False Claims Act: What is it, and how can you avoid scrutiny?
Upcoding physician services. Billing for more services than you could possibly provide in a day. Billing for services performed by an excluded individual or services and items that were not provided. Billing medically unnecessary services. These are just a few of the reasons why physicians could find themselves facing hefty penalties and even prison time under the False Claims Act (31 U.S.C. § § 3729-3733), a federal statute that punishes anyone who knowingly submits false claims to the government.
Knowingly submitting false claims means a person must have actual knowledge of the false information, deliberate ignorance of the truth or falsity of the information, or reckless disregard of the truth or falsity of the information. However, individuals may be held liable for violating the False Claims Act even when there is no proof of specific intent to defraud.
The False Claims Act was originally passed in 1863 but was amended in 1986, 2009, and 2010. In fiscal year 2023, False Claim Act settlements and judgements exceeded $2.68 billion, and more than $1.8 billion pertained to matters involving healthcare industry.
The False Claims Act (31 U.S.C. § § 3729-3733): What physicians need to know
The government isn’t the only entity that can allege fraud. Individuals or non-governmental organizations can as well. That’s because the False Claims Act is one of the strongest whistleblower laws in the United States, providing whistleblowers with an award of 15%-30% of the collected proceeds. Those proceeds can be substantial considering false claims are subject to civil penalties of up to $11,000 per claim plus three times the amount of damages the government sustains because of each false claim. Individuals who knowingly make a false claim may be subject to criminal fines of up to $250,000 and imprisonment of up to five years. Violating the False Claims Act may also lead to a provider’s exclusion from Federal health care programs.
The takeaway? False Claims Act penalties have the potential to seriously harm a healthcare provider’s ability to stay in business.
Whistleblower lawsuits in healthcare under 31 U.S.C. § § 3729-3733
There are countless examples of whistleblower lawsuits affecting medical practices. For example, one urology medical practice recently paid $1.85 million to settle False Claim allegations of overbilling Medicare. The whistleblower received about $323,750.
Similarly, a primary care medical practice paid $1.5 million to resolve False Claims Act liability after a whistleblower filed a lawsuit stating several physicians had submitted unsupported diagnoses to the Medicare Advantage program.
More recently, a whistleblower accused Aledade, the largest U.S. independent primary care network and an Accountable Care Organization, of Medicare fraud-specifically adding overstated medical diagnoses to patients’ electronic medical records.
Over the years, whistleblowers received awards worth nearly 12% of total funds recovered by the U.S. government.
How to mitigate compliance risk
There are several ways to mitigate your risk of False Claims Act penalties. These include the following:
Perform proactive medical billing and coding audits. It’s always a good idea to audit your claims. Focus on common intentional and unintentional errors such unbundling, intentionally claiming reimbursement for treating a person other than the eligible beneficiary, billing for services and procedures more expensive than provided to patients to increase earnings, and more. If an audit identifies an overpayment federal healthcare program, providers must self-report it and return the overpayment within 60 days of the date the overpayment was identified. Failure to do so may make the overpayment a false claim.
Provide education. Use your audit results to target physician education as well as education for medical coders and medical billers.
Leverage your practice management system. Built-in claim scrubbers can easily detect and eliminate errors in billing codes that can send up a red flag for a False Claims Act violation. Ensuring these claim scrubbers are in place and that medical coders and billers review all edits prior to claim submission is paramount.
Conclusion
The False Claims Act plays an important role in minimizing fraud and abuse. Physicians can protect themselves against False Claims Act penalties by focusing on compliance and revenue integrity. Ongoing audits, education, and built-in claim scrubbers help reduce the likelihood of violations. Learn how edgeMED can help and be sure to check the Healthy Snacks blog for more expert insights, best practices and industry trends.
