Healthcare Fraud Laws Simplified: Protecting Your Organization

The healthcare industry is growing exponentially, propelled by various technological advancements, increasing demand for quality healthcare, and an aging population. McKinsey & Company predicts that this industry will grow from 583 billion dollars in 2022 to 819 billion dollars in 2027, at a CAGR of 7 percent. However, this significant growth also makes the healthcare sector vulnerable to fraudulent activities, leading to substantial financial losses and compromising the delivery of high-quality care. In addition to draining millions of dollars of taxpayers’ money year on year, it also leads to a depletion of trust in the system. Certain fraud laws have been put in place to address these challenges while ensuring accountability and fairness.

Healthcare Fraud Laws You Need To Know

Laws like the False Claim Act (FCA), Anti-Kickback Statute (AKS), the Exclusion Authorities, Physician Self-Referral Law (Stark law), and the Civil Monetary Penalties Law (CMPL) are meant to safeguard patient welfare, protect public funds, and create a leveled field for healthcare providers and payers. It is the job of government agencies like the Department of Health and Human Services, the Department of Justice, the Centers for Medicare and Medicaid Services (CMS), and the Office of Inspector General (OIG) to enforce these laws and take necessary action. These laws are not just meant to guide one’s moral compass, rather organizations or individuals in violation of these laws can lead to civil fines, loss of medical license from the state medical board, criminal penalties, and disbarment from federal healthcare programs. 

You may like to read our blog on the real costs of non compliance in healthcare.

False Claims Act (FCA)

The False Claims Act is a robust framework designed to address any fraudulent activities against government-funded healthcare programs such as Medicare and Medicaid. Individuals or institutions are financially liable for up to three times the program’s loss under this act for submitting false claims in an attempt to attain reimbursement from the government. Every service or item billed to a healthcare program counts as a claim, leading to substantial fines. The FCA has whistleblower provisions that allow employees to file suit for false claims on the government’s behalf, resulting in significant recoveries. The FCA plays a key role in ensuring accountability in billing and reporting practices.

The Anti-Kickback Statute (AKS)

While some industries encourage referrals with a reward, it is a crime to pay for referrals in federal healthcare programs. The Anti-Kickback Statute forbids offering, soliciting, or receiving any remuneration in exchange for patient referrals or services covered by federal healthcare programs. Violating this law can result in future exclusion from federal health programs and huge fines. This is done to make certain that any clinical decisions taken are based on what the patient needs rather than being influenced by financial incentives and compromising patient care.

Stark Law

Physicians are prohibited from referring patients for certain healthcare services payable by Medicaid or Medicare if the physician or their family members have a financial interest in the institution. This is the Stark Law, also known as the Physician Self-referral Law which prohibits indulgence of ownership and compensation arrangements, unless specific exceptions are met. To better understand the Stark Law, a simple example of a violation would be where the physician has a stake in an imaging center and directs patients, including family members, exclusively to that facility for diagnostics.

Some of the healthcare services that come under the scrutiny of the Stark Law include inpatient and outpatient hospital services, clinical laboratory services, home health services, physical therapy, outpatient prescription drugs, occupational therapy, radiology and other specific imaging services, and outpatient speech-language pathology services.

Centers for Medicare & Medicaid Services (CMS) Regulations

The CMS department enforces numerous rules designed to detect and prevent fraud within federally funded programs. CMS plays a pivotal role in monitoring and maintaining the integrity of the program by implementing strict guidelines for coding, billing, and reimbursements. In order to achieve this, the CMS harnesses the power of robust fraud detection tools and advanced analytics to identify anomalies in claims data. This law helps considerably reduce improper payments and holds providers accountable.

The Civil Monetary Penalties Law (CMPL)

The OIG is authorized to impose penalties on individuals or organizations that commit abuse or fraud related to federal healthcare programs. Some of the CMPL violations include providing inaccurate information that may influence a decision to discharge, violating the AKS, Medicare assignment provisions, or Medicare physician agreements, presenting a claim for a service or item for which payment may not be made, and making false application statements to participate in federal healthcare programs.

These fraud laws are proving to be indispensable to the smooth functioning of the healthcare industry. It not only addresses any unethical practices but also fosters transparency and ensures the delivery of quality healthcare.

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