Increased Scrutiny of Healthcare Provider Fraud

Healthcare organizations will likely face increasing fraud scrutiny in 2014 in the wake of significant fraud recoveries by the government, according to a new report by law firm Bass, Berry & Sims PLC.

Last year marked a record number of prosecuted healthcare fraud cases, an increase of 3% over the previous year. According to data from the US Department of Justice (DOJ), all fraud, abuse, audit recoveries totaled $4.3 billion.

Bass, Berry & Sims’ Healthcare Fraud Task Force published its annual “Healthcare Fraud and Abuse Review 2013” detailed the impact of cases involving laws like the Stark Law and the Anti-Kickback Statute.

“Healthcare organizations can expect continued scrutiny in 2014,” Matthew Curley, part of the firm’s Healthcare Fraud Task Force, said in a statement. “They should be increasingly focused on ensuring compliance with relevant healthcare fraud laws and regulations, especially involving their physician relationships.”

According to the report, new lawsuits filed by whistleblowers nearly doubled in the last 5 years and there were more than 750 new suits filed in fiscal year 2013.

“There also was a significant increase in FCA settlements resolving Stark Law and Anti-Kickback Statute allegation,” according to the report. “These settlements typically involved allegations of improper payments to physicians for consulting services, lease arrangements, bonus compensation, and teaching agreements.”

Enforcement of physicians centered on physician billing, particularly related to upcoding, according to the report. There was also an increased focus on individual physicians and in 2013 the DOJ settled with an individual physician for $26.1 million, one of the largest settlements in history between the DOJ and an individual.

A frequent target of federal investigations was hospice and home health companies with settlements involving allegations of inadequate care, worthless services, and unnecessary care.

“The theory of liability pursued by the government marks a dramatic shift in applying the Stark Law to Medicaid, and not just Medicare claims,” Brian Roark, head of the firm’s Healthcare Fraud Task Force, said in a statement. “Expansion of the Stark Law to Medicaid claims certainly will result in heightened risk under the False Claims Act for providers.”

The full report and its analysis of related cases and settlements can be seen here.