The Rise In Healthcare Fraud Investigations

Healthcare fraud has been an investigative priority since the Health Insurance Portability and Accountability Act established a National Healthcare Fraud and Abuse Control Program to coordinate Federal, State, and Local law enforcement regarding healthcare fraud and abuse in 1996. Since that time, the federal government has recovered over $18 billion for healthcare fraud and abuse. States have also ramped up their enforcement efforts, with Texas recovering $418 million in 2010.

If you are a provider currently under audit or investigation, you should retain an attorney experienced in this area.

While there are slight variations depending on the type of practice, the government generally focuses on the same basic areas in healthcare fraud cases:

Services Not Rendered

The government often examines whether or not services that were billed were actually rendered. A favorite technique is examining the amount of time the provider spends with each patient. They divide the number of hours the provider is in the office by the number of patients seen during that day. If the time per patient is unreasonable in the government’s opinion, they frequently take the position that the provider did not see all of the patients and/or did not see the patients long enough to adequately provide the service. The government has an even stronger case in situations where the billing codes are time-based. The government may also examine a provider’s travel records to determine which days he or she was in the office.

The provider needs to ensure that they are spending adequate time with each patient. It is also helpful to have the appropriate provider document and sign the charts contemporaneously upon treatment. Such a policy can help "prove" that the provider actually provided the service.


If the government can successfully challenge the determination of medical necessity, then they can take the position that all charges paid for a patient were improper. The person making the necessity determination must be qualified. If the requirement in a particular area is that a doctor makes the determination, this cannot be delegated to an assistant. The government will also examine how and if the person making the determination of necessity is compensated. If it is an unrelated individual, the government will examine whether there are improper payments, or kickbacks.


The government often examines whether a provider is consistently coding a more complex procedure, for which the reimbursement is higher, rather than a less complex version of that same procedure. This is called "upcoding." It is critical that the documentation in the chart supports the level of service that is being provided. This is particularly true when a more complex procedure is being billed.


"Unbundling" is a situation when there is one procedure that is split up to maximize reimbursement. For example, two procedures can be performed separately and are reimbursed at $100 each. However, when those two procedures are performed together, there is one billing code which pays $150. When those procedures are performed together, the third code must be used instead of "unbundling" those procedures and billing the two other codes separately in order to obtain higher reimbursement.


"Kickbacks" can be gifts or benefits to referral sources, beneficiaries, or employees. It is good practice not to make any substantial gifts to referral sources or any gifts at all to beneficiaries, such as rebates or gift cards. The government could also take the position that employee compensation based upon revenue is a kickback.

Texas law in this area is much broader. The Texas Patients’ Solicitation Act prohibits any remuneration for soliciting or securing a patient or patronage for or from a person licensed, certified, or registered by a state healthcare regulatory agency.

Providers and their staff must take the time to learn and follow the often complex rules. If an office is big enough, hire an in-house compliance officer. If not, find a competent consultant to advise you. You need to make sure you are following every procedure in order to minimize your liability if you find yourself in the government’s sights.

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