Medicaid is a mostly State-run program. The Federal Government provides the money, and some guidelines. The states themselves handle the day-to-day operations of Medicaid programs.
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 in Raleigh is important.