Fraud, Waste and Abuse and the Federal False Claims Act

The False Claims Act [31 U.S.C. § § 3729-3733] is one of the most important Federal laws against fraud, waste and abuse and one every healthcare payer and provider should be familiar with. Violating the provisions of the False Claims Act can lead to significant penalties. Let’s cover some of the details of this important law and how to avoid violating it. 

The False Claims Act 

The False Claims Act, first passed in 1863 and amended in 1986, 2009, and 2010, is the federal government’s primary method of litigating fraud against government agencies or programs. It establishes liability when any person or organization improperly receives payments from or avoids payments to the federal government. 

The qui tam provision of the law has become the predominant method by which the government enforces the False Claims Act. Under this provision, anyone can file suit on behalf of the government against a person or entity believed to be violating the False Claims Act. Frequently, these suits are brought by employees or stakeholders involved in the accused organization, known as whistleblowers. 

The FCA and Healthcare Fraud, Waste & Abuse 

The False Claims Act isn’t limited to healthcare, but healthcare has become the predominant field for FCA actions, especially since 2010 changes to the law as part of the Patient Protection and Affordable Care Act. The expansion of Medicare, Medicaid, and other government medical programs has provided ample opportunities for FCA actions against private organizations working with those programs. 

There are several types of fraud, waste, and abuse billing actions that can fall under the FCA’s purview, including: 

  • Total neglect / no services provided: A claim is made for services that were not furnished to the patient. 
  • Worthless services: When a provider orders services unneeded for a patient and with no good faith explanation for them
  • Inadequate services: The provider denies needed tests or services, or submits a claim without completing a necessary part of the procedure claimed. 
  • Diminished standard of care: Failed to meet the standard of care established for the 
  • type of facility and the services rendered. 
  • Improper coding: The services rendered were improperly coded or without needed documentation. 
  • Misrepresentation of credentials: The provider performed services without the proper credentials, or someone performed a procedure and billed it under a different provider’s credentials. 

The FCA Process 

To initiate a False Claims Act action, an individual must file a lawsuit in a U.S. District Court under seal. The Department of Justice then investigates the suit, a process that can take several months. They can choose to pursue the case in conjunction with the plaintiff; if they choose not to, the plaintiff can still pursue the case on their own. If the suit is successful, the plaintiff receives a share of the settlement levied against the offending organization. 

Whistleblowers are protected under the law from discrimination, harassment, or retaliation (such as suspension or termination of employment) as a result of reporting possible fraud, waste and abuse in good faith. 

FCA Penalties

The False Claims Act includes substantial financial fines and penalties for violations. A person or organization found to be in violation of the FCA can be responsible for up to three times the amount of the false claim, plus an additional penalty of up to $11,000 per claim. This means that the government will recover up to three times the amount of money they lost in fraud, waste and abuse costs, and share that amount with any individuals that filed suit on their behalf under the FCA.

In addition to the more common civil component of the FCA, there is a criminal component as well. Fraud in the healthcare sector uncovered by FCA actions can lead to up to ten years of jail time and $100,000 in fines under 42 U.S. Code § 1320a–7b in addition to damages from the False Claims Act. 

Fraud, Waste, And Abuse For Healthcare Payers

The False Claims Act applies to federal government medical programs, so what prevents providers from submitting false claims to health insurance plans and other private payers? 

A: False Claims Act enforcement helps ensure providers are properly processing claims, and their efforts to avoid violating the FCA may reduce the number of fraud, waste, and abuse charges submitted to private payers. 

B: A robust payment integrity team can help ensure that claims submitted to your organization are correct and free of F, W&A charges. 

For health insurance plans and other private players, robust payment integrity means having Alaffia Health on your side.

Alaffia’s next-generation AI platform can review claims for potential fraud, waste, and abuse charges much faster than any human analyst. Our platform focuses on the high-cost claims that are proven to contain most F, W&A charges, and flags claims with potential overbilling for review by our expert team of medical billing and payment integrity analysts. We retrieve documentation, communicate with the provider, and negotiate the correct billing amount before your organization pays the claim. 

It only takes a few minutes to learn how Alaffia can protect your organization from fraud, waste and abuse charges. Get started today!