Defending Against Health Care Fraud 101: Medical Billing Explained

Before representing a defendant charged with health care fraud, it is important for defense counsel to gain a detailed understanding of Medicare billing. Many criminal defense attorneys who are not well-versed in Medicare and Medicaid or private insurance billing may struggle with these complex concepts.

Prior to billing Medicare, Medicaid or a private insurance company for a service, the physician or practice must be credentialed by the insurance entity. Generally, credentialing requires certification that the physician or practice will comply with federal rules and regulations as well as the policies of the insurance company.

Medicare’s rules and regulations are incredibly detailed and complex. Center for Medicare Services regulations, as well as local and National coverage determinations (LCD and NCDs, respectively), define what Medicare will reimburse. The government often indicts physicians and practices for charging for services that were either not medically necessary or rendered in violation of regulations or LCDs and NCDs.

When an eligible provider performs a service for a Medicare beneficiary, the service is reduced to a code which corresponds to that service.  There are three common types of codes – Current Procedural Terminology (CPT) codes, Healthcare Common Procedures Coding System codes (HCPCS), and International Classification of Diseases, 10th revision, Clinical Modification codes, also referred to as ICD-10.

CPT codes describe how to report procedures while HCPCS codes are used to report supplies, equipment, and devices provided to patients.  HCPCS is alphanumeric and administered by the Centers for Medicare and Medicaid Services.  ICD-10 codes are used to report diagnoses and disorders, and this coding system is maintained and revised by the National Center for Health Services (NCHS).

Proper Code Utilization

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.

If your healthcare practice needs help with its billing system and whether it is in compliance, so as to avoid healthcare fraud), the healthcare lawyers at Chapman Law Group are here for you.  

We serve healthcare professionals across Michigan — including Detroit, Dearborn, Troy, Ann Arbor and Grand Rapids — and Florida (Miami, Jacksonville, Tampa, Orlando and West Palm Beach). Contact us today for a consultation.

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Ronald W. Chapman II LL.M.

Chairperson of White Collar Defense & Government Investigations

Michigan Office
1441 West Long Lake Rd., Ste. 310
Troy, MI 48098
Phone: (248) 644-6326

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