do a lot of work, such as bringing the qui tam lawsuit without government assistance. Ten percent is more common when the relator had some involvement in the fraud. It sounds unfair to reward someone engaging in fraud, but the government understands that without these whistleblowers, the scam would continue. The government also knows that those involved in the fraud often serve as the most effective whistleblowers.

Besides rewarding whistleblowers, the False Claims Act can levy potentially millions of dollars in monetary penalties on those who commit fraud. For example, someone guilty of violating the False Claims Act can pay around $10,000 for each fraudulent act. So a doctor’s office that improperly bills Medicare 100 times doesn’t pay $10,000 in damages. Instead, it pays $1 million, or $10,000 for each fraudulent bill sent to Medicare.

Increasing Medicare Fraud

Why are the instances of Medicare Fraud going up? There are several reasons for this.

First, people are getting smarter in finding ways to defraud the government. Medicare is a relatively old program, starting back in the 1960s. This provides plenty of time and opportunity for unscrupulous individuals to find ways to steal money from the government. With such a complex government program, there are many ways fraud can occur.

One of the more popular methods is to use kickbacks. Kickbacks are special arrangements where one party will get money for providing an improper benefit to another. In the healthcare context, kickbacks often take place when one doctor sends a patient to another doctor in return for a cash payment. This cash payment is a kickback.

Another form of Medicare fraud is upcoding. With upcoding, medical offices use the wrong code on a bill to receive more money than necessary. So instead of using a billing code for a medical service worth $5,000, a code for a service worth $15,000 goes on the bill.

Fake Medicare Patients

Then there’s there use of fake patients. In this scenario, a doctor or hospital may completely make up patients to bill for nonexistent services. A hospital might bill Medicare for John Smith’s X-ray during last month’s emergency room visit even though there was no such visit and John Smith doesn’t exist. A slight variation of this scheme is when the patient exists, but the medical service does not. Perhaps there was a real John Smith that came into the emergency room, but he never got an x-ray, just a physical exam, which might be much cheaper.

Second, the overall population in the United States continues to age. As people get older, they require more medical services. This provides more opportunities for individuals in the healthcare industry to commit fraud. It’s a lot easier to defraud more money from the government when a doctor has 80 patients instead of 60. Even if the rate at which Medicare fraud occurs goes down, the total number of fraudulent occurrences may rise as a result of this growth in the use of Medicare.

Third, there is the passage of the Affordable Care Act, also known as “Obamacare.” This law made massive changes to the legal framework of the healthcare industry. One thing it did was take steps to cut down on Medicare fraud. Changes to Medicare to stop fraud include harsher penalties, sharing of information between state and federal agencies and more oversight. With closer scrutiny and additional attempts to reduce fraud, it’s no surprise when regulators and potential whistleblowers find more issues. So even though the amount of reported fraud rises, it may be due in part because people are just paying more attention.

Want to Discover More about Stopping Medicare Fraud?

Find out more about Medicare false claims by contacting our legal team at Bothwell Law Group online.

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