Health Care Provider Fraud

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Fraudulent schemes have been uncovered in every setting where health care services are provided, including those described here. Common fraudulent schemes found to violate the False Claims Act (FCA) include:

  • billing for services not provided.
  • billing for a test or service that is not medically necessary or reasonable.
  • paying or accepting kickbacks.
  • making referrals based on the provider’s personal financial interest.
  • performing a service using unlicensed personnel or in an unlicensed facility.
  • failing to return overpayments received from the government or to correct known problems leading to the submission of false claims.


There are many types of fraud that can occur in a hospital setting. Some examples include:

  • admitting patients who could have been treated on a less costly, outpatient basis.
  • misrepresenting information on a cost report, i.e., an annual submission that a hospital makes to Medicare and upon which Medicare bases its reimbursement to the hospital.
  • billing for medically unnecessary procedures and services.
  • ignoring internal audits that identified false claims in order to avoid having to repay the government.
  • maintaining relationships with other health care providers (physicians, ambulatory service centers, skilled nursing facilities, etc.) that violate the Medicare & Medicaid Anti-Kickback Statute and/or the physician self-referral Stark Law. Examples of such schemes include:
    • a hospital providing below-market rent to a physician group in exchange for patient referrals;
    • hospital employees steering discharged patients to skilled nursing facilities and ambulance companies that provide kickbacks; and,
    • a hospital appointing a physician to a lucrative position in order to induce referrals for hospital services.

Physicians, Nurses, and Other Care Providers

Health care providers treating patients outside of the hospital can also run afoul of the law in many ways. Some examples include:

  • billing for services not provided or charging for a more expensive service than was provided (often referred to as “upcoding”).
  • ordering unnecessary tests or conducting unnecessary procedures.
  • misrepresenting the type of service provided (e.g., physical therapists billing for individual services when, in fact, the patient was treated in a group setting).
  • misrepresenting who provided the service (e.g., billing for a more expensive doctor visit when a nurse practitioner or other non-physician provider actually provided the services).
  • assigning inappropriate diagnosis codes to patients in order to increase the patient’s “risk score” and the reimbursement paid under the Medicare Advantage (Managed Care) program.
  • entering into agreements or relationships with hospitals or other health care providers that violate the Medicare & Medicaid Anti-Kickback Statute or physician self-referral Stark Law.

Diagnostic Testing, Ambulatory Surgery, and Dialysis Centers

These facilities provide specialized medical care and procedures outside of the hospital setting and on an outpatient basis. Such facilities cover a wide range of care; common examples include MRIs, colonoscopies, endoscopies, overnight diagnostic sleep tests, and dialysis. While treatment outside of hospitals can help to reduce costs, some independent testing facilities, ambulatory surgery centers (ASCs), and dialysis centers undermine the system by pursuing fraudulent schemes and arrangements, including:

  • billing for services not provided or charging for a more expensive service than was provided (often referred to as “upcoding”).
  • performing medically unnecessary procedures or defaulting to more expensive procedures or methods in order to increase reimbursement.
  • employing unlicensed technicians or performing services in unapproved and/or unlicensed locations.
  • waiving patient co-pays and deductibles in order to attract and retain business.
  • failing to return overpayments to the government.
  • entering into agreements or relationships with physicians, hospitals, skilled nursing facilities, or other health care providers that violate the Medicare and Medicaid Anti-Kickback Statute or physician self-referral Stark Law.

Clinical Laboratories

Lab companies can engage in numerous schemes to defraud government health care programs, including:

  • billing for medically unnecessary — and often very expensive — tests.
  • adding inappropriate codes to laboratory test orders without the health care provider’s knowledge or consent in order to increase reimbursement.
  • “unbundling” a panel of tests that should be billed as a single unit in order to increase reimbursement by billing for each test separately.
  • paying physicians a kickback, disguised as a “processing and handling fee,” for each blood sample that the physician sends to the laboratory for testing, in violation of the Medicare and Medicaid Anti-Kickback Statute.
  • running afoul of the physician self-referral Stark law by maintaining inappropriate financial relationships with referring physicians or their family members.

Nursing and Rehabilitation, Home Health, and Hospice

Fraudulent schemes have been identified at skilled nursing facilities, hospice, and home health agencies across the country. They often take advantage of vulnerable patient populations with generous Medicare and other federal health care benefits.

Examples include:

  • skilled nursing facilities and rehabilitation service providers performing unnecessary, and sometimes harmful, physical therapy on patients in order to maximize reimbursement.
  • hospice centers billing for patients who are not terminally ill and thus not eligible for the Medicare hospice benefit.
  • home health services manipulating data and falsifying records in order to make patients appear to satisfy Medicare eligibility criteria for their services.
  • substance abuse treatment centers billing for counseling services that they did not provide and/or for which they failed to document information required for payment by state or federal regulations.
  • mental health treatment centers billing for treatment provided by unlicensed individuals.
  • nursing homes billing Medicare and Medicaid for grossly substandard care.
  • skilled nursing facilities, hospice centers, and/or home health agencies entering into agreements or relationships with hospitals or other health care providers that violate the Medicare and Medicaid Anti-Kickback Statute and the physician self-referral Stark Law (e.g., providing kickbacks to hospital employees and physicians in exchange for patient referrals).

Ambulance Companies

Under certain circumstances, Medicare and other federal health care programs pay for beneficiaries to be transported by ambulance. For example, in addition to covering emergency transports, Medicare covers limited, medically necessary, nonemergency ambulance transportation to particular locations, such as a dialysis facility, if a physician has certified that the transport is medically necessary. Some ambulance companies, however, employ fraudulent schemes in order to unjustly pocket taxpayer funds allocated to this important benefit.

Examples include:

  • billing for medically unnecessary and costly patient transports (e.g., advanced life support) when the patient only needs and/or only receives a lower level of service that is reimbursed at a lesser rate.
  • unnecessarily transporting patients in an emergent fashion and billing Medicare for this medically unnecessary service.
  • submitting Certificates of Medical Necessity that were fraudulently obtained from local hospitals in support of claims for medically unnecessary ambulance services.
  • paying kickbacks and/or providing (even small) gifts to hospital nurses in exchange for referrals of patients who are being discharged from the hospital and in need of transport to their home or to a nursing facility.
  • offering kickbacks to local government entities in order to secure lucrative contracts for ambulance services.

How to Report Health Care Provider Fraud

The above are just some examples of the many different types of fraud that can be prosecuted under the False Claims Act. Unfortunately, fraud continues to plague Medicare, Medicaid, TRICARE, and other federal health care programs and is not limited to the acts or settings described above. If you think that you have information about health care fraud by providers, please contact us for a free, confidential consultation.