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Red Flags in Health Care Transactions: What Puts Providers in Hot Water?

Red Flags in Health Care Transactions: What Puts Providers in Hot Water?
Hendershot, Cannon & Hisey, P.C.

While regulatory oversight has generally increased across the board in American industries, few areas have become as intensively regulated as health care – especially when that care puts federal government money on the line.

Today, providers, suppliers, and various medical businesses who bill federal government programs like Medicare and Medicaid, the VA, or TRICARE are well aware of the increasingly aggressive approach regulators have taken when it comes to stamping out fraud and abuse.

From stringent enrollment requirements, reporting rules, and audits to health care fraud investigations which put potential penalties (and in some cases prison time) on the table – enforcement efforts taken by the federal government can be far-reaching high-stakes. In late 2018, for example, we discussed how a federal fraud takedown resulted in over 600 defendants being charge with health care and abuse offenses, and fraudulent practices that cost the federal government more than $2 billion.

While the motives are in many ways reasonable – preventing waste, fraud, and abuse protects taxpayers and patients from unscrupulous billing and profit-focused care – the litany of laws and regulations can be cumbersome and difficult to understand. What’s more, the serious penalties which can accompany non-compliance can lead to risk-laden audits, investigations, and subpoenas.

Knowing What Fraud Finders Look For

Understanding what the federal government and its agents / contractors look for when it comes to health care fraud is not about finding loopholes to get around the law – it’s about knowing how to comply with myriad regulations, and how to avoid the serious consequences of non-compliance, whether it’s recoupment, provider exclusion, monetary penalties, or even criminal charges. That’s particularly true when it comes to transactions and billing practices.

Below are some of the most common forms of fraud auditors and regulators look for when it comes to fraud in health care transactions:

  • Not bundling services – Auditors and other federal health care regulators are on high alert for providers who charge for services billable to federal health care programs individually, rather than properly bundling them. Bundling office visits, treatments, and procedures costs less than when they’re charged for their stand-alone rates, as if they were separate services. This practice, known as “unbundling,” may be cause for further investigation if it happens regularly.
  • Double billing – Double billing is a significant concern for regulators, and while it may be the result of poor billing practices, is often perceived as potential fraud. That includes cases where benefit programs are billed twice, and when federal health programs and private insurers are billed for the same services or supplies. All providers should be sure to create effective policies and correct any issues related to double billing.
  • Services not renderedBilling for services not rendered, or billing for “phantom” supplies can have steep consequences. Not only do insurers and regulators actively look closely into high-volume practices to ensure services and supplies are actually provided, patients may catch on and report providers themselves.
  • Excessive / unnecessary charges – When providers are high-volume billing practices, or when they routinely bill for services at higher rates (“up-coding”), excessive charges can be a significant red flag. Patterns of routinely billing for the same types of “add-on” treatments, a history of high-value claims, and treating a large number of patients in a short amount of time can raise questions as to whether providers are overcharging. Billing for medically unnecessary equipment, tests, and hours may also open the door to more intensive auditing.

Health care fraud takes many forms, and investigators at both the state and federal level can be meticulous in their exploration of transactions and billing records for questionable practices and patterns. Examples of other red flags may include:

  • The same diagnosis or treatments for all patients;
  • Rare and expensive services, procedures, or supplies;
  • A lack of follow-up visits or treatment;
  • Alternative payment models or compensation not set in advance based on fair market value;
  • Patients being treated at home when treatment is typically performed at a medical facility;
  • Billing for expenses and operational costs which are ineligible for reimbursement;
  • Fraudulent claims or schemes (i.e. doctors signing off on services non-licensed individuals provided) which constitute False Claims Act violations.
  • Discounts for services or supplies, below fair-market-value space or equipment leases, payments to family members, and certain marketing commissions which may constitute an illegal form of “remuneration” under the Anti-Kickback Statute – unless they meet the criteria of statutory “safe harbors.”
  • Direct compensation, direct investment, and company / practice ownership relationships which may implicate the Stark Law when physicians make referrals for designated health services to an entity with which they have a financial relationship.

Trust Proven Texas Attorneys With Your Health Care Compliance

While “red flags” may potentially lead to fraud, many are the result of errors, poorly structured agreements and relationships, and poor billing and transactional practices. These missteps, even when seemingly insignificant, can expose providers and medical businesses to grave risks.

At Hendershot, Cannon & Hisey, P.C., our attorneys not only defend health care clients against allegations of fraud – we also work proactively with practices, physicians, and other medical businesses to ensure they take the correct steps in avoiding the red flags which so often lead to disruption and increased risks-exposure.

Our firm is available to help clients across Texas and beyond with a range of health care regulatory compliance matters, including:

Call (713) 909-7323 or contact us online to speak with an attorney about your health and medical law needs.

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