Hospital Fraud

Hospital fraud is among the most pervasive and costly forms of healthcare fraud, evidenced by the enormity of the settlements reached when the facilities are apprehended. It is estimated that, in 2015 alone, $330 million in Medicare funding was recovered as a result of the discovery of improper hospital billing techniques; though an impressive return on the bilked funds, this number reflects only a fraction from the estimated $60 billion in losses that Medicare suffers on an annual basis. In fact, a report published by the Government Accounting Office (GAO), over one-third of civil healthcare fraud cases in 2010 were filed against hospitals and medical facilities.

Hospitals are heavily victimized when it comes to fraud, largely in part due to the fact that they are generally large facilities with broad and extensive areas of expertise; this, coupled with the myriad of medical professionals employed at any given time, provide countless avenues in which to commit fraudulent acts. Further, hospital networks often co-own or partner with other medical providers (ambulance services, private clinics, etc.) which can often make it easier to mask ongoing schemes. This was the case in the settlement with Navicent Health Inc., who utilized their hospital facility to falsify documents, thus allowing them to bill Medicare for improper services provided by their emergency transportation company.

Most examples of hospital fraud involve False Claims Act violations, in which the facilities inappropriately bill Medicare, Medicaid, and other government-funded health care programs. The methods used to perpetuate these schemes include:

  • Upcoding; the process of misrepresenting patient diagnoses in order to receive higher reimbursement rates
  • Billing for services that are either not provided or not considered to be medically reasonable
  • Admitting patients that would benefit from alternative care
  • Receiving or supplying kickbacks for unlawful patient referrals
  • Improperly coding services or treatments in order to receive reimbursement that would otherwise have not been paid
  • Falsification of patient records to prevent detection of submitted false claims

Fortunately, with nurses being statistically more likely to report fraud, many of these schemes are halted before the monetary losses become even more immense. In fact, most hospital fraud cases are brought forward by whistleblowers, most of whom were employed by the disreputable hospitals in question. Under the provisions of the False Claims Act, whistleblowers are protected from potential workplace repercussions that stem from any information brought forward; specifically, “If an employee is fired, demoted, harassed, or otherwise discriminated against for filing a False Claims Act suit, the law provides for reinstatement, double back pay, and compensation for special damages, including litigation costs and reasonable attorneys’ fees.” 

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