A former Missouri healthcare company owner was sentenced on August 14, 2024, to 20 months in prison and fined $100,000 for submitting over $3.8 million in fraudulent claims to Medicare, Medicaid, and private healthcare benefit programs. His co-defendant, a physician, pleaded guilty in November 2022, satisfied the restitution owed, and agreed to forfeit $3.1 million in assets.
The defendants had obtained accreditation from the Centers for Disease Control and Prevention’s (CDC) Clinical Laboratory Improvement Amendments (CLIA) for two laboratories, claiming they were for human tissue anal sis and testing. The scheme began in 2014, with the labs operating as separate entities but concealing that they were in the same building, shared a part-time employee, and used the same equipment.
The defendants misrepresented their operations in CLIA applications by altering one lab’s testing hours to avoid overlap and maintaining separate logs, despite all tests being conducted at the same facility. They hid their co-ownership and profit-sharing arrangement from Medicare, Medicaid, and private insurers, cross-referring tests like urine specimens between labs.
They also concealed that their labs lacked necessary equipment for specialized analyses, outsourcing these tests to external labs despite knowing that Medicare, Medicaid, and many private insurers prohibit “pass-through billing.” When insurers scrutinized their claims and refused payment, the defendants created a third lab company solely for billing purposes, using a CLIA number from one of the other labs.
In several instances, each lab submitted claims for testing the same specimen from the same individual on the same day, a practice known as “split-billing.” This generated $1.4 million from pass-through billing and $2.4 million from split billing from Medicare, Medicaid, and private insurers.
Compliance Perspective
Issue
Healthcare fraud can involve medical providers, company owners, patients, and others who intentionally deceive the healthcare system to obtain unlawful benefits or payments. Submitting false or fraudulent claims to Medicare or Medicaid is illegal. Filing false claims may result in fines of up to three times the programs’ loss plus $11,000 per claim filed. Under the civil False Claims Act, each billed item or service to Medicare or Medicaid counts as a separate claim, which means fines can accumulate quickly. The Office of Inspector General (OIG) strongly encourages nursing facilities to implement comprehensive procedures to ensure that services are provided at the appropriate quality and level and are delivered as ordered and reported in reimbursement claims. Accurate documentation at the time of service is essential to support billing. Facility staff should be knowledgeable in identifying and reporting suspicious billing practices. Additionally, a nonretaliatory environment for reporting suspicious billing practices is mandatory for all facilities.
Discussion Points
- Regularly review and update your policies and procedures for preventing and reporting false claims and suspicious billing practices. Ensure that they reflect current regulations and best practices.
- Train all staff on what constitutes a false claim, how to recognize suspicious billing practices, and the importance of prompt reporting. Emphasize that reporting concerns is mandatory. Document that these trainings occurred, and file the signed documents in each employee’s education file.
- Periodically perform audits to ensure all staff are aware of their responsibility to identify compliance and ethics concerns and to promptly report violations to their supervisor, the compliance and ethics officer, or via the anonymous hotline. Perform Triple Checks for all Medicare Part A claims prior to submission to ensure that medical necessity is supported by appropriate documentation, and that services meet skilled care requirements.
*This news alert has been prepared by Med-Net Concepts, LLC for informational purposes only and is not intended to provide legal advice.*
