Grant or Program Fraud
Hospitals and research institutions receive federal and state grants for research and other specialized projects in the health care area. Grants have strict rules about how the grant money can be spent. Fraud occurs when institutions shift costs between grant programs to cover up cost overruns and/or falsely describe the purposes for which they are spending the funds.
Medicare / Medicaid Fraud
Service Not Rendered: The most basic scheme of healthcare fraud is the billing for services that were never rendered for patients. This could include billing Medicare or Medicaid for services that were never performed, medical supplies and equipment that were never delivered, and lab or medical tests that never occurred. In the Nursing Home industry, nursing homes might falsify nursing logs to make it look as though Medicare patients were being treated.
Medicare Overpayments: A medical care provider commits fraud when it conceals, improperly avoids or decreases its obligation to pay the government, by failing to disclose and refund obvious overpayments. With the enactment of the Patient Protection and Affordable Care Act of 2010, federal law explicitly provides for liability of providers when overpayments are retained. Overpayments” are defined as “Medicare funds received or retained to which a person is not entitled, after applicable reconciliation.” Such overpayments must be reported and returned by the later of sixty days after they were identified or the date any applicable cost report is due.
Violations of Stark Statute: The “Stark Statute” prohibits hospitals (and other medical care providers) from submitting Medicare claims based on patient referrals from physicians with an improper “financial relationship” with the hospital. Prohibited financial relationships are broadly defined in the relevant statute to include any “compensation” paid directly or indirectly to a referring physician.
Violations of The Anti-Kickback Statute: The Anti-Kickback Statute prohibits any person or company from paying or getting paid to induce or reward any person for referring, recommending or arranging for the purchase of any item that may be paid for by Medicare. The statute prohibits both outright bribes and offering inducements that have as one of their purposes the inducement of a physician to refer patients for services that will be reimbursed by a federal healthcare program. The actors on both sides of the kickback relationship are potentially liable.
Home Healthcare Fraud: Home Healthcare Fraud typically occurs when Medicare claims are made on the behalf of individuals who do not qualify as “homebound.” Homebound status should be confined to those beneficiaries who are: (a) confined to the home (or ALF), except for infrequent or short absences or trips for medical care; and (b) requiring one or more of the following qualifying services: physical therapy; speech-language pathology; intermittent skilled nursing.
False Certifications and Information: Health care providers are required to act openly and honestly with the Medicare and Medicaid programs and submit claims based upon accurate information. This includes a duty by providers to disclose all known errors and omissions in their claims.
Fraudulent Cost Reports: Medicare reimburses hospitals for additional costs including overhead costs, capital improvement costs, and financing costs. Claims for these reimbursements are submitted in “cost reports” at the conclusion of each year. These claims are based on the percentage of overall services that were related to Medicare patients as opposed to other-pay patients, and calculated as a percentage of the overall costs incurred. Fraud often occurs when costs are “mis-labeled” in these reports.
Upcoding and Unbundling: Medicare and Medicaid systems use a set of billing codes known as the HCPCS codes. Providers may wrongfully use a higher paying code to fraudulently reflect that a more expensive procedure or device was involved in the patient’s treatment. These codes are billed electronically and typically slip through the system.
Most general areas of contract fraud apply to the defense arena, but some illegal activity is unique to defense work, including:
Cross-Charging: A cross-charging scheme may involve either fixed price contacts or cost-plus contracts. The contractor might defraud the Government by improperly recording the labor, materials and overhead from its “fixed price” contract, to its “cost-plus” contract. The contractor will receive the full fixed price on its one contract, but defraud the Government into paying an inflated amount on its cost-plus contract. Ultimately, the Government pays costs that never should have been recorded as being related to the cost-plus contract.
Improper Product Substitution: All government contracts carry specific requirements that the products or goods being purchased by the Government under its contracts meet a certain grade or quality. Contractors may substitute cheaper and inferior goods or components in an attempt to save money. In such a situation, the contractor may not be able to honestly certify that the goods or components meet the standards designated in the contract.
Improper Cost Allocation: It is not uncommon for contractors to have contracts for commercial customers and contracts for Government customers. In the cost shifting scheme, the contractor will improperly record costs related to its commercial contracts, onto the cost ledgers for its Government contracts. By doing so, the contractor defrauds the Government into paying for costs and overhead unrelated to its Government contracts.
Violations of TINA: Defense contactors’ pay is often determined by a “cost plus fixed-fee contact,” and based on the contractor’s costs, plus a percentage for profit. The Truth In Negotiations Act (TINA) requires that the contractor submit its historical cost and pricing data for similar work, in order that the Government can have a fair estimate of what the costs for the current contact will run. The bidding contractor must certify that it has complied with TINA, by truthfully and honestly submitting all relevant cost and pricing data and historical information for the contract.
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