Medicare is a Federally administered program. The basic scheme is that private providers offer medical services to the poor (Medicaid) or the elderly (Medicare), bill the government (state or federal) for reimbursement for the services provided.

Because there is a great deal of disjuncture between the services provided and the services paid, fraud can creep in. Even where there is no fraud, the government can suspect there is fraud and can accuse providers of Medicaid or Medicare fraud based on billing information provided by the provider at the time of billing.

How does the government detect fraud?

In some cases, whistleblowers will call the government to inform them that a provider has been billing fraudulently. This is comparatively rare, but does happen, especially when a disgruntled employee leaves a provider and decides to exact revenge.

In other cases, the provider is caught up in a different criminal enterprise – usually organized crime – and the Medicaid or Medicare fraud is uncovered.

In still other cases, the government hires outside contractors who use complex review techniques and computer programs to check providers’ bills against the average for that region. If providers’ bills deviate substantially, the government may conduct a more intensive investigation to determine whether the provider is intentionally committing fraud.

The intentionality can be inferred from conduct. The government does not have to prove that the company wanted to “cheat” the government. The government merely needs to prove that the company knew and either permitted to continue or did nothing to stop double billing, excessive billing, billing where no care was provided, and so forth.

These are the grey cases, where a good white collar lawyer Raleigh is important.

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.