A medical group and its subsidiary, headquartered in California, have agreed to pay $58,740,000, and their former president and majority owner, a physician, has agreed to pay $1,760,000 for allegedly violating the False Claims Act by causing the submission of false diagnosis codes for two spinal conditions to increase payments from the Medicare Advantage program. A California-based radiology group that worked with the medical group has also agreed to pay $2,350,000 for allegedly conspiring with the medical group in connection with the false diagnoses for the two spinal conditions.
Under Medicare Advantage (also known as the Medicare Part C program), Medicare beneficiaries can choose to enroll in managed care insurance plans called Medicare Advantage Plans (MA Plans). These MA Plans contract with healthcare providers, like the medical group, to provide Medicare-covered benefits. MA Plans are paid a fixed per-person amount to provide care to their enrollees, and in turn, the MA Plans pay the providers.
The Centers for Medicare and Medicaid Services (CMS), which oversees the Medicare program, adjusts payments to MA Plans based on the demographic information and health diagnoses of each beneficiary. These adjustments, called “risk scores,” are used to determine payment levels. A beneficiary with diagnoses that are more expensive to treat will have a higher risk score, leading to larger risk-adjusted payments from CMS to the MA Plan.
The medical group, founded in Los Angeles in 1993, has expanded to at least six states and has employed up to 150 primary care providers and 1,000 specialists at various times. The majority owner, a physician, established the medical group and served as its president and majority owner until 2023.
From 2015 to 2021, the medical group and its former president, the physician, allegedly submitted diagnoses for two severe spinal conditions—spinal enthesopathy and sacroiliitis—for patients who did not suffer from either condition. When questioned by an MA Plan about the use of the spinal enthesopathy diagnosis, the medical group enlisted the radiology group’s assistance in creating radiology reports that appeared to support the diagnosis. Both diagnoses led to increased payments from CMS to the MA Plan, which then passed a portion of the increased payment to the medical group.
The resolution of this matter resulted from a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the US Attorney’s Office for the Central District of California, with assistance from the Department of Health and Human Services Office of Inspector General (HHS-OIG).
“My office is committed to ensuring that healthcare providers are held accountable for unlawful misrepresentations to Medicare and other healthcare programs,” said Acting US Attorney Joseph T. McNally for the Central District of California. “As this settlement makes clear, we will diligently pursue those who defraud government programs.”
Compliance Perspective
Issue
Submitting claims for payment to Medicare or Medicaid that are known, or should be known, to be false or fraudulent is illegal. This includes falsifying documents, submitting incomplete or inaccurate documentation, failing to provide the documented care, or engaging in other deceptive practices. All medical services must be medically necessary, and the patient must be involved in the decision-making process and eligible for those services. In fiscal year 2024, healthcare fraud continued to be a leading source of False Claims Act settlements and judgments. Providing unnecessary medical services not only wastes taxpayer funds but can also expose patients to harmful procedures or prevent them from receiving potentially more effective treatments. The False Claims Act imposes treble damages and penalties on individuals who knowingly submit false claims or fail to repay money owed to the United States.
Discussion Points
- Review your policies and procedures related to documentation accuracy, compliance with Medicare and Medicaid regulations, and preventing false claims.
- Provide training to appropriate staff on ensuring the accuracy of Medicare and Medicaid billing and supporting documentation before claims are submitted. Regularly train staff on compliance and ethics policies, and make sure they understand the significance of identifying and reporting any potential compliance violations to their supervisor, the compliance officer, or via the anonymous hotline.
- Periodically conduct audits of Medicare and Medicaid documentation and billing practices to ensure compliance. This includes checking that diagnoses and services billed align with the supporting documentation and that no false or unnecessary claims are being submitted. Address and correct any discrepancies promptly to prevent further issues.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*
