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The United States Attorney’s Office for the District of Rhode Island recently filed suit against a set of related medical groups and their owner. At issue is urine drug test fraud. Urine Drug test or (UDT) fraud is currently a hotbed in the healthcare system. In fact, as we previously noted, urine drug testing is a multi-billion dollar a year business and so lucrative for treatment clinics that they refer to it as “Liquid Gold.”
In the complaint, the government alleges that the medical groups fraudulently collected over $1.5 million in payments from Medicare and Medicaid for services that they did not perform. According to the government, the medical groups put in place a simple, yet lucrative, scheme. First, a doctor within the group would order a urine test for a patient. Then their in-house lab would then perform a “moderate complexity” Urine Drug Test. But, the lab would instead bill Medicare for a “high complexity” test. The motivation for this alleged lie is clear. Medicare pays $97 per high complexity test, but only $20 for moderate complexity. The defendants thus pocketed about $77 per false claim. If repeated over and over, this type of fraud can yield big dollars. But they did not stop there. The defendants also allegedly submitted false claims for quantitative testing (versus qualitative) that they did not perform.
The government alleges that the defendants submitted over 60,000 false claims for tests that they did not perform. As a result, they bilked the Medicare and Medicaid programs of over $1.5 million.
This lawsuit is notable for several reasons. First, it was not initiated by a whistleblower filing a qui tam lawsuit on behalf of the government which typically account for over 80 percent of new False Claims Act cases each year. Instead, the government initiated this matter itself. Of course, the government’s investigation may have been generated by a whistleblower tip to the FBI or the HHS Office of Inspector General hotline. Or perhaps the government utilized its ever-increasing data analysis capabilities to spot this alleged fraud. Alternatively, the state or federal government may have conducted an audit of the medical group’s claims and identified the pattern of fraud. Whatever the source, we salute the government for its diligent pursuit of justice and recovery of taxpayer dollars.
Second, these are frauds we have unfortunately seen many times before. The medical group did perform a test. But they lied about the complexity of the test so that they could get paid more. This is classic “up-coding” and is a scheme that healthcare providers of many types have used. Likewise, the medical group said that it performed a quantitative test, when in fact, it had only performed a qualitative one–again all to get a higher reimbursement from Medicare and Medicaid. Here, significantly, the medical group did not even have the capability to perform the tests they were billing for–a bit of evidence that should prove useful to the United States as it presents its case in court.
But the scheme went even further. According to the complaint, because it did not have the capability to actually perform the high complexity test, the defendants sent the specimens for a second round of testing by a fully equipped lab. That lab then performed the high complexity test and billed Medicare or Medicaid for it. So, now Medicare and Medicaid were paying for the “same” test twice! And yet, like up-coding, double billing is a well-worn healthcare fraud
Unscrupulous health care providers and clinical laboratories can take advantage of the “pay and chase” structure of the Medicare system. With a simple swipe of a key or addition of a code to a claim form, they can often pocket millions in taxpayer funds. Robust federal government enforcement — as seen here — is the key to combatting such fraud. Likewise, whistleblowers with information about such schemes have an important role to play. We are honored to represent them every day.