Healthcare fraud is a criminal offense in the U.S. and occurs when someone deliberately deceives the healthcare system in order to profit personally. According to figures from the U.S. Department of Justice, the scale of this problem is enormous with more than $100 billion in healthcare expenditure lost to fraud, waste and abuse each year.

The range of activities that comprise healthcare fraud is extensive and includes practices like billing for services that were not provided, receiving kickbacks, and falsifying documents.

There are a wide range of laws in place to deter individuals from engaging in healthcare fraud. In this article, we will outline common types of healthcare fraud and review the main pieces of federal legislation designed to safeguard the healthcare system and penalize those who seek to take advantage of it.

Common Types of Healthcare Fraud

• Billing for services not rendered: This is where a healthcare provider bills for goods or services they have not provided. For example, a physician may bill Medicare for laboratory tests that were never ordered.

• Upcoding: Here, a medical provider inflates the level of service provided by using a higher bill code in order to receive a higher reimbursement.

• Double billing: This occurs when a medical provider bills two separate sources for the same service or procedure. For example, a provider may bill their insurance company for a surgical procedure as well as Medicare.

• Unnecessary services: Healthcare fraud occurs when a healthcare provider performs unnecessary medical treatments or bills for services that the patient did not require. This may involve misrepresenting the patient’s symptoms or condition to increase the amount billed.

• Unbundling: This is where a medical provider breaks down a procedure into its component parts and charges for each one separately rather than billing the entire procedure as a single service in order to receive a higher reimbursement.

The following pieces of federal legislation are in place to help combat various types of healthcare fraud in the U.S.

The Healthcare  Fraud Statute

The Healthcare Fraud Statute, codified under 18 United States Code (U.S.C), § 1347, makes it a crime to knowingly and willfully execute a scheme to defraud any healthcare benefit program or obtain any money or property from it through fraudulent means.

An individual would be guilty of fraud under this statute if they use false pretenses, representations or promises to secure benefits they are not entitled to. Violations of the Healthcare Fraud Statute can be punishable with fines of $250,000 and imprisonment for up to 10 years.

False Claims Act

This False Claims Act (FCA) codified under 18 U.S.C, § 287, is a civil statute that prohibits individuals or businesses from knowingly submitting false or fraudulent claims from the U.S. government or any of its departments or agencies.

The FCA also contains Qui Tam provisions that are designed to protect and incentivize healthcare whistleblowers by allowing them to confidentially report healthcare fraud on behalf of the government and receive a portion of the funds recovered.

Current penalties for a FCA violation range from $13,946 to $27,894 per false claim, and individuals or entities that submit false claims may be ordered to pay up to treble the damages for each violation.

The Anti-Kickback Statute

The Anti-Kickback Statute (AKS), codified under 42 U.S.C. § 1320a-7b, makes it illegal for anyone to knowingly or willfully offer, pay, solicit or receive any form of remuneration in exchange for patient referrals or for purchasing items or services paid for by a federal health program.

To successfully prosecute someone under the AKS, there must be proof of intent and proof of remuneration such as a bribe, kickback, or rebate between the parties. This can include things like money, gifts, donations, gifts, and other things of value. Individuals found guilty of an AKS violation can face up to 10 years in prison and fines of up to $100,000.

The Physician Self-Referral Law

Known as the Stark Law, this legislation codified under 42 U.S.C. § 1395, makes it illegal for physicians to refer Medicare or Medicaid patients to entities with which they or an immediate family member have a financial relationship.

Similar to the AKS, the Stark Law prohibits physicians from making patient referrals in exchange for financial benefit, however, it is intended to target self-referrals only. Unlike the AKS, a successful prosecution does not require proof of intent to violate the law, making it a strict liability offense. Violators of the Stark Law face civil penalties, which can include fines of$15,000 per claim and orders for treble damages.

The legal framework surrounding healthcare fraud will no doubt continue to evolve to combat fraudulent practices and protect the healthcare system and the patients who rely on it.