Recent stories in the news seem to suggest that health care fraud is running rampant. We’ve got stories about Eric Leak‘s Medicaid agency, Nature’s Reflections, funneling money to pay athletes, a seizure of property in Greensboro for alleged Medicaid fraud, and, in Charlotte, a man was charged with Medicaid fraud and sentenced to three years under court supervision and ordered to pay $3,153,074. And these examples are local.
Health care fraud with even larger amounts of money at stake has been prosecuted in other states. A nonprofit up in NY is accused of defrauding the Medicaid system for over $27 million. Overall, the federal government opened 924 criminal health care fraud investigations last year.
What is going on? Are more people getting into the health care fraud business? Has the government become better at detecting possible health care fraud?
I believe that the answer is that the federal and state governments have determined that it “pays” high dividends to invest in health care fraud investigations. More and more money is being allocated to the fraud investigative divisions. More money, in turn, yields more health care fraud allegations…which yields more convictions….and more money to the government.
Believe me, I understand the importance of detecting fraud. It sickens me that those who actually defraud our Medicaid and Medicare systems are taking medically necessary services away from those who need the services. However, sometimes the net is cast so wide…so far…that innocent providers get caught in the net. And being accused of health care fraud when you innocent is a gruesome, harrowing experience that (1) you hope never happens; and (2) you have to be prepared in case it does. I have seen it happen.
As previously stated, in fiscal year (FY) 2014, the federal government opened 924 new criminal health care fraud investigations. That’s 77 new fraud investigations a month!! This number does not include civil investigations.
In FY 2012, the Department of Justice (DOJ) opened 2,016 new health care fraud investigations (1,131 criminal, 885 civil).
The Justice Department launched 903 new health-care fraud prosecutions in the first eight months of FY 2011, more than all of FY 2010.
These numbers show:
- an 85% increase over FY 2010,
- a 157% increase over FY 2006
- and 822% over FY 1991.
And the 924 investigations opened in fiscal 2014 only represent federal investigations. Concurrently, all 50 states are conducting similar investigations.
What is being recovered? Are the increased efforts to detect health care fraud worth the effort and expenditures?
Heck, yes, it is worth it to both the state and federal governments!
Government teams recovered $4.3 billion in FY 2013 and $19.2 billion over the last five years. While still astronomically high, the numbers dropped slightly for FY 2014. In FY 2014, according to the Annual Report of the Departments of Health and Human Services and Justice, the federal government won or negotiated over $2.3 billion in health care fraud judgments and settlements. Due to these efforts, as well as efforts from preceding years, the federal government retrieved $3.3 billion from health care fraud investigations.
So the federal and state governments are putting more money into investigating health care fraud. Why?
The Affordable Care Act.
Obviously, the federal and state governments conducted health care fraud investigations prior to the ACA. But the implementation of the ACA set new mandates to increase fraud investigations. (Mandates, which were suggestions prior to the ACA).
In 2009, Barack Obama signed Executive Order 13520, which was targeted to reduce improper payments and to eliminate waste in federal programs.
On March 23, 2010, President Obama signed the ACA into law. A major part of the ACA is focused on cost containment methods. Theoretically, the ACA is supposed to be self-funding. Detecting fraud, waste and abuse in the Medicare/Medicaid system helps to fund the ACA.
Unlike many of the other ACA provisions, most of the fraud and abuse provisions went into effect in 2010 or 2011. The ACA increases funding to the Healthcare Fraud and Abuse Control Program by $350 million over the next decade. These funds can be used for fraud and abuse control and for the Medicare Integrity Program.
The ACA mandates states to conduct post payment and prepayment reviews, screen and audit providers, terminate certain providers, and create provider categories of risk.
While recent articles and media seem to indicate that health care fraud is running rampant, the substantial increase in accusations of health care fraud really may be caused by factors other than more fraud is occurring.
The ACA mandates have an impact.
And, quite frankly, the investigation units may be a bit overzealous to recover funds.
What will happen if you are a target of a criminal health care fraud investigation?
It depends whether the federal or state government is conducting the investigation.
If the federal government is investigating you, most likely, you will be unaware of the investigation. Then, one day, agents of the federal government will come to your office and seize all property deemed related to the alleged fraud. Your accounts will be frozen. Whether you are guilty or not will not matter. What will matter is you will need an experienced, knowledgeable health fraud attorney and the funds with which to compensate said attorney with frozen accounts.
If the state government is conducting the investigation, it is a little less hostile and CSI-ish. Your reimbursements will be suspended with or without your notice (obviously, you would notice the suspension once the suspension occurred). But the whole “raid on your office thing” is less likely.
There are legal remedies available, and the “defense” should begin immediately.
Most importantly, if you are a health care provider and you are not committing fraud, you are not safe from accusations of fraud.
Your insurance, most likely, will not cover attorneys’ fees for alleged intention fraud.
The attorney of your choice will not be able to accept funds that are “tainted” by alleged fraud, even if no fraud occurred.
Be aware that if, for whatever reason, you are accused, you will need to be prepared…for what you hope never happens.
It’s a heart-stopping moment, but it happens regularly: A Medicaid provider, who never had any problems with the State of North Carolina, receives a letter from the North Carolina Attorney General’s Medicaid Investigations Division, or “MID”, informing her that she is the subject of an investigation of Medicaid billing practices. The MID’s core mission is to investigate and prosecute health care fraud committed by Medicaid providers. If you receive a letter from MID, it is an extremely serious matter and can instantly change everything you. You need to know what MID is, how you might become the subject of an investigation, and what to do if you are.
What is MID? MID is a subdivision of the North Carolina Department of Justice that is tasked primarily with investigating Medicaid fraud. MID has two main divisions, civil and criminal. The civil division investigates cases in which a provider may have made a false statement in order to obtain reimbursement payments. The civil division uses special powers granted by the North Carolina False Claims Act to investigate providers, determine if there is enough evidence to show a false statement resulting in reimbursement payments from Medicaid, and thereafter file a civil lawsuit to recover the money.
MID’s criminal division employs prosecutors whose job is to investigate, file criminal charges against, and convict providers who have intentionally and willfully obtained reimbursement payments under false pretenses. The MID website itself describes Medicaid fraud to include circumstances in which providers intentionally bill Medicaid for services not actually provided, use an improper procedure code to bill for a higher priced service when a lower priced service was provided, bill for non-covered services by describing the services as covered services, misrepresent a patient’s diagnosis and symptoms and bill Medicaid for a service that is medically unnecessary, or falsifies medical records. Any such acts could result in criminal prosecution.
As a responsible Medicaid provider, you might conclude that you would never have to worry about an MID investigation. After all, MID is tasked with investigating fraud, and the vast majority of providers honestly and lawfully provide services and submit reimbursement requests for those services. However, the new reality in Medicaid is that many honest providers can and do find themselves dealing with an MID investigation. A prime example, which happens frequently, is when DHHS finds a “credible allegation of fraud” regarding the provider. One would conclude that a “credible allegation of fraud” would be limited to hard evidence that a provider intentionally obtained reimbursements based on false information or some other bad act. However, the Medicaid regulations define a “credible allegation of fraud” to include the results of claims data mining. In other words, a “credible allegation of fraud” can be based simply on a computer analysis of a provider’s billings to Medicaid, and this has indeed been the basis of DHHS’ referral of cases to MID for investigation. For this reason, a number of honest providers have indeed found themselves the subject of an MID investigation, having to contend with the difficulty that such an investigation brings.
There are several key things that providers must know about an MID investigation. If you find yourself the subject of such an investigation, keep the following in mind:
• The first and most important: get a lawyer. The stakes in an MID investigation are extremely high, to include the potential for conviction of a crime. Proceeding without advice of counsel is very risky. Everyone who is subject of an investigation has substantial and important rights, but it takes an expert in this area of the law (and not necessarily me or my firm) to competently advise someone who is the subject of an MID investigation.
• Always remember that the State’s investigators and lawyers only work for the State. MID is staffed with competent, dedicated investigators and attorneys, and my dealings with them show that they are straightforward people. However, their job is to investigate fraud, and if you are the subject of an investigation, they have received information indicating that you may have committed fraud. You therefore should exercise caution when speaking with them, you are under no obligation to answer questions, and you certainly are under no such obligation without first hiring an attorney.
• Ensure that all your records are properly preserved. Part of MID’s investigation will certainly be a request to inspect and copy your records related to Medicaid billing, such as patient files, employee timesheets, records relating to claims submissions, and contracts with service providers. Any loss of such records will have to be explained, and if a loss occurs after a provider has received notice of an investigation, the provider could be accused of having destroyed records. It is therefore crucial that you preserve your records, both the ones on paper and the electronic data containing relevant information.
• Do not discuss the investigation or your Medicaid billing practices with anyone except your lawyer. Because you are the subject of an investigation that is based on information that may indicate you committed fraud, you must be careful about what you say. If you discuss matters with anyone but your lawyer, those persons could be compelled to testify about what you said, and it is not uncommon for someone to misquote, misunderstand, or otherwise misreport what someone has said. Speaking only with your lawyer is the safest course.
• Finally, be patient with the process. Being the subject of an MID investigation is stressful and frustrating, but MID currently is backlogged with a huge number of cases. This means that it will take time for the investigation to conclude. Expert counsel can help you through this process, but recognize that it will take a long time for it to conclude.