The problem is that what the government sometimes counts as fraud, is merely aggressive, and perfectly legal, billing on the parts of providers.

Whether you’re in the category of a company/person accused of outright fraud – where you billed the State, but no services were provided – or in the category of a company/person who has merely billed in excess of customary rates, the penalties can be very harsh.

Here’s what is often defined as Medicaid Fraud:

• Billing for services not rendered: A provider bills Medicaid for a procedure or service that was not actually provided.
• Double Billing: A provider bills Medicaid twice for the same procedure or service.
• Billing for unnecessary services: A provider misrepresents the diagnosis and symptoms on patient records and billing invoices in order to obtain payment for unnecessary services.
• Drug Substitution: A pharmacist fills a recipient’s prescription with a generic drug, but bills Medicaid for a higher cost brand name drug.
• Kickbacks: A provider offers or pays a kickback to induce someone to refer Medicaid recipients to that provider as patients or clients. Examples of kickbacks include cash, vacations, and gifts.
• Supplemental Charges: A provider charges a Medicaid recipient for a service which is covered by Medicaid and should be billed to Medicaid, and then charges the recipient the difference between the provider’s usual fee and what Medicaid pays.
• Inflating the Usual and Customary Charges: A provider charges Medicaid more than their usual and customary charge for the same product or service billed to other insurers and the public. A provider might inflate the cost of the procedure, service or goods provided.

When dealing with complex fraud cases such as Medicaid fraud, it’s important to, when possible, have a qualified lawyer and, if you can afford it, forensic accountants or other experts who can help show that you were not, in fact, engaged in this kind of fraud.

This aggressive prosecution is surely to pull in people who are truly innocent of the charges. Obviously Medicaid billing rules are far from clear, and what may be “fraud” in the government’s eyes, may simply be a company seeking to bill at the highest possible rate.

In the end, it’s likely that the State of North Carolina is threatening this action not so much because it believes abuse is rampant, but because it wants to send a warning shot over the bows of health care providers who bill the government that prosecution awaits if the government believes it has been overbilled.

In addition to the true crooks, some companies are going to face the threat of prosecution or actual prosecution so as to convince everyone else out there to dot their Is and cross their Ts.

Unfortunately for the companies that have been targeted by the government, life is not going to be pleasant for the next 18 to 24 months.