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Physician Practice Fraud: The Visit Code, the Referral and the Owner

Whistleblower Justice Network

Physician practice fraud turns visits, tests, drug treatments and referrals into false claims for healthcare payments through invented services, inflated codes, false records or payments for patient orders. The decision can start with the clinician, the billing office or the people running the business. If you work inside a practice, you may know where the patient’s care and the government’s bill parted company: a code changed after a denial, a visit added automatically, or an order required before anyone examined the patient.

How a Physician Practice Turns Care Into a Claim

A physician practice sells professional services in offices, clinics and facilities, with separate payments for some tests, drugs and other services. A hospitalist’s professional claim and the hospital’s facility claim describe different parts of the same patient’s care. The practice’s clinical record, service code, clinician identifier and payer contract connect the work to the money.

The person who treats the patient may work for a professional entity while a management services organization runs billing, information systems and administrative operations. The owner of the shares, the employer and the person controlling claim production can occupy different seats. That division matters when the clinician’s note reaches a billing system someone else controls. The payer changes what the claim represents and where government money enters:

Payer What the Practice’s Records Need to Explain
Medicare fee-for-service The service, code, actual practitioner, setting and coverage supporting the professional claim.
Medicare Advantage The encounter and diagnosis information reaching the plan, plus the contract connecting the plan’s payments to the practice’s revenue.
Medicaid The state’s coverage and enrollment rules, and the managed-care contract where a plan pays the practice.

Medicare Advantage plans receive government money even though private insurers administer the coverage. Medicaid managed care also puts a plan between the public program and the practice. For a physician billing fraud case under the False Claims Act, we follow the government payment through those relationships and identify the false statement that affected it.

In a June 2019 settlement with Southeastern Integrated Medical, the Office of Inspector General alleged that the group billed Medicare for non-covered specimen validity testing. That testing checked whether a urine sample had been substituted, adulterated or diluted.

Why the Code and the Referral Are Worth Money

Physician practice billing incentives included 40% of presumptive-testing profits for physicians at Physician Partners of America, according to the Justice Department’s allegations. A higher visit level, an additional procedure or a diagnosis that increases a plan’s payment can make the same patient more profitable. The bonus formula connects those choices to a clinician’s pay: billed charges, collections, testing profits or revenue shared with a health plan.

Self-referral adds another financial connection. The physician who orders a test may also have an interest in the business performing it. The Robert Wood Johnson Foundation’s 2008 synthesis, Physician Self-Referral and Physician-Owned Specialty Facilities, found a relationship between that financial interest and greater use of services:

There is strong evidence that self-referral increases the utilization of health care services and indirect evidence suggests that at least some of this increase is not medically appropriate.

Physician Self-Referral and Physician-Owned Specialty Facilities, Robert Wood Johnson Foundation, 2008

That finding gives an insider a useful question about a testing target or referral quota: whose revenue rises when the order is placed? The compensation formula, the patient’s clinical need and the destination of the order belong in the same account.

How the False Claim Gets Into the Record

The useful evidence of physician billing fraud connects what happened to what was billed. Staff schedules and travel records identify who was available. Clinical measurements and test results explain the stated need for treatment. Drug inventory and administration records show what reached the patient, while the transmitted claim shows what the payer was told.

EHR automated upcoding fraud allegations formed part of the $45 million settlement that Vohra Wound Physicians and its owner agreed to in November 2025. The Justice Department’s complaint alleged that software recorded the amount of dead tissue in a wound, assumed it had all been removed, inserted that measurement into the chart and selected the billing codes. The complaint put the alleged sequence plainly:

Vohra WPM’s EMR essentially invented a number, put it in the medical record, and billed Medicare extra based on it.

United States of America v. Dr. Ameet Vohra; Vohra Wound Physicians Management, LLC; and VHS Holdings, P.A., government complaint, paragraph 268

We see the problem in that sequence: the software allegedly supplied both the charge and its supposed clinical support. A reviewer reading only the finished chart could miss the decision that created them. The configuration, training instructions and clinician’s actual observations explain different parts of the claim.

The billing office can also change the diagnosis after the clinician has finished. Medical Business Service agreed to a $1,950,000 settlement in October 2014 over allegations that it changed diagnoses on rejected radiology claims to evade Medicare and Medicaid coverage restrictions. The whistleblower’s complaint alleged that employees recoded stacks of denied claims with a codebook and no reference to medical records. The earlier claim, denial and resubmission can expose a diagnosis that appeared when payment required it.

An audit or employee warning adds the question of what management knew. Comparing the warning with later claims, corrections and billing instructions shows what the business did next. Knowingly keeping a government overpayment can also support a False Claims Act case. Ignored audit warnings can connect a recurring claim problem to the people who chose to continue it.

Who Controls the Visit, the Referral and the Bill?

Physicians, coders, billers, practice managers and owners can each control a different part of the transaction. An employee may see a coding override, a clinician may know who actually treated the patient, and an MSO employee may know who set the rule across offices. In private equity and MSO fraud cases, the management agreement, coding authority and response to warnings can connect those decisions to the people controlling the business.

Oliver Street Dermatology Management, doing business as U.S. Dermatology Partners, agreed to an $8.9 million settlement in September 2023. The Justice Department alleged that it increased purchase prices for dermatology practices in exchange for referrals to affiliated businesses after acquisition, resulting in Medicare claims. Here the alleged referral payment sat in the purchase price. An insider who knows the acquisition negotiations may see a connection that the later visit claim never shows.

Telehealth ordering can place a physician inside another business’s billing chain. The Office of Inspector General’s 2022 telemedicine-company alert identified order-authorization fees tied to volume without adequate clinical information as an arrangement requiring scrutiny. For a clinician asked to approve those orders, the information available and the payment for each approval help explain the relationship.

A former general manager brought the whistleblower case against Bluestone Physician Services, while a former hospitalist brought the nationwide case against IPC. Those roles reached different evidence: practice operations in one case and professional billing in the other. For how to report physician practice fraud, start with our whistleblower experts and the part of the business you know. We work with you on the payment trail, the people behind it and the right physician billing fraud whistleblower lawyers.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Speak with our whistleblower experts about the claims you know and the recovery behind a physician fraud whistleblower reward.

What Are Some Examples of Fraud in Medical Practice?

Physician practice fraud can change the service, its level, the person said to have performed it, the reason it was needed, the referral payment or the diagnosis sent to a health plan. These patterns often meet in the same practice. The examples below show which part of the transaction an insider may recognize.

Upcoding Visits and Billing Impossible Days

Physician upcoding allegations were part of Bluestone’s $14,902,000 settlement in June 2024. The Justice Department alleged that domiciliary visits and chronic care management claims lacked the level of services represented. The money covered allegations under Medicare, Medicaid and TRICARE.

In a separate IPC Michigan and Team Health case, the Justice Department alleged daily volumes too high to perform and same-provider claims in Michigan and Indiana on the same day for services not rendered to Michigan beneficiaries. That comparison reaches the schedule and location as well as the code.

Modifier 25 and a Visit Already Included in the Procedure

Modifier 25 fraud allegations led to Skyline Urology‘s $1,850,000 settlement in February 2019. The Justice Department alleged that the practice unbundled routine evaluation and management work from procedures and billed Medicare for an additional visit. The code asserted a significant, separately identifiable service beyond the care already included in the procedure.

Incident-To Billing and the Person Behind the NPI

Incident-to billing fraud can exploit the gap between the physician allowance and the 85% generally paid for direct nurse practitioner and physician assistant claims. Qualifying physician-supervised incident-to services can use the physician allowance, but the alleged fraud involves claiming that rate without the required supervision. The actual worker, supervision, payer, setting and service date explain the claimed rate.

In its 2025 guilty plea, Pain Specialists, P.A. admitted billing under its physician owner’s NPI while he traveled, for services requiring his personal consultation or direct supervision. The practice’s admission connects the identifier to the missing participation. A billing employee and a colleague who knew the schedule could see different halves of that same claim.

Medical Necessity Written to Fit the Order

Medical necessity fraud allegations were part of the $24.5 million settlement announced in April 2022 with Physician Partners of America. The Justice Department alleged unnecessary urine, genetic and psychological testing, testing mandates before physician examination and compensation tied to presumptive-testing profits. The alleged arrangement put the order before the examination and attached a financial reward to the testing. Patient symptoms, orders and whether anyone used the results explain the gap between the care and the bill.

Self-Referral and Kickbacks Behind Ordinary Contracts

Physician self-referral fraud allegations in the Oliver Street case involved the acquisition of 11 dermatology practices. The Stark Law restricts referrals for specified services when a financial relationship violates its conditions for payment. Physician kickbacks can hide in rent, purported supervision, free staff or services, and investment distributions tied to orders.

Gramercy Cardiac Diagnostic Services and its owner agreed to a $6.5 million settlement in September 2023 and admitted conduct involving referral-based rents and purported supervision payments. Their admissions included over $11 million in rental payments. We see a settlement smaller than the rent payments used to secure the referrals. Rent calculations, referral volume and whether the promised supervision happened made the financial relationship visible.

Chronic Care Management and Wellness Work That Was Missing

Chronic care management fraud can involve billing a monthly code requiring at least 20 minutes of qualifying staff work when that time was never supplied. Consent and a care plan also belong behind that claim. Time logs, staff assignments and the work performed explain the monthly charge, including whether the same minutes supported another claim.

Annual wellness visit fraud allegations led to a $513,730 settlement with Tri-Area Community Health in 2026. The Justice Department alleged that pharmacist-performed wellness visits lacked appropriate oversight and were billed under uninvolved physicians’ names. The appointment, the completed assessment and the named physician’s participation are separate parts of the evidence.

Drug Claims Beyond the Dose the Patient Received

Free drugs billed for reimbursement formed part of the allegations that Progressive Oncology and its owner agreed to settle for $1,450,000 in July 2026. The allegations also covered treatment never administered and single-use vial quantities billed across patients as separate vials. Purchasing, no-cost deliveries, vial inventory and administration records connect the quantity available to the quantity given and billed.

Medicare Advantage Diagnoses That Increase the Plan’s Payment

Medicare Advantage diagnosis fraud allegations led to HealthCare Partners‘ $270 million settlement in October 2018. The Justice Department alleged incorrect diagnosis coding and chart reviews that added diagnoses increasing payment while ignoring inaccurate codes that should have been removed. Those diagnoses affected government payments to Medicare Advantage plans, with revenue shared with the practice’s management organization. We see the direction of that alleged review: it only moved the payment upward. Never down. An insider who knows which codes were added, which were left in place and who gave the instructions can explain how it worked.

Types of Physician Practice Fraud

The physician’s name can appear on a claim that misstates the visit, the worker or the reason for the order:

Cases

The visit code, the referral and the person behind the billing number can each change what the government pays a practice. These cases connect those decisions to the clinical record and the money behind the order.

Chronic Care Management Fraud: The Monthly Minutes That Were Never Worked

Modifier 25 Fraud: The Visit Already Paid for in the Procedure

EHR Automated Upcoding Fraud: When the EHR Creates the Claim

Routine Urine Drug Tests in Pain Practices: Orders Without Individual Need

Physician Upcoding: When the E/M Level Outruns the Visit

Phantom Physician Services: Real Patients, Invented Tests and Impossible Days

Physician Compensation and Referral Targets: When Fair Market Value Is Not Enough

Medicare Advantage Diagnosis Fraud Inside Physician Practices: When the Chart Is Made to Fit the Code

Medical Necessity Fraud: When the Clinical Premise Is Fabricated

Sleep-Practice Fraud: Unnecessary Studies, Wrong Staff and False Test Location

A Kickback in the Purchase Price: Buying a Practice’s Future Referrals

Dermatology Fraud Patterns: Mohs Stages, Performer Identity and Flap Repairs

Physician Lab Referral Bonuses: When Productivity Pays for Lab Referrals

Physician Drug Billing Fraud: Reconcile the Vial, the Dose and the Claim

Radiation-Oncology Billing: Unreviewed Plans, Duplicate Work and Unsupported Supervision

Procedure Upcoding: Billing the Surgery That Was Not Performed

NPI Misuse and Uncredentialed Clinicians: A Valid Number Is Not a Valid Claim

Referral Payments Disguised as Rent, Supervision or Free Staff: What Was the Practice Really Being Paid For?

Incident-To Billing Fraud: Whose Work Is Under the Physician’s NPI?

Free, Imported or Substituted Drugs: What the Practice Actually Billed

Annual Wellness Visit Fraud: A Physician’s Name Cannot Do the Work

Billing Company Fraud: Diagnosis Changes After a Denial

Private Equity and MSO Fraud Liability: Who Controlled the Claims?

Physician-Owned Distributors: When Investment Returns Follow Device Use

Single-Use Vials and Drug Waste: When the Same Quantity Is Billed Twice

Laboratory MSO Distributions: Investment Returns or Payments for Physician Orders?

Physician Billing Fraud: When a Practice Billing Error Becomes a False Claims Act Case

Physician Speaker and Consulting Payments: When the Lecture Is Optional

Paying for Primary-Care Patients: When the Marketing Budget Buys the Patient

False Physician Practice Incentive Claims: The Report Says Yes, the System Says No

Physician Office Laboratory CLIA False Claims: The Tests Stayed Put and the Claims Changed Address

Physician Practice Qui Tam Lawsuit: You Know How the Claim Was Made

Vascular Procedure Fraud: When the Measurement Makes the Procedure Pay

Physician Practice Corporate Integrity Agreements: What the Settlement Still Requires

Keeping an Identified Overpayment: The Practice Found the Problem and Kept the Money

Pain Clinic Injection Fraud: When Prescriptions Drive Unnecessary Visits and Procedures

Physician Copay Waiver Fraud: Waived Copays, False Collections and Referral Inducements

Clinical Judgment, Coding Evidence and Reversed Outcomes: What a Fraud Case Must Prove

You Know Where the Bill Parted From the Care

If you can explain the coding instruction, testing target or referral arrangement behind the claims, speak with our whistleblower experts about building your strongest physician practice fraud case. We build the case strategy with you, bring in physician fraud whistleblower lawyers who understand the payment system, and remain your partners as the case develops.

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