Of the $2.8 billion recovered by the Department of Justice in 2018, $2.5 billion (or 89.3%) involved the health care industry, including drug and medical device manufacturers, managed care providers, hospitals, pharmacies, hospice organizations, laboratories, and physicians. Types of healthcare fraud are many and varied and can include such actions as charging for medically unnecessary services (which can sometimes be harmful to the patient) and paying kickbacks to doctors and other healthcare professionals — even to patients in some cases.
Upcoding has become a common type of fraud. It occurs when a medical professional provides one type of service but charges for a more expensive service, such as when a patient is treated for a sprained ankle but charged for a broken ankle.
Much of healthcare fraud is aimed at federally funded programs like Medicare, Medicaid, and TRICARE (healthcare for military families). Fraud against these programs has become so prevalent that one federal prosecutor who led the Medicare Fraud Task Force likened fraud investigations to the game of Whac-a-Mole, where as soon as you knock one down, another one immediately pops up.
Medicare/Medicaid. A cardiologist became the highest paid Medicare cardiologist in the U.S. by allegedly billing Medicare, Medicaid, and TRICARE for medically unnecessary procedures and paying kickbacks to patients by waiving Medicare copayments without regard to financial hardship. In 2016, he was required to pay $2 million for defrauding taxpayers and for putting patients at risk.
Pharmaceutical and medical device manufacturers. In one of the largest healthcare fraud settlements in U.S. history, Johnson & Johnson (J&J) and its subsidiaries were ordered to pay more than $2.2 billion in 2013 to resolve criminal and civil liability arising from allegations relating to the prescription drugs Risperdal, Invega and Natrecor. The DOJ alleged that J&J promoted the drugs when they were not approved as safe and effective by the FDA, and even paid kickbacks to doctors and to the nation's largest long-term care pharmacy provider.
Healthcare providers. A cardiac nurse and a healthcare reimbursement consultant filed a qui tam claim against hundreds of hospitals that were allegedly implanting cardiac devices in Medicare patients. These actions were contrary to criteria established by the Centers for Medicare and Medicaid Services in consultation with cardiologists, professional cardiology societies, cardiac device manufacturers, and patient advocates. In 2015, the DOJ reached settlements involving 457 hospitals in 43 states for more than $250 million.
Hospitals. Tenet Healthcare, a major U.S. hospital chain, paid more than $240 million in 2016 to settle allegations that four of its hospitals engaged in a scheme to cheat the government by paying kickbacks in return for patient referrals.
Lab services. In 2015, a former owner and CEO of a drug testing laboratory was ordered to pay more than $9 million for allegedly trading physicians free computer software for patient referrals.
Physicians. In 2017, the DOJ ordered two physicians' groups, EmCare and Physician's Alliance Ltd. (PAL), to pay over $33 million for allegedly accepting kickbacks in exchange for patient referrals to hospitals owned by the now-defunct Health Management Associates (HMA). Many of the patients were Medicare recipients. On average, Medicare pays at least three times as much for an inpatient admission as it does for outpatient care. As part of the alleged scheme, HMA paid bonuses to EmCare ED physicians and tied EmCare's retention of existing contracts and receipt of new contracts to increased admissions of patients who came to the emergency department. The EmCare settlement resolves a qui tam lawsuit filed by two North Carolina doctors whose medical practice, MEMA, previously supplied ED physicians to two HMA hospitals in North Carolina.
Home healthcare services. In 2016 the former owner, operator, and sole shareholder of Recovery Home Care, Inc. (RHC) and Recovery Home Care Services, Inc. was ordered to pay $1.75 million for alleged fraudulent practices. The government claimed that the owner schemed to pay dozens of physicians thousands of dollars a month to serve as sham medical directors who supposedly conducted quality reviews of RHC patient charts. The government alleged that while little or no work was performed, these physicians received thousands of dollars in kickbacks.
Nursing home and hospice. The nation's largest contract therapy provider, RehabCare Group, RehabCare Group East, and their parent, Kindred Healthcare, paid $125 million in 2016 to resolve claims that it induced nursing homes to submit false claims to Medicare for rehab services that were not reasonable, necessary, skilled, or that were not provided at all.