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 Healthcare Fraud Trends 

Michael Santos

Michael Santos

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HEALTHCARE FRAUD TRENDS

In healthcare fraud, providers or consumers submit or help someone else submit false information to receive payment for healthcare claims.

RECENT HEALTHCARE FRAUD PROSECUTION TRENDS

INTRODUCTION

As the losses from healthcare fraud reach 10% or more of annual health care spending, healthcare fraud prevention and enforcement continues to be a top priority for the Department of Justice (DOJ).

Our first post in this current blog series on healthcare fraud focused on the most common healthcare provider fraud schemes. This blog post focuses on how does healthcare fraud occur, and some recent healthcare fraud cases from 2020 and 2021.   

Federal prosecutors are going after healthcare fraud in cases large and small, convicting medical professionals, pharmacists, suppliers, support staff, and anyone they find in their path. Their message is clear: healthcare fraud is too costly both in dollars and patient care to allow to go unpunished. The total financial losses just from the cases highlighted in this post are close to $3 billion.

DISCUSSION

To recap, what is healthcare fraud? Healthcare fraud is the filing of false and dishonest healthcare claims, typically for personal gain. The federal government can prosecute anyone involved in healthcare fraud for either fraud or conspiracy to commit healthcare fraud

CLICK HERE FOR BLOG #1 IN THIS HEALTHCARE FRAUD SERIES

How Does Healthcare Fraud Occur?

Healthcare fraud occurs when healthcare providers or consumers intentionally submit or help someone else submit false or misleading information to authorize payment for healthcare services. Healthcare fraud leads to criminal prosecution, and people go to jail and prison for health insurance fraud.

Some examples of health care fraud and abuse by consumers are:

  • filing claims for services or medications not received;
  • forging or altering bills or receipts;
  • using someone else’s coverage or insurance card.

Some examples of health care fraud and abuse by healthcare providers and others are:

  • billing for services not performed;
  • falsifying a patient’s diagnosis to justify tests, surgeries, or other procedures not medically necessary;
  • misrepresenting procedures performed to obtain payment for non-covered services, such as cosmetic surgery;
  • upcoding – billing for a more costly service than the one performed;
  • unbundling – billing each stage of a procedure as if it were a separate procedure;
  • accepting kickbacks for patient referrals and the like;
  • waiving patient co-pays or deductibles and over-billing the insurance carrier or benefit plan;
  • billing a patient more than the co-pay amount for services that were prepaid or paid in full by the benefit plan under the terms of a managed care contract;
  • using unlicensed staff.

Healthcare Fraud 2020-2021: Recent Trends

There can be no question that healthcare providers and others exploited the COVID-19 global health crisis to take advantage of the healthcare systems in the US. Over the last 12 months, many trends in healthcare fraud related to the pandemic.

The National Health Care Anti-Fraud Association (NHCAA) regularly reports the major cases of healthcare fraud and abuse. 

And, government investigators are actively seeking to hold people involved in healthcare fraud schemes accountable through criminal prosecution and prison sentences. Thus, patients and healthcare providers alike are more susceptible than ever to becoming embroiled in a healthcare fraud investigation, as a whistleblower, informant, witness, suspect or target.

In any criminal prosecution, the amount of the financial loss, or loss amount, directly impacts a defendant’s potential prison sentence. Indeed, people frequently ask about the biggest healthcare frauds. The question about the biggest healthcare frauds typically relates to the size of the financial losses. 
The recent cases summarized below include some of the biggest healthcare frauds of the last 12 months, grouped by loss amounts. This grouping only highlights the vast amounts of money lost to healthcare fraud most recently. Remember, these are only the tip of the iceberg.

Fraud Schemes Over One Billion: Telemedicine

The DOJ filed criminal charges against 138 defendants for participating in various healthcare fraud schemes that resulted in approximately $1.4 billion in alleged losses. Nationwide, the DOJ charges target approximately $1.1 billion in fraud committed using telemedicine, $29 million in COVID-19 healthcare fraud, $133 million connected to substance abuse treatment facilities, or “sober homes,” and $160 million connected to other health care fraud and illegal opioid distribution schemes across the country. This was one of the biggest healthcare fraud operations of 2021. Law enforcement has its eyes on telemedicine fraud going forward into 2022. With over 1 billion in losses from telemedicine fraud, doctors participating in telemedicine should exercise due care to avoid an investigation.

Fraud Schemes: Over $100 million

  • False Healthcare Benefits Scheme: $134 million. Two Texas residents face charges of conspiracy to commit healthcare fraud. From 2013 to 2020, a pharmacy owner and the pharmacy’s accountant received more than $134 million in payments from Medicare and other healthcare benefit programs based on fraudulent claims. Long-running schemes that include false Medicare claims are among the cases the DOJ aggressively pursues to make an example for others.  
  • Sale of Medical Data to Facilitate Fraud: $109 million. A Florida resident entered a guilty plea for receiving kickbacks in connection with a healthcare program and one count of violating HIPAA. Authorities charged this Florida man and his co-conspirator for selling personal and medical data of Medicare patients to facilitate over $109 million of fraudulent claims. Another co-defendant provided access to a confidential clearinghouse that contained the personal health information for Medicaid patients. 
  • Home Care Services Fraud: $100 million. An owner and operator of a homecare services business and a licensed nurse who worked there face charges for conspiracy to pay and receive kickbacks, commit healthcare fraud, and conspiracy to commit healthcare fraud. Together, the defendants used the home care services company to defraud Medicare and MassHealth for over $100 million by paying kickbacks for patient referrals. 

Fraud Schemes: Under $100 million

  • Medical Equipment Kickback Scheme: $93 million. This case involved the defendants receiving kickbacks for health benefits orders for equipment such as orthotic braces. Defendants defrauded Medicare, Tricare, and CHAMPVA (Civilian Health and Medical Program of the Department of Veterans Affairs).
  • Fraudulent COVID-19 Tests: $70 million. This scheme involved three defendants accused of conspiring to obtain kickbacks to provide unnecessary allergy and COVID-19 tests. The alleged scheme resulted in $70 million defrauded from various healthcare benefit programs.
  • Telemarketers Commit Fraud, Money laundering: $47 million. Defendants, owners of telemarketing companies, referred medically unnecessary genetic tests to labs in exchange for kickbacks.
  • Pharmacogenetic Testing Kickback Scheme: $28 million. Two defendants pleaded guilty to conspiring to pay and receive kickbacks to arrange and refer genetic tests. All told, they exchanged over $28 million in illegal kickback payments during the conspiracy. 
  • Medicare Medical Equipment Fraud Scheme: $20 million. The four defendants in this fraud scheme were two nurse practitioners and two equipment company owners who defrauded more than $20 million from Medicare with false durable equipment claims. Among other things, the defendants would sign prescriptions for unnecessary medical braces without as much as a physical examination of patients and often without having any contact with the insurance beneficiary at all.
  • Healthcare Cash Kickbacks: $20 million. In this scheme, healthcare providers paid cash kickbacks to Medicare members (and other health insurance providers), so they could bill health insurance programs for acupuncture and physical therapy services never provided or medically unnecessary. 

Fraud Schemes: Under $10 million

  • Ghost Claims: $8.4 million. In California, a medical doctor was guilty of conspiracy to commit healthcare fraud for submitting claims for family planning services, diagnostic testing, and prescriptions for people that did not exist. The claims defrauded the Family Planning, Access, Care and Treatment program of California’s Medicaid program.
  • Pharmacy Coupons Scheme: $8 million. Two defendants in Florida submitted false claims to prescription drug coupon programs. Defendants owned 15 Miami-based retail pharmacies and were able to bilk $8 million from these programs.
  • False Home Healthcare Certifications: $6 million. A California medical doctor faced charges for providing false home healthcare certifications to four home health agencies. As a result, Medicare paid fraudulently bills for unnecessary services. The defendant also submitted claims to Medicare for unnecessary or never provided patient visits and treatments.
  • Mental Health Services Fraud: $5.4 million. Prosecutors filed two indictments charging a group of 13 people in a scheme where health practitioners and interpreters submitted fraudulent claims for never provided mental health services, resulting in Medicaid overpaying over $5.4 million. 
  • Doctor’s Illegal Opioid Distribution Scheme: $5.1 million. Prosecutors charged a Louisiana doctor with four counts of unlawful distribution and dispensing opioids and one count of conspiracy to commit healthcare fraud. The doctor distributed more than 1.2 million doses of controlled substances, submitting fraudulent claims to Medicaid, Medicare, and other healthcare insurance companies.
  • Charges For Nonexistent Sleep Studies: $5 million. The owners of a sleep lab billed hundreds of never conducted sleep studies to a health insurance company. In addition to conspiracy to commit healthcare fraud, the defendants also faced tax evasion for failing to pay federal income taxes on the $5 million from the fraud.
  • Fraudulent Vendor Payments: $4.5 million. Two New Jersey residents face charges of conspiracy to commit healthcare fraud. They schemed with others to defraud the New Jersey Traumatic Brain Injury Fund by misappropriating over $4.5 million in vendor payments for services that were never provided from 2009 to June 2019. 
  • Unnecessary Testing: $4 million. Two men pled guilty to conspiracy to commit healthcare fraud for defrauding a union-run health benefits program. The defendants ran unauthorized health events as well as thousands of medically unnecessary tests on their members. 
  • NFL Retirement Benefits Scheme: $2.5 million. Three former NFL football players and others pleaded guilty in a scheme to defraud a healthcare benefit program created for retired players. In total, the football players received $2.5 million in false claims for medical equipment.
  • Medicare Fraud, Mail Fraud, and Money Laundering: $2.3 million. A nurse practitioner faced charges for fraudulently billing for services not provided, mail fraud, and money laundering. The defendant waived co-pays for patients, hoping they would not report the fraudulent billing to Medicare. In total, the defendant illegally billed and received over $2.3 million from commercial health insurers and Medicare.
  • Fake Medical Diagnoses and Office Visits: $2.2 million. A chiropractor faced multiple counts of healthcare fraud, making false statements, and aggravated identity theft. The defendant billed for office visits that never took place and provided invented medical diagnoses. In total, the defendant defrauded health insurers of $2.2 million.
  • Unnecessary Testing And Kickbacks: $1.3 million. A doctor and his wife faced criminal charges for soliciting kickbacks and bribes. The couple fraudulently obtained samples from Medicare patients and sent them for unnecessary genetic tests. Also, the couple received kickbacks for every test submitted. 
  • Billing For Fraudulent Optometry Services: $1 million. The defendant faced indictment for fraudulently billing Medicare more than $1 million for services never rendered. A possible sentence for these charges includes up to10 years in prison and a $250,000 fine
  • Illegal Distribution of Prescription Medications: $356,000. A doctor faced healthcare fraud charges and illegal distribution for prescribing controlled substances. The defendant distributed prescriptions such as Xanax and Adderall in exchange for cash payments, thereby  defrauding Medicaid. 
  • Controlled Substances And False Claims. In this case, a grand jury indicted a psychiatrist on eight counts of unlawful distribution of controlled substances and two counts of healthcare fraud. The doctor prescribed controlled substances to people who did not legitimately need the drugs. The doctor also submitted false claims to health insurance companies to receive greater reimbursements. 

CONCLUSION

Against this backdrop of aggressive enforcement and prosecution of different types of healthcare fraud and abuse over the last 12 months, federal law enforcement agencies expect to do more of the same in 2022. 

In particular, pandemic-related healthcare fraud, excessive testing to churn profits, unbundling services schemes, and upcoding fraud are all expected to continue unabated and will thus remain on federal law enforcement’s radar. The healthcare industry can expect the focal point of these enforcement actions to be the misuse of electronic health records, contributions to the opioid epidemic, abuse of senior citizens, manipulation of Medicare’s managed care program, and improper claims under COVID-19 relief funds.

The federal agencies tasked with responsibility for combatting healthcare fraud vow to remain vigilant and prepared.

Prison Professors, an Earning Freedom company, works alongside (not in place of) civil and criminal defense counsel to help clients proactively navigate through investigations and prosecutions. Our team also helps clients prepare mitigation and compliance strategies.

If you have any questions or are uncertain about any of the issues discussed in this post, schedule a call with our risk mitigation team to receive additional guidance.

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