Medical False Claims Act Violations That Will Be Prosecuted: Medically Unnecessary Services

False Claims Act (FCA) violations can derail your medical practice. Filing false claims with Medicare or Medicaid can lead to massive civil fines, including up to three times the loss caused to the program on top of $11,000 per false claim filed. Each instance of an item or service being wrongly billed can be treated as a separate violation, meaning the fines can easily pile up to hundreds of thousands if not millions of dollars. If the claim resulted from a kickback arrangement, medical offices can be liable under the FCA and the Anti-Kickback Statute, compounding the potential penalties.

Billing for medically unnecessary services under federal healthcare laws is one way to get charged with an FCA violation. Medicare, Medicaid, and other government insurance programs limit reimbursement to medically necessary services. Healthcare providers who are caught billing for unnecessary services, even inadvertently, can face significant liability. Below, our knowledgeable California healthcare law and compliance attorney discusses medically unnecessary services and how to avoid incurring unnecessary liability.

What Are Medically Unnecessary Services?

Medicare and Medicaid will only pay for services that are “reasonable and necessary for the diagnosis or treatment of illness or injury.” Federal law requires that health care providers who seek reimbursement under Medicare, Medicaid, or other government insurance provide services “only when, and to the extent, medically necessary.” Defining medical necessity is not an exact science, but the American Medical Association (AMA) has provided some guidance. According to the AMA, “medically necessary” services include:

Health care services or products that a prudent physician would provide to a patient for the purpose of preventing, diagnosing or treating an illness, injury, disease or its symptoms in a manner that is: (a) in accordance with generally accepted standards of medical practice; (b) clinically appropriate in terms of type, frequency, extent, site, and duration; and (c) not primarily … for the convenience of the patient, treating physician, or other health care provider.

Physicians are meant to be the gatekeepers to treatment, evaluating whether medical treatment is medically necessary according to their professional, objective judgment.

What Types of Treatments Might be Considered Medically Unnecessary?

Any type of medical treatment or service that is not considered “reasonable and necessary for the diagnosis or treatment of illness or injury” could be treated as medically unnecessary. Any type of service, treatment, medication, prosthetic, or diagnostic test may be considered medically unnecessary when it does not further the goal of helping the patient. Examples of medically unnecessary services might include:

• Medication prescribed to a patient without sufficient cause
• Ambulance rides for a patient who could have transported themselves without risk
• A range of tests ordered for a patient who does not present with any symptoms indicating the need for those tests
• A rush to try invasive or expensive procedures without first trying cheaper options such as drugs or physical therapy
• Widespread use of a particular diagnostic test even among patients who present no need for that test

When Are Medically Unnecessary Claims Subject to FCA Enforcement?

Physicians are meant to be the arbiter of what constitutes medical necessity. If a physician deems a treatment, diagnostic test, or procedure to be helpful and necessary for diagnosis or treatment, the government will not be quick to second-guess the physician’s judgment.

When medical officers are perceived to be engaging in some sort of deceptive behavior in order to bill for more services than necessary, however, an FCA claim may arise. If any of the following apply, for example, the medical office is at high risk for an FCA violation:

• The practice falsifies patient records to make it appear as if the patient met the criteria for a given service.
• A service was provided to a patient and billed to a federal health insurance provider, but circumstances indicate that the doctor did not actually know the service was ordered.
• The physician’s objectivity is questionable because they prescribed the drug, device, or treatment after receiving a kickback from another party benefiting from the physicians’ prescription.

Additionally, any unusual patterns of testing or treatment may lead to FCA charges. For example, if the government finds that every patient is given a chest X-ray at a given medical office, even when they show up complaining about dizziness or muscle spasms, the government might investigate potential FCA violations. It’s important to keep thorough documentation of all tests and treatments, along with justifications, to avoid unnecessary FCA liability.

Trusted Advice and Representation for Your California Medical Practice

For assistance with matters involving healthcare regulatory compliance, auditing, fraud defense, employment disputes, mergers and acquisitions, business disputes, licensing, or any other matter of healthcare law, contact the Law Offices of Art Kalantar in Los Angeles or California statewide at 310-773-0001.