Following is information on the fraud and abuse rules provided by Susan McClelland, McClelland Consulting, LLC, who presented several workshops for us on Medicare Coding and Billing during the Medicare Demonstration Project:

In 1995, President Clinton launched a program to fight Medicare fraud and abuse. In 1997 alone, Medicare saved more than $7.5 billion through anti-fraud and anti-abuse efforts. In other words, the federal government is making a lot of money with these investigative programs; so, don’t expect them to go away.

• These fines can be applied to billing and coding errors committed by any healthcare provider who offers services reimbursed by Medicare.

• Healthcare fraud and abuse crimes are the NUMBER TWO PRIORITY (after violent crimes) by the US Department of Justice.

When Is It “Fraud and Abuse”?

Fraud is defined as “intentional deception or misrepresentation that individuals make, knowing it to be false, and that could result in some unauthorized benefit to them.” Abuse is defined as “incidents or practices that are inconsistent with accepted sound medical/chiropractic practices. Abuse may directly or indirectly result in unnecessary costs to the program, improper reimbursement, or payment for services that fail to meet professionally recognized standards of care, or that are medically unnecessary.”

The legal definition of healthcare fraud and false claims has been expanded to include such things as:
• Inadvertent Billing Errors
• Incorrect Coding
• Billing for items that HCFA determines (after the fact) were not medically necessary.

In addition, they have reduced the legal standards of proof.

Unbundling and Upcoding

Medicare considers unbundling and upcoding to be potentially fraudulent. Unbundling is a practice where patient procedures are “split out” and billed separately, rather than using a code that describes the “total” procedure. Upcoding is a practice where services that are performed are charged at a higher code level in order to receive better reimbursement.

Over billing Medicare

Doctors must also be careful not to over bill Medicare or keep overpayments. You cannot bill Medicare patients more than non-Medicare patients. Most practices are familiar with this rule, but many practices violate it if they accept “insurance only.”

Preparing False Claims

The doctor is responsible for all claims submitted by the office, even if they were submitted by staff members and never reviewed by the doctor. Common false claims include:

• Billing for no-shows
• Billing for services that were not furnished at all
• Claims that are supported by false records
• Billing Medicare as the primary insurer when Medicare is the secondary insurer

Other Violations

Offices should be in compliance with all Stark laws and the “incident to” Medicare requirements, as well as other less-known requirements that can lead to fraud or abuse. Examples are in your handout.

While the regulations seem endless, violations-both unintentional and intentional are a serious matter and should be avoided at all costs.

Penalties include:
• Increased Financial Penalties
• Exclusion for the Medicare program
• Freezing of Assets
• Forfeiture of Property (previously applied only to drug trafficking crimes and racketeering)
• Increased Criminal Penalties including Imprisonment

Additionally, the federal government has taken an “if you should know – you did know” position in determining healthcare fraud and related offenses. In other words, an honest mistake with no intent to defraud the government may no longer be a defense.