Fraud & Abuse

Audio/Visual Introduction

Fraud & Abuse Phone Numbers

WPS Medicare Customer Service	Office of Inspector General (OIG) Hotline
(866) 590-6730 8:00am to 4:00pm CT, M-F	(800) HHS-TIPS or (800) 447-8477

Fraud & Abuse Correspondence

IA	KS	MO	NE
WPS Medicare Part B General Correspondence P.O. Box 8550 Madison, WI 53708-8550	WPS Medicare Part B General Correspondence P.O. Box 7238 Madison, WI 53707-7238	WPS Medicare Part B General Correspondence P.O. Box 14260 Madison, WI 53708-0260	WPS Medicare Part B General Correspondence P.O. Box 8667 Madison, WI 53708-8667

Responsibility

What is the carrier's responsibility regarding the fraud and abuse function?

The carrier's Fraud and Abuse Unit's primary role is to identify cases of suspected fraud and abuse, develop them thoroughly and in a timely manner, and take immediate action to ensure that Medicare Trust Fund monies are not inappropriately paid out and that any mistaken payments are recouped. Where appropriate, the carrier must refer cases to the Office of Inspector General for consideration and initiation of criminal, civil monetary penalty, and/or administrative sanction actions.

What is the provider's responsibility?

Providers have the responsibility to stay current with Medicare rules and regulations. It is also the provider's responsibility to ensure administrative personnel understand Medicare guidelines as they pertain to coding and billing of services provided.

Following are some suggestions for keeping up-to-date on Medicare regulations:

Read your Medicare newsletters and keep them on file.
Attend Medicare sponsored seminars.
Read information printed on your Medicare Payment reports and other correspondence from Medicare.
Contact Medicare if you are unsure about the correct way to bill.
Document the services--note the specific services or procedures performed, the date and time of the services and the place the service was rendered.

We know most practitioners are providing excellent care and utilizing appropriate billing practices. We urge you to follow the above suggestions to avoid problems created through misunderstandings. We, as a Medicare carrier, and you, as providers in the Medicare program, need to work together for the wise utilization of the Medicare dollar to provide needed health care for Medicare beneficiaries. If you become aware of abusive/fraudulent situations, call or write your Medicare office.

How does Medicare define "fraud" and "abuse?"

"Fraud"

Fraud is the intentional deception or misrepresentation that an individual knows to be false or does not believe to be true and makes, knowing that the deception could result in some unauthorized benefit to himself/herself or some other person. The most frequent kind of fraud arises from a false statement or misrepresentation made, or caused to be made, that is material to entitlement or payment under the Medicare program. The violator may be a physician or other practitioner, a supplier of durable medical equipment, and employee of a physician or supplier, a carrier employee, a billing service, a beneficiary, or any other person or business entity in a position to bill the Medicare program or to otherwise benefit from such billing. Fraud in the Medicare program takes such forms as, but is not limited to:

Billing for services or supplies that were not provided. This includes billing for "no shows," i.e., billing Medicare for services which were not actually furnished because the patients failed to keep their appointments;
Misrepresenting the diagnosis for the patient to justify the services or equipment furnished;
Altering claim forms to obtain a higher payment amount;
Deliberately applying for duplicate payment, e.g., billing both Medicare and the beneficiary for the same service, or billing both Medicare and another insurance in an attempt to get paid twice;
Soliciting, offering, or receiving a kickback, bribe, or rebate, e.g., paying for a referral of patients in exchange for the ordering of diagnostic tests and other services or medical equipment;
Unbundled or exploded charges; for example, the billing of a multichannel set of lab tests to appear as if the individual tests had been performed;
A provider completing Certificates of Medical Necessity (CMNs) for patients not personally and professionally known by the provider;
Misrepresenting the services rendered (upcoding or the use of procedure codes not appropriate for the item or service actually furnished), amounts charged for services rendered, identity of the person receiving the services, dates of services, etc;
Billing for noncovered services as covered services, e.g., routine foot care billed as a more involved form of foot care to obtain payment;
Claims involving collusion between a provider and a beneficiary, or between a supplier and a provider resulting in higher costs or charges to the Medicare program;
Use of another person's Medicare card in obtaining medical care;
Alteration of claims history records to generate fraudulent payments;
False provider disclosures of ownership in a clinical laboratory;
Split billing schemes (e.g., billing procedures over a period of days when all treatment occurred during one visit);
Use of the adjustment process to generate fraudulent payments;
Collusion between provider, beneficiary or carrier employee acting on their own behalf;
Billing based on "gang visits," e.g., a physician visits a nursing home, and bills for 20 nursing home visits without furnishing any specific service to, or on behalf of, individual patients.

"Abuse"

The term "abuse" describes incidents or practices of physicians or suppliers of equipment which, although not usually considered fraudulent, are inconsistent with accepted sound medical, business or fiscal practices. Abuse takes such forms as, but is not limited to:

Overpayments resulting from excessive charges.
Claims for services not medically necessary, or not medically necessary to the extent furnished (e.g., a battery of diagnostic tests is given where, based on diagnosis, only a few are needed);
Over utilization of medical and health care services.
Questionable billing patterns and practices which may result in unnecessary costs to the program.
Breach of mandatory claim submission requirement, Medicare participation or assignment agreements.
Practices which fail to meet professionally recognized standards of care. Exceeding the limiting charge.
Although these types of practices may initially be categorized as abusive in nature, under certain circumstances, they may develop into fraud. Continuation of abuse or repeated unnecessary care problems could result in providers being excluded from the Medicare program.

What actions can be taken when Medicare Fraud and Abuse is committed?

Most contacts by the Fraud and Abuse Unit with providers and suppliers are educational in nature. Suspected fraud and repeated abuse are referred to the Office of Inspector General (OIG). The Office of Investigations (OI), within OIG, is staffed with professional criminal investigators and is responsible for all Health and Human Services criminal investigations, including Medicare fraud.

Along with OIG, the Federal Bureau of Investigation (FBI) investigates potential health care fraud. Cases are presented to the United States Attorney's Office within the Department of Justice for civil and/or criminal prosecution.

When fraud has been committed, the government can:

Seek federal criminal conviction of the parties involved in the fraudulent activities.
Negotiate a civil settlement with the parties involved. These monetary settlements, which may be in lieu of or in addition to criminal prosecution, can be substantial.
Take administrative actions to exclude the responsible parties from the Medicare program.
Suspend the abusive provider from the Medicare program.

When abuse is committed, the government can:

Recover payments made in error. - In addition to recovering mispayments, invoke civil monetary penalties consistent with the magnitude of the abusive action.
Suspend the abusive provider from the Medicare program.

Civil Monetary Penalties

The penalties may be imposed where the Secretary of Health and Human Services determines that a person presents or causes to be presented a claim for:

An item or service not provided as claimed;
An item or service that is false or fraudulent;
A physician's service provided by a person who was not a licensed physician, whose license had been obtained through misrepresentation, or who improperly represented to a patient that he/she was a certified specialist; or
An item or service furnished by an excluded person.

The Secretary may also impose a civil monetary penalty against a person who presents or causes to be presented a request for payment in violation of:

A Medicare assignment agreement;
An agreement with the State Medicaid agency not to charge a person in excess of permitted limits;
A Medicare participating physician or supplier agreement; or
An agreement not to charge patients for services denied as a result of a determination of an abuse of PPS. A person that gives false or misleading information regarding PPS that could reasonably be expected to influence a discharge decision is also subject to the imposition of a civil monetary penalty.

Other situations where civil monetary penalties may be applied include:

Violation of assignment requirement for certain diagnostic clinical lab tests;
Violation of requirement of assignment for nurse-anesthetists services;
Any supplier who refuses to supply rented DME supplies without charge after rental payments may no longer be made;
Nonparticipating physician or supplier violation of charge limitation provisions for radiology services;
Violation of assignment requirement for physician assistant services;
Medicare nonparticipating physician's violation of limiting charge limits;
Nonparticipating physician's violation of charge limitation provisions for services subject to inherent reasonableness provisions, for specified overpriced procedures, specified cataract procedure, A-mode ophthalmic ultrasound procedures, medical direction of nurse anesthetists, and for certain purchased diagnostic procedures where mark-up is prohibited;
Physician billing for assistants at cataract surgery without prior approval of PRO.
Nonparticipating physician's violation of refund requirements for medically unnecessary services;
Nonparticipating physician's violation of refund provision for unassigned claims for elective surgery;
Physician charges in violation of assignment provision for certain purchased diagnostic procedures where mark-up is prohibited or where a payment is prohibited for these procedures due to failure to disclose required information;
Hospital unbundling of outpatient surgery; and
Hospital and responsible physician "dumping" of patients.

What is Sanction?

Sanctions are designed to be remedial actions for dealing with abusive practices and to protect the program from making improper payments. Carriers develop cases for potential program exclusion for the OIG.

The OIG has the authority to impose sanctions. Administrative remedies can include revocation of assignment privileges, withholding Medicare payments and referral to state licensing authorities, medical boards and professional societies. The OIG also has the authority to impose a Monetary penalty in lieu of exclusion.

Exclusions for abuse are considered when practices consist of a clear pattern that the provider refuses or fails to remedy in spite of educational efforts. Educational efforts are not necessary when issues involve life threatening or harmful care or practice. All cases in which an institutional provider is convicted of a program-related offense are considered for sanction action by the OIG. The OIG web site allows searches to find if a particular provider or supplier is currently sanctioned.

What is a "kickback?"

Under section 1128B(b) of the Social Security Act (42 USC 1320z-7b(b)), it's a felony for anyone to knowingly and willfully offer, pay, solicit or receive any payment in return for referring an individual to another person for the furnishing, or arranging for the furnishing, of any item or service that may be paid for under the Medicare.

If you accept or solicit any payment for referring hospital patients to any practitioner, durable medical equipment supplier (DME), home health agency, laboratory, or any other health care provider or facility which furnished items or services which may be covered under Medicare, you may be subject to prosecution. The criminal statute applies regardless of whether the referral is made directly or indirectly, overtly or covertly, in cash or in kind.

Some examples of potential violations for covered services under the Medicare program are listed below:

If respiratory therapists, physical therapists or other therapists working in the hospital are paid a "finders fee" for patients they refer to DME suppliers who supply oxygen equipment, wheelchairs, or other equipment or supplies to patients.
If hospital social workers or discharge planners are sent checks by home health agencies for referring hospital patients who will need home health services once they are discharged.
If physicians working in outpatient departments of hospitals are offered percentages of prescription payment if they refer patients needing prescription drugs to local pharmacies.

In the examples above, the unlawful activity is not the referral but the solicitation or receipt of payment. A referral of a patient that does not involve a solicitation or result in receipt of any payment would not be considered a violation of the statute. These examples are not all inclusive of the kickback arrangements that are violations of the law.

Individuals convicted under these felony provisions may be fined up to $25,000 or imprisoned up to five years, or both.

Do discounts or rebates violate the Anti-Kickback Statute?

Discounts, rebates or other reductions may violate the statute because these arrangements induce the purchase of items or services payable by Medicare. Some arrangements are clearly permissible if they fall under a safe harbor. One protected safe harbor is a "discount" in the price a seller charges a buyer for goods or service based on a direct transaction. The discount must apply to the original item or service, which is purchased or furnished.

A "rebate" is defined as a reduction in price, which is not given at the time of sale. Because this reduction in price is not given at the time of sale, a rebate is not protected by the discount safe harbor.

For a discount program to be protected certain factors must exist to assure the reduction in price will be passed on to Medicare. The discount must be:

Made at the time of sale of the goods or service, and
Offered for the same item or service being purchased or furnished, and
Clearly and accurately reported on the claim form.

Credit or coupon discounts directly redeemable from the seller may be protected if they comply with all the standards in the discount safe harbor.

What types of discounts are not protected under safe harbor?

Rebates offered to beneficiaries.
Cash payments.
Furnishing an item or service free of charge or at a reduced charge in exchange for any agreement to buy a different item or service.
Reduction in price applicable to one payer but not to Medicare or a State health care program.
Routine reduction or waiver of any coinsurance or deductible amount owed by a program beneficiary.

What is a Questionable Business Arrangement?

Arrangements or adjustments made by persons providing diagnostic services which create the appearance that a physician performed or supervised their own employee's performance of that service, thus allowing the physician to profit from work done by others, is considered a "questionable business arrangement."

An example of a potential questionable business arrangement is the "hiring out" of employees of cardiac scanning services and mobile ultrasound companies who lease equipment to physicians who then bill for supervision of those employees for the day the equipment is used.

It is illegal for an ordering physician to arrange to reassign his/her payment to the supplier for the interpretation of purchased service tests. Under this arrangement, the supplier then bills a global charge (professional and technical components) for the service, paying an amount directly to the ordering physician for the interpretation. This is a violation of the Social Security Act which prohibits Medicare from paying benefits to any person other than the person who furnished the service. This is subject to limited exceptions.

What are the penalties for these arrangements?

These arrangements could constitute a violation of 1128(B)(b) of the Social Security Act, which prohibits payment for referrals (i.e., kickbacks). Violations of this Act may subject the physician or supplier to criminal penalties or exclusion from the Medicare program.

What are Joint Ventures?

A "joint venture" may take a variety of forms: it may be a contractual agreement between two or more parties to cooperate in providing services, or it may involve the creation of a new legal entity, such as a limited partnership or closely held corporation, to provide services. Of course, there may be legitimate reasons to form a joint venture, such as raising necessary investment capital. The Office of the Inspector General (OIG) believes that some of these joint ventures may violate the Medicare anti-kickback statute.

Some examples of the items or services provided in these arrangements include clinical diagnostic laboratory services, Durable Medical Equipment (DME), and other diagnostic services.

Physicians may become investors in a newly formed joint venture entity. This entity will compensate the investors in the form of "profit distributions". These suspect joint ventures may not be intended to raise investment capital legitimately, but to lock up a stream of referrals from the physician investors and compensate them indirectly for these referrals. Because physician investors can benefit financially from their referrals, unnecessary procedures and tests may be ordered or performed resulting in unnecessary program expenditures.

The questionable features of these suspect joint ventures may be reflected in three areas:

The manner in which investors are selected and retained;
The nature of the business structure of the joint venture; and
The financing and profit distributions.

What is Routine Waiver of Deductible or Coinsurance?

A provider, practitioner, or supplier who routinely waives Medicare copayments or deductibles for the majority of Medicare patients may be misstating its actual charge. For example, if a supplier claims that its charge for a piece of equipment is $100, but routinely waives the copayment, the actual charge is $80. Medicare should be paying 80 percent of $80 ($64), rather than 80 percent of $100 ($80). As a result of the supplier's misrepresentation, the Medicare program is paying $16 more than it should be on this item.

In certain cases, a provider or supplier who routinely waives Medicare copayments or deductibles also could be held liable under the Medicare anti-kickback statute. This statute makes it illegal to offer, pay, solicit, or receive anything of value as an inducement to generate business payable by Medicare. When providers, practitioners, or suppliers forgive financial obligations for reasons other than genuine financial hardship of the particular patient, they may be unlawfully inducing that patient to purchase items or services from them.

One important exception to the prohibition against waiving copayments and deductibles is that providers, practitioners, or suppliers may forgive the copayment in consideration of a particular patient's financial hardship. The hardship exception, however, must not be used routinely; it should be used occasionally to address the special financial needs of a particular patient. Except in such special cases, a good faith effort to collect deductibles and copayments must be made.

What penalties can be imposed for routinely waiving Medicare copayments or deductibles? Whoever submits a false claim to the Medicare program (for example, a claim misrepresents an actual charge) may be subject to criminal, civil, or administrative liability for making false statements and/or submitting false claims to the Government.

What are indications of improper waiver of deductibles and copayments?

Please note that this list is not intended to be exhaustive but, rather, to highlight some indicators of potentially unlawful activity.

Advertisements which state: "Medicare Accepted As Payment in Full," "Insurance Accepted as Payment in Full," or "No Out-of-Pocket Expense."
Advertisements promising that "discounts" will be given to Medicare beneficiaries.
Routine use of "Financial hardship" forms that state the beneficiary is unable to pay the coinsurance/deductible (i.e., there is no good faith attempt to determine the beneficiary's actual financial status).
Collection of copayments and deductibles only where the beneficiary has Medicare supplemental insurance ("Medigap") coverage (i.e., the items or services are "free" to the beneficiary).
Charges to Medicare beneficiaries that are higher than those made to other persons for similar services and items (the higher charges offset the waiver of coinsurance).
Failure to collect copayments or deductibles for a specific group of Medicare patients for reasons unrelated to indigence (e.g., a supplier waives coinsurance or deductible for all patients from a particular hospital, in order to get referrals).
"Insurance programs" which cover copayments or deductibles only for items or service provided by the entity offering the insurance. The "insurance premium" paid by the beneficiary is insignificant and can be as low as $1 a month or even $1 a year. These premiums are not based upon actuarial risks, but instead are a sham used to disguise the routine waiver of copayments and deductibles.

Section 203(b)(1) of the Health Insurance Portability and Accountability Act of 1996 allows the Federal Government to pay a reward to individuals who report evidence of suspected fraud and abuse against the Medicare program. Implementing regulations, issued on June 8, 1998, provide that a complainant may be rewarded up to 10 percent of the amount recovered, but not more than $1,000. Not everyone is eligible for the reward, though. To be eligible for a reward:

The information you give has to lead to a recovery of at least $100.
The suspected fraud must be acts or omissions that are grounds for the Government to impose sanctions provided under certain provisions of the law.
There isn't another reward that you qualify for under another Government program.
You must not have participated in the sanctionable offense with respect to which payment is being made.
And, if the person or organization is already under investigation, you will not be eligible for a reward.
You are not an immediate family member or an employee of the Department of Health and Human Services, its contractors or subcontractors, the Social Security Administration, the Office of the Inspector General, a State Medicaid Agency, the Department of Justice, the FBI, or any other Federal, State, or local law enforcement agency at the time he or she came into possession, or divulged information leading to a recovery of Medicare funds.

You'll receive a letter from us acknowledging that we have received your complaint. Some investigations take a long time to complete, and may take several months or years to resolve. You'll be notified by letter of your eligibility to receive a reward after the Medicare funds have been recovered. If you do receive a reward for this information you may be expected to pay any applicable state and federal taxes.

Page Last Updated: Wednesday, 17-Feb-2010 15:28:08 CST