John LeBlanc of Manatt, Phelps & Phillips is an expert on healthcare fraud. He works with large health systems to establish compliance programs and detect any fraudulent activities.
The U.S. spends over $3.2 trillion per year on healthcare costs, is responsible for 18% of the world’s GDP, and has over 100 million residents under the age of 65. Unfortunately, however, many fraudulent activities have been uncovered in the health care industry, causing federal enforcement agencies to step up their efforts to combat this fraud.
Federal agencies such as the Federal Bureau of Investigation (FBI), Department of Health and Human Services Office of Inspector General (HHS-OIG), Centers for Medicare & Medicaid Services (CMS), the Federal Trade Commission, Food and Drug Administration (FDA), Internal Revenue Service (IRS) Criminal Investigation Division, and state Medicaid Fraud Control Units are responsible for finding fraudulent activities.
John LeBlanc believes that “most health systems have a compliance program, but to ensure that everything is being done correctly, you have to test the system periodically. If the system has been designed properly, it allows for company self-policing.”
He also says that a compliance officer should be appointed and trained to identify fraudulent activities and how to prevent them.
If you are responsible for creating or maintaining a compliance program, note that some of the components that federal enforcement agencies will review include policies and procedures, internal controls, effect on financial statements, employee training programs, compliance officer’s roles and responsibilities, written complaint handling program, medical necessity reviews of all services provided to Medicaid patients at each practice site, and billing compliance.
When determining if your company is guilty of fraud, the Department of Justice (DOJ) has listed factors that need to be examined.
The first factor is whether there was an intent to defraud or deceive someone deliberately or through some carelessness. This includes recruiting new patients by making false claims regarding services, prescribing unnecessary medical services (i.e., medically unnecessary prescriptions), or submitting false claims on behalf of another person or entity.
The second factor is whether the acts that were committed involved material misrepresentations. These include making false statements about what goods or services had been sold, how much was paid for them, and whether they existed at all.
The third factor is whether it involved the presentation to an insurer of a claim for payment that was known to be false when it was presented. This includes creating or using false records designed to be shown to someone else to get them to pay for something, denying benefits while knowing they should be provided (i.e., denying a claim), and providing less than the requested services but billing for the total amount.
If these three points are met, then your company could be liable for civil or criminal penalties. For civil penalties, you could be facing fines up to $11,000 per violation or a maximum of $10,000 when combining all false claims in a specific matter. You can also be required to pay triple the damage incurred by the federal government, plus possibly $11,000 for each violation if it is determined you tried to conceal or failed to cooperate with investigators. Finally, if your company is found guilty of criminal penalties, you could be facing fines up to $250,000 and five years in prison per violation.
LeBlanc concluded by saying, “Every time there is a major law enforcement action, you are going to see more companies reacting with various levels of concern.”
This can be seen through the growth in compliance programs over the past few years. “A lot of them want to get out ahead of any potential problem because they don’t want their name associated with that,” LeBlanc said.
If you are responsible for creating or maintaining a compliance program, ensure that you have documentation on how your company is collecting payments and conducting medical necessity reviews. You will want to be prepared if any federal enforcement agencies come knocking at your door.