Recently, the U.S. Department of Health and Human Services Office of Inspector General updated their booklet, “Avoiding Medicare and Medicaid Fraud and Abuse.”

In this publication, the Government agencies, including the Department of Justice, the Department of Health and Human Services office of Inspector General, and the Centers for Medicare and Medicaid Services, outlined five of the most important federal laws affecting physician’s offices. The Office of Inspector General recommends that physicians frequently conduct self-audits. In an effort to help with the recommended self-audits, a synopsis of the five most prevalent federal laws affecting healthcare offices is provided here.

Although there are several federal laws to be concerned about, we will focus on these five federal fraud and abuse laws:

1. The False Claims Act

2. The Anti-Kickback Statute

3. The Physician Self-Referral Statute

4. The Exclusion Authorities

5. The Civil Money Penalties Law

1. The False claims Act

The False Claims Act makes it illegal to submit false or fraudulent claims for payment to Federal programs, including Medicare or Medicaid. Claims may be considered false if 1) the service is not actually rendered to the patient, 2) is provided but already covered under another claim, 3) is miscoded, or 4) is not supported by the medical record. If medical necessity is not shown, and the care is deemed to be maintenance care, this may be construed as fraud. For false claims act violations, you can be fined up to three times the programs’ loss plus $11,000 per claim. This fine is per claim. If intent of fraud is proven, this will also result in jail time. The false claims act also provides a strong financial incentive to whistleblowers to report fraud. Whistleblowers can receive up to 30% of any false claims act recovery. Often whistleblowers turn out to be ex-business partners, office staff or even patients.

2. Anti-Kickback Statute

We always appreciate referrals. It is proper to at least show your appreciation with a thank you note. However, asking for, or receiving any remuneration in exchange for your referrals, is a crime under the anti-kickback statute. Also, you can never reward someone even as a token of appreciation for referrals. This includes gift cards, free care, prizes or other forms of payments. In Medicare alone, this will result in a fine of up to $10,000 per occurrence.

3. Physician Self-Referral Statute

The Physician Self-Referral Statute, or Stark Law as it is sometimes called, prohibits you from referring Medicare or Medicaid patients for designated health services to entities with which you have a financial relationship, unless an exception applies. Financial relationships covered by this law include ownership or investment interest as well as compensation relationships. This law applies to your financial relationships and those of your immediate family members. Designated health services include clinical laboratory services, physical therapy, home health services or other services that provide care or supplies to patients. Exceptions to this law do exist and these are called “safe harbors”. A competent healthcare attorney should be consulted to see if you meet one of these exceptions.

4. Exclusion Authorities

Under the exclusion authorities, OIG may exclude providers from participation in the federal healthcare programs. There are two categories of exclusions: Mandatory exclusions are imposed on the basis of certain criminal convictions. Permissive exclusions are based on sanctions by other agencies, such as a state medical board suspending or revoking a medical license or other misconduct including defaulting on health education loans or providing unnecessary or substandard care. Under the Patient Affordable Care Act, it is now mandatory that every provider check to see if any of their employees, business partners or associates is listed in the OIG exclusion list. This investigation must be documented in the mandatory OIG compliance manual. (This is different than your HIPAA manual).

The effect of exclusion is very serious. Excluded individuals may not bill for treating Medicare and Medicaid patients, nor may their services be billed indirectly through an employer or a group practice. Currently, more than 5200 physicians are not eligible to participate in these programs because of exclusion.

5. Civil Monetary Penalties Law

You should also be aware that the OIG may seek civil monetary penalties for a wide variety of abusive conduct, including presenting a claim that is considered false or fraudulent because it is for medically unnecessary services, i.e. maintenance care. The OIG may also impose civil monetary penalties for violating the Medicare assignment agreement by overcharging, back billing or double billing Medicare beneficiaries. Keep in mind that as a chiropractor you cannot opt out of Medicare. If you see a Medicare patient for any services, you and your corporation must be approved by Medicare through the 855 forms. Revalidation is done through the PECOS system. Penalties range from $10,000-$50,000 per violation.