Jul 24 2017

Payor Agreements and Hidden False Claims Act and Criminal Traps

It was a neighborhood like many others.

Neat, but not too neat front yards. Newspapers brought in by 8:00 a.m. and maybe by 10:00 a.m. on weekends.

And, all was within the bounds of normal, giving, of course, wide birth to the meaning of the word, for this is nonfiction, not fiction. But with one outlier, of course.

They assembled just before daybreak, approximately a dozen SWAT-clothed FBI agents accompanied by the local police and, of course, a reporter with a camera. Then, they raided the gray house with a just as neat front yard but, to the well-eyed, just a tad too many security cameras.

Later that day, the reporter wrote that the man living in the house ran a 7 to 8 figure financial scam out of his, I suppose, just as neat den.

Ah, crime lurking in the “normal” neighborhood.

Unfortunately, crime and other misdeeds lurk in other neighborhoods, too. For example, inside of a provider agreement between a medical group and a payor.

Standard form provider agreements often closely and specifically define who, by classification, may be considered within the group for purposes of billing the payor. Many such define group physicians as the group’s employed physicians, thereby excluding subcontractors.

Yet, at the same time, it’s equally common for many medical groups to either regularly or from time to time staff using subcontracted physicians.

Although a set of concerns (breach of contract, fraud, and so on) is present in any such situation, the potential for trouble explodes when the provider agreement covers federal healthcare program patients. For example, many provider agreements cover both commercial and Medicare Advantage patients.

In that case, when the group submits a claim for a procedure on a covered Medicare patient performed by a subcontracted physician, the claim is potentially a false claim, triggering liability under the federal False Claims Act. And, although the FCA is a civil statute, it has a criminal cousin, 18 U.S.C. 287, commonly referred to as the criminal false claims act.

As if that weren’t enough, the same lurking billing violation can trigger liability under a host of federal criminal statutes, from mail and wire fraud, to the Travel Act, to federal health care fraud.

Criminal and, at least, serious civil, liability lurks in many neat neighborhoods. Create your own neighborhood watch to make sure that it’s not lurking behind your medical group’s otherwise metaphorical neat lawn.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss



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