Avoiding Medicaid and Medicare Fraud and Abuse

Every day we hear about new doctors getting arrested for fraud. It’s sad and shameful to hear, especially when some of those doctors are practicing in our so-called “Russian” community. Some of the doctors arrested later become my clients. Instead of waiting for another physician to lose his license because of the way he runs his practice, I decided to write this article as a guide on how to avoid Medicaid and Medicare Fraud.


Our Trust in Physicians

Most doctors strive to work ethically and submit proper claims for payment. Society places enormous trust in physicians, and rightfully so. Trust is at the core of the physician-patient relationship. When our health is at its most vulnerable, we rely on the expertise of healthcare practitioners to put us on the road to a healthy recovery.

The Federal Government, however, also places enormous trust in physicians. Medicare, Medicaid, and other Federal health care programs rely on physicians’ medical judgment to treat beneficiaries with appropriate services and to bill for such services correctly. This obviously is not always the case. I represent a lot of doctors in my practice as an attorney. In my legal practice I find one thing interesting and highly disappointing about doctors: there are some (I will obviously never name them) who deliberately run their practices in violation of the laws and clearly deserve to be punished. There are others (who comprise most of my clients), who violate the laws unintentionally – simply by not knowing that they were doing something wrong and that certain billing practices are illegal.

Thus, my article is intended for the latter group – those physicians who want to run their practice in compliance with every State and Federal regulation and who need my help to identify “red flags” that could lead to potential liability in law enforcement and administrative actions.

Common Reasons for Medicaid/Medicare Fraud Charges

False Claims Act

It is illegal to submit claims for payment to Medicare or Medicaid that you know or should know are false or fraudulent. Filing false claims may result in fines of up to three times the programs’ loss plus $11,000 per claim filed. Criminal penalties for submitting false claims include imprisonment and criminal fines. Physicians have gone to prison for submitting false health care claims.

Anti-Kickback Statute (AKS)

The AKS is a criminal statute that prohibits the exchange of anything of value for the referral individuals who receive their health insurance through the government. The law is closely associated with the False Claims Act, as it essentially provides business for doctors who wish to take advantage of Medicaid or Medicare recipients.

Fee Sharing

It is illegal for a doctor to be in business with a non-doctor. Thus, any fees charged by a doctor cannot be split with non-doctor, even if this non-doctor invested into the medical facility that the doctor in question occupies. Yes, as an attorney I have seen a number of Management and Sublease Agreements and I’ve gone over every line in this agreement with my clients. However, just recently I met a doctor who told me she was getting “30%” of billing done by a management company and she saw nothing wrong with this arrangement. It’s a miracle that I met this doctor before the Office of Medicaid Inspector General did.

Fraudulent Billing

I tell all my physician clients: When you submit a claim for services performed for a Medicare or Medicaid beneficiary, you are filing a bill with the Federal Government and certifying that you have earned the payment requested and complied with the billing requirements. If you knew or should have known that the submitted claim was false, then the attempt to collect compensation constitutes a violation.


Upcoding is the act of assigning an inaccurate code on a medical procedure or treatment in an effort to increase reimbursement. It usually occurs by medical practitioners who intentionally bill the client’s insurance agency for a medical procedure that didn’t occur or that costs more than the one performed.

Not Medically Necessary

One of the main principles surrounding Medicaid and Medicare is that compensation is only to be granted for procedures performed that are deemed “Medically necessary.” While most doctors conduct their practice with integrity, many take advantage of the publicly funded program by performing procedures that are not necessary, and do very little to treat the client.

Examples of Incorrect Billing:

A psychiatrist was fined $400,000 and permanently excluded from participating in the Federal healthcare programs for misrepresenting that he provided therapy sessions requiring 30 or 60 minutes of face-to-face time with the patient, when he had provided only medication checks for 15 minutes or less. The psychiatrist also misrepresented that he provided therapy sessions when in fact, a non-licensed individual conducted the sessions.

A dermatologist was sentenced to 2 years of probation and 6 months of home confinement and ordered to pay $2.9 million after he pled guilty to one count of obstruction of a criminal health care fraud investigation. The dermatologist admitted to several violations ranging from falsifying lab tests and backdating letters to referring physicians to substantiate false diagnoses to make the documentation appear that his patients had Medicare-covered conditions when they did not.

A cardiologist paid the government $435,000 and entered into a 5-year Integrity Agreement with OIG to settle allegations that he knowingly submitted claims for consultation services that were not supported by patient medical records and did not meet the criteria for a consultation. The physician also allegedly knowingly submitted false claims for E&M services when he had already received payment for such services in connection with previous claims for nuclear stress testing.

An endocrinologist billed routine blood draws as critical care blood draws. He paid $447,000 to settle allegations of upcoding and other billing violations.

In conclusion, I want to add that all physicians study extremely hard to become doctors – they have gone through years in college, medical school, and residency training. Most physicians come penniless from medical school and are eager to open their own offices to start making money to recoup the costs and pay off their student loans. Very often, they unknowingly get themselves into the schemes outlined above and end up losing their hard-earned medical licenses and even going to jail. My job as their health care law attorney is to prevent this from happening.

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