Defending Against Health Care Fraud 101: Medical Billing Explained

Medical professionals and their billers are required to ensure that the proper code is utilized for the appropriate service. The codes applicable to the beneficiary’s treatment are submitted electronically to Medicare, and the provider is periodically reimbursed for the services rendered.

Medicare program payment methods are highly complex and change constantly — although, in general, Medicare determines a base rate for a specified unit of service, and then makes adjustments based on clinical severity, selected policies, and geographic market.

Since 1987, Medicare has used a formula called the Sustainable Growth Rate to control Medicare spending. This formula has called for cuts in provider payments, reaching as high as 24%. However, the Sustainable Growth Rate formula was replaced by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), a controversial method that shifts reimbursement from fee-for-service to pay-for-performance.

Physician advocacy groups are fearful that MACRA could negatively impact reimbursement as physicians adjust to the new “merit-based incentive payment system.” Faced with increased cuts in reimbursement for their services, providers are often tempted to bill for services not rendered in order to increase reimbursement. Intentionally billing for a code with a higher reimbursement rate or charging for a service that was not rendered constitutes healthcare fraud pursuant to 18 U.S.C. 1347.

A violation of 18 U.S.C. 1347 or 1349 requires the Government to prove not just that the physician or healthcare entity billed improperly, but also that it was done intentionally as part of a scheme. Healthcare billing rules and regulations are incredibly complex, and many providers lack the billing and coding knowledge to properly bill.

Still, the government doesn’t accept failure to properly bill as an excuse for healthcare fraud, and it may still indict the physician or practice that was merely negligent and not intentionally committing fraud.