Understanding Medical Billing Fraud: A Guide for Whistleblowers

Medical billing fraud occurs when a healthcare provider seeks reimbursement from the U.S. government for services that were never rendered. This type of fraud is committed in several ways, including unbundling, upcoding, or phantom billing.

To put things in perspective: the government spent over $832 billion on Medicare in fiscal year 2023, which is just over 3% of the country’s GDP. This makes it a prime target for fraud and fraudsters alike who seek to enrich themselves.

Medical billing fraud can be very hard to detect. And therefore, under the False Claims Act and its qui tam provision, and under other state False Claims Act programs, whistleblowers can report their concerns to the U.S. government, and potentially receive an award of between 15% and 30% of the monies recovered in a successful investigation. If you know medical billing fraud occuring, continue reading to learn more about your options as a whistleblower.

There are a few types of medical billing frauds that the government sees time and time again. These frauds mostly abuse Medicare but can also be found in Medicaid abuse as well. Below are a few of the most common medical billing fraud schemes that whistleblowers can report:

Unbundling

Unbundling is a type of billing fraud in which a healthcare provider submits false or misrepresentative CPT codes for services that provide higher reimbursements than the treatment provided. They might bill separately for individual treatments of a procedure that are typically bundled together, hence the term “unbundling.” For example, billing separately for anesthesia, surgery, and recovery room services when they are typically bundled into a single procedure code.

Upcoding

Upcoding occurs when healthcare providers seek higher reimbursements than what they are entitled to.

In healthcare, there are specific Current Procedural Terminology (CPT) codes that correspond to different medical services, devices, or ancillary service, which are reimbursable by the government.

The treatment of more severe conditions generally provides a higher reimbursement rate. Thus, fraudsters take advantage of this by intentionally using codes that correspond to such treatments.

However, this can be hard to detect. Healthcare providers are constantly finding new ways to upcode, and they can do it in subtle ways, including the following:

• Unnecessary Procedures: Billing for procedures that are completely unnecessary;
• False Codes: Claiming to have provided a treatment, when it never happened;
• Mistate Resources: Claiming to bring in specialists for a treatment or procedure;
• Extra Hours: Billing for more hours than what was actually performed;

In other words, providers know that it’s difficult to verify whether services were performed, and thus they lie by fraudulently upcoding treatments and procedures. For example, a doctor might bill for a complex surgery when only a simpler procedure was performed.

Phantom Billing

Phantom billing occurs when a healthcare provider seeks reimbursement for services or equipment that wasn’t used in a treatment or procedure. In essence, upcoding involves charging more for a service than it’s worth, while phantom billing involves charging for services that don’t exist. For example, a medical provider might bill for a blood test that was never ordered or a piece of equipment that was never used.

Multiple Billing

This is as simple as it sounds. Multiple billing occurs when a provider bills for the same service multiple times. This happens often when a patient receives the same treatment or procedure during multiple visits.

Risk Adjustment Fraud

Risk adjustment fraud is a common type of frauds that occurs under Medicare Part C.

It involves the process of illegally manipulating patient data to receive higher reimbursements from the government. A provider might exaggerate a patient’s health condition to make them appear sicker than they really are or inflate their risk factors.

A provider might also use incorrect codes to suggest a more severe condition (see upcoding). They may also enroll patients in government programs who are not eligible OR enroll them in a program that demands higher rates than other health insurance programs.

These are just a few of the most common types of medical billing frauds that occur. Fraudulent billing practices can have serious consequences, including fines, penalties, and imprisonment. If you suspect healthcare fraud, it’s important to report it to the appropriate authorities.

• Identifying Fraud: Relators must have evidence that a healthcare provider or entity has submitted false or fraudulent claims to the government. This can include evidence of upcoding, unbundling, phantom billing, or other fraudulent practices.
• Filing a Complaint: Relators can file a sealed complaint with the federal court, alleging that the defendant has violated the FCA. The complaint must provide detailed information about the fraudulent activity and the damages that the government has suffered.
• Investigation: The government has the option to intervene in the case. If the government chooses to intervene, it takes over the prosecution of the case. If the government does not intervene, the relator can proceed with the case on their own.
• Recovery: If the relator wins the case, they are entitled to a portion of the government’s recovery. The amount of the award can vary depending on the circumstances of the case.

If you believe that a healthcare provider or entity has committed medical billing fraud, you may want to consider filing a qui tam lawsuit. However, it is important to consult with an attorney who specializes in such matters to discuss the potential risks and benefits of taking legal action.

The False Claims Act requires that a whistleblower have an attorney present to file a qui tam case. This is due to the complexity of such cases. However, an attorney can also help you navigate the necessary legal procedures to ensure that your case is filed correctly.

Attorneys will also help you gather evidence to support your claims, negotiate on your behalf if the government chooses to intervene, and help you get the maximum financial award possible, ensuring you get what you deserve for reporting such fraud.

You can singlehandedly expose such fraudulent billing practices to improve the quality healthcare services for all and help taxpayers from being defrauded. Get in touch with one of our qui tam whistleblower attorneys today for a free and confidential consultation.