Examples Of Fraud

Routine Waiver Of Deductibles, Co-Insurances Or Co-Payments

Routine waiver of deductibles, co-insurances or co-payments is unlawful because it results in false claims, violations of the Anti-Kickback Statute, and excessive utilization of items and services paid for by Medicare. Medical providers may not offer such waivers in any advertisements or solicitations, and may not use a waiver as a routine method of doing business. A coinsurance or deductible waiver may be made only if it is determined in good faith the patient is in financial need, or the waiver is made after reasonable collection efforts have been unsuccessfully made.

False Certification

With every claim submitted to Medicare or Medicaid, the medical provider certifies the services are medically indicated and necessary and were personally furnished by the provider or by another professional acting under the proper level of supervision. Very often, services are provided without the requisite level of supervision in order to avoid costs. This is illegal and a violation of the False Claims Act.


This is an illegal and fraudulent mechanism to obtain payment at a higher level than what should be paid. Upcoding intentionally replaces a lower paying Current Procedural Terminology (CPT) code with a higher paying CPT code to give the perception a more expensive procedure was performed, when in reality a lesser paying procedure was actually performed. An example is intentionally billing a Level 4 physician office visit (CPT code 99204), when the service provided is most accurately described as a Level 3 visit (CPT code 99203).


This is an illegal and fraudulent practice used to obtain higher reimbursement. Unbundling disassembles certain procedures, which are grouped into a single CPT or HCPCS code into separate component codes for the sole purpose of obtaining a higher payment. Medical providers are legally obligated to use the CPT/HCPCS code that most accurately describes the procedure performed. Unbundling breaks a procedure out into its component parts, when Medicare and Medicaid require the procedures to be billed together as a single CPT code at a reduced cost.

Unbundling can be found in the physical therapy setting where the physical therapist bills for manual muscle testing and range of motion testing, instead of a single code, 97001 – Physical Therapy Evaluation, which encompasses all of these codes. Another example can be found in a laboratory setting. Many tests are expressed in panels, which test for multiple substances. CPT/HCPCS codes also exist for individual tests of certain substances. Unbundling occurs when each test is billed under its respective CPT/HCPCS code, rather than under a single CPT/HCPCS code which captures all of the individual substances tested for.

Fraud In Home Health Agency Services

A Home Health Agency commits fraud by continuing to provide services after the patient no longer qualifies as being homebound or by continuing to provide services in the absence of medical necessity for those services. Reimbursement to a Home Health Agency is determined in part by the complexity of care needed for its patients. Greater complexity equals greater reimbursement. The complexity of care is determined by the agency's completion of the OASIS form (Outcome and Assessment Information Set). Fraud results when the OASIS form is manipulated to reflect a more serious medical condition than what actually exists.

Medicare's home health benefit provides a 60-day episode of home care. Medicare pays the Home Health Agency a predetermined amount for the patient's care. The 60-day episode of care payment rate includes costs for the six home health disciplines, as well as the costs for routine and non-routine medical supplies. The six home health disciplines included in the 60-day episode rate are:

  1. Skilled nursing services
  2. Home health aide services
  3. Physical therapy
  4. Speech-language pathology services
  5. Occupational therapy services
  6. Medical social services

To qualify for the Medicare home health benefit, a Medicare beneficiary must be confined to the home (homebound), under the care of a physician, and must receive services under a plan of care established and periodically reviewed by a physician; be in need of skilled nursing care on an intermittent basis or physical therapy, occupational therapy, or speech-language pathology.

Medicare will cover home health physical therapy, speech therapy, or occupational therapy services if the patient's condition is expected to improve in a reasonable and generally predictable period of time, or if a skilled therapist is needed to safely and effectively create a maintenance program for the patient's condition, or if a skilled therapist is needed to safely and effectively perform maintenance therapy for the patient's condition. The patient must be homebound.

The Home Health Agency assigns its Medicare patient to a Home Health Resource Groups (HHRG). This assignment is done on the basis of the patient's diagnosis and functional limitations. These groups range from uncomplicated patient conditions to severely complicated medical conditions. Medicare's episodic rate payment for home health services is derived from the HHRG values. The OASIS form is used to develop a score that the Home Health Agency uses to assign the patient to an HHRG.

Overbilling Of Time-Based Codes For Outpatient Chiropractic, Physical Therapy, And Occupational Therapy

Many of the CPT codes for chiropractic, physical therapy, and occupational therapy are time-based codes measured in 15-minute increments. In addition, these CPT codes are defined in terms of one-on-one contact between the provider and the patient. These codes are commonly 97110, 97112, 97124, 97140, 97530. It is extremely important to note that these codes are all defined as requiring one-on-one contact by the provider. For these CPT codes, Medicare has an 8-minute rule. The 8-minute rule sets forth the minimum time requirements necessary to bill an incremental unit of these codes. For example, a provider cannot bill Medicare for two units of these timed codes if he or she only spends 16 minutes with a patient. A provider must cumulatively spend at least 23 minutes performing the procedures to bill for two units. To bill for three units, the provider must cumulatively spend at least 38 minutes performing these procedures. It is fraudulent to bill two units of these timed CPT codes if less than 23 minutes are spent performing those services. Correspondingly, it is fraudulent to bill three units of these timed codes if less than 38 minutes are spent performing those services.

Example #1: A provider spends 10 minutes performing CPT code 97110, and 9 minutes performing CPT code 97124; the total treatment time is 19 minutes. The provider may only bill 1 unit of 97110 because the 23-minute threshold has not been met. 97110 is billed as this code reflects the majority of time spent performing the service. It is fraudulent to bill two units in this example.

Example #2. A provider spends 11 minutes performing CPT code 97110, 13 minutes performing CPT code 97124, and 6 minutes performing 97140. The total treatment time is 30 minutes. The provider may bill one unit of 97110 and one unit of 97124. The provider may not bill three units because the 38-minute threshold has not been met. It is fraudulent to bill more than two units in this example. Each bill submitted fraudulently could result in a penalty of up to $10,000.

Overbilling Of Time-Based Codes For Speech Language Pathology

There are timed CPT codes for speech therapists (referred to as speech language pathologists or SLPs). It is fraudulent to bill for the codes without satisfying the time requirements. The common timed codes for speech therapists are:

  • 92605 – Evaluation for nonspeech generating device (one unit equals 1 hour).
    • 92618 is billed for each additional 30 minutes beyond the first hour.
  • 92607 – Evaluation for speech-generating device (one unit equals 1 hour).
    • 92608 is billed for each additional 30 minutes beyond the first hour.
  • 92626 – Evaluation of auditory rehabilitation status (one unit equals 1 hour).
    • 92627 is billed for each additional 30 minutes beyond the first hour.
  • 96105- Assessment of aphasia (one unit equals 1 hour).
  • 96125 – Standardized cognitive performance testing (one unit equals 1 hour).
  • 97532 – Cognitive skills development (one unit equals 15 minutes).
  • 97533 – Sensory integration (one unit equals 15 minutes).

Overbilling Of Time-Based Codes For Psychotherapy

There are timed CPT codes for psychotherapy. It is fraudulent to bill for the codes without satisfying the time requirements. The common timed codes for psychotherapists are:

  • 90832 psychotherapy with patient and/or family member (one unit equals 30 minutes). The actual time requirement to bill Medicare for 90832 is between 16 and 37 minutes. Medicare cannot be billed for anything less than 16 minutes.
  • 90834 psychotherapy with patient and/or family member (one unit equals 45 minutes). The actual time requirement to bill Medicare for 90834 is between 38 and 52 minutes.
  • 90837 psychotherapy with patient and/or family member (one unit equals 60 minutes). The actual time requirement to bill Medicare for 90837 is 53 or more minutes.

For the codes above, the psychotherapy times must be provided face to face with the patient and/or family member. The patient MUST be present for some or all of the service.

Overbilling For CPT Codes Requiring One-On-One Contact Between The Patient And The Provider

One-on-one direct provider contact is required for the CPT codes that describe therapeutic procedures – 97110 (therapeutic exercise), 97112 (neuromuscular reeducation), 97124 (massage), 97140 (manual therapy), 97530 (therapeutic activity). Medicare's rules require a literal interpretation of one-on-one care. By definition, a provider can only bill Medicare for the time that was actually spent performing one-on-one care. If the provider performs any of these therapeutic procedures on two patients over the course of 1 hour, the maximum number of units the provider can cumulatively bill Medicare between the two patients is four units. In this scenario, it would be fraudulent to bill any more than two units to each patient.

If the provider divides his or her time equally between two patients over the course of an hour, the provider cannot bill Medicare any more than two units per patient. Because the one-on-one contact requirement is a literal one, it would be fraudulent in this scenario to bill any number of units that add up to more than 60 minutes in the course of an hour. However, this is a common, fraudulent practice.

Overbilling For Outpatient Physical Therapy And Occupational Therapy In The Patient's Home

Medicare's Part B physical therapy benefit allows patients to receive physical therapy in their own home. (Note: This is a different benefit than the service provided by a home health agency under Medicare Part A.) The physical therapist may not bill Medicare for travel time and may not include travel as any part of a CPT code. The therapist's billable time does not start when the therapist parks in the driveway of the patient's residence. The therapist's billable time does not start when the therapist walks into the home. The therapist's billable time starts when the medically prescribed services actually begin. The therapist may not include any time spent documenting the services as billable time to Medicare. The time requirements follow Medicare's 8-minute rule. For example, in order for the therapist to bill Medicare for three units, the therapist must spend at least 38 minutes in the home engaged in patient care.

Fraudulent Use Of The "KX" Modifier In Outpatient Physical Therapy And Occupational Therapy

Medicare has an annual calendar dollar limitation for physical therapy and occupational therapy benefits. If additional medically necessary therapy is required beyond the annual dollar value threshold, Medicare allows the therapist to utilize an exceptions process to provide additional services beyond the threshold. This is accomplished by adding a code known as a KX modifier to the patient's Medicare claims. By using the KX modifier, the therapist is attesting the services are reasonable and necessary and there is documentation of medical necessity in the beneficiary's medical record. It is illegal and fraudulent when the billing department adds the modifier on its own initiative, to ensure payment for those services. It is illegal and fraudulent to add this modifier without establishing medical necessity for those services. Some providers automatically, as a matter of routine practice, submit the KX modifier to ensure payment for all services. This is illegal and fraudulent.

By adding the KX modifier, the therapist is attesting:

  • The service was medically necessary and it is justified by the medical documentation.
  • The therapy financial limitation cap was met.
  • The patient's condition requires further treatment.

Impossible Day Scenarios

An Impossible Day simply means the total time billed to Medicare by the medical provider exceeds the amount of time that could actually be spent in the time period. Many of the CPT codes for medical providers are time-based codes. Most time-based codes are measured in 15-minute increments; others may be measured in 30- or 60-minute blocks of time.

Example #1 – The time represented by the number of time-based units billed in a day per medical provider exceeds the number of hours worked in a day by that medical provider:

The medical provider works in the office for 8 hours. An 8-hour day is equal to 480 minutes in that day. For that day, the medical provider bills a total of 50 units of time-based CPT codes. Each timed-based code billed is defined in 15-minute increments; 15 minutes multiplied by 50 CPT code units equals 750 minutes. It is impossible and fraudulent to bill 750 minutes of service within an 8-hour period.

Example #2 – The number of patients treated and time billed for each patient make it impossible for the services to have been rendered in a one-on-one fashion.

The medical provider treats 20 patients over the course of an 8-hour day. Medicare is billed two units of a timed code for each patient. A total of 40 units are billed, totaling 600 minutes. The scenario is illegal and impossible in two ways. It is impossible to bill 600 minutes of the timed codes in that day when the provider has only worked 480 minutes in that day. Secondly, it is impossible because each patient could not have received between 23 minutes and 30 minutes of one-on-one service.

Billing Under The Name Of The Wrong Provider

The credentialing process for Medicare is a time-consuming one. Medicare will not issue payment for service performed by a provider until the provider is enrolled with the Medicare program and assigned to the group practice. This can create a cash flow issue, as the practice does not receive payment until the provider's enrollment is complete. It is fraudulent to allow an unenrolled provider to perform the service and bill for that service under an enrolled provider's name.

Nurse Practitioners

Many enroll in the Medicare program and bill under their own provider number. However, Medicare's reimbursement for services billed under the nurse practitioner's provider is 85 percent of the Medicare Physician Fee Schedule (MPFS). Services provided by a nurse practitioner under a physician's provider number is reimbursed at 100 percent of the MPFS. Billing under the physician's provider number is known as "incident to billing. In order to obtain this higher reimbursement for nurse practitioner's services, Medicare requires the physician performs an initial visit with the patient in order to establish the physician-patient relationship. Thereafter, the physician must actively participate in the management of the patient's course of treatment. Billing under the physician's provider number to obtain a higher reimbursement rate for a nurse practitioner's service without having the physician perform the first visit or participating in the management of the patient's course of treatment is fraudulent and illegal.

Billing Medicare For Free Items

If the medical practice receives items for free, it cannot bill Medicare/Medicaid for those items. If the medical provider orders nine items of a particular supply, and receives the 10th item free, it cannot bill Medicare for that 10th item. In these situations, the fraud committed is submitting a claim for payment to Medicare/Medicaid for the item because there was no expense incurred by the medical provider.

Failing To Return Overpayments To Medicare/Medicaid

The False Claims Act makes it illegal for a medical provider to keep money that the medical provider received as a result of an overpayment from Medicare/Medicaid. Medical providers are required to report overpayments to Medicare/Medicaid and return any overpayment within 60 days of an overpayment discovery. The term overpayment is very broad. Overpayments include more than situations where Medicare/Medicaid overpays the medical provider on various CPT codes.

Medicare reimburses some medical providers for their expenses incurred in delivering services to Medicare beneficiaries. An overpayment results when a provider bills Medicare and subsequently receives payments for costs in which the medical provider did not incur. For reference, The Medicare Program Integrity Manual specifies that billing Medicare for costs not incurred is an example of Medicare fraud. Courts have recognized that Medicare does not pay providers for free goods.

Fraudulent Supervision

Medicare has strict supervision requirements for certain professionals who provide services under the direction of a physician. For diagnostic X-ray and other diagnostic tests, there are three levels of supervision: personal supervision, direct supervision, and general supervision. Services that are not furnished with the required level of supervision are not reasonable and necessary, are not covered by the Medicare program and are, therefore, not eligible for reimbursement.

  • General Supervision means the procedure in question must be "furnished under the physician's overall direction and control, but the physician's presence is not required during the performance of the procedure."

  • Direct Supervision in the office setting means "the physician must be present in the office suite and immediately available to furnish assistance and direction throughout the performance of the procedure." It does not mean the physician must be present in the room when the procedure is performed.

  • Personal Supervision means a physician must be in attendance in the room during the performance of the procedure.

If you are unsure about the appropriate level of physician supervision required for procedures, Medicare provides an online tool. You can find this information in the Relative Value File published in the Medicare Physician Fee Schedule (MPFS) https://www.cms.gov/PhysicianFeeSched/PFSRVF/list.asp. In the file, the first column contains the HCPCS codes. Appearing several columns to the right of this is a column labeled physician supervision of diagnostic procedures. This column provides numerical designations that correspond to the supervision requirement. A designation of 1 in that column means that General Supervision is required. A 2 means that Direct Supervision is required. A 3 means that Personal Supervision is required. A 9 means that supervision is inapplicable.

Physician Supervision Of Professionals

Physician Assistant – Services of a physician assistant require the general supervision of a physician. Physician assistants can only be paid for professional services that have been personally performed by the physician assistant. Supervision of other nonphysician staff by a physician assistant does not constitute personal performance of a professional service by the physician assistant.

Nurse Practitioner – Nurse practitioners must work in collaboration with a physician. The supervision level is determined by state law. Nurse practitioners can only be paid for professional services the nurse practitioner personally performs. Supervision of other non-physician staff by a nurse practitioner does not constitute personal performance of a professional service by a nurse practitioner.

Physical Therapists Working in a Physician's Office – If the physical therapist's services are billed out under the physician's Medicare provider number, the physical therapist's services are considered to be incident to the physician's services. In this situation, Direct Supervision is required. If the physical therapist's services are billed under the physical therapist's own Medicare provider number, physician supervision is not required.

Physical Therapist Assistants – In an outpatient setting, Medicare requires direct supervision of the physical therapist assistant. A physical therapist assistant cannot provide services without a physical therapist on-site. TRICARE, the federal civilian military insurance, will not reimburse for any services provided by physical therapist assistants.

Unlicensed Personnel – For any HCPCS/CPT code requiring the skill of a licensed professional, an unlicensed technician cannot provide the service. Physical therapists cannot bill Medicare for any skilled procedures performed by a student or by any technician. In addition, Medicare cannot be billed for services performed by Certified Athletic Trainers (ATC).

Common Positions That May Come Across Medicare Fraud

There is no hard and fast rule as to who is in the best position to identify health care fraud. Some common examples include job titles mentioned herein, as well as pharmaceutical sales representatives, compliance officers, chief financial officers, chief executive officers, chief medical officers, chief information officers, bookkeepers, medical billing specialists, accountants, employees, independent contractors, and even outside vendors to government contractors.

Fraud Under The Patient Protection And The Affordable Care Act (ACA)

With the passage of the newly implemented Patient Protection and Affordable Care Act, sometimes referred to as Obamacare, there are a number of new mechanisms that provide incentives and remedies to those in a position to recognize and report fraud against the government. Such health care fraud often comes in the form of Medicare reimbursements or Medicaid reimbursements that are intentionally off in some way, allowing the entity seeking reimbursement to recover a greater amount than that to which it is entitled under the applicable laws.

The ACA protects any individual who receives a subsidy for health care insurance or takes any action to assist with enforcement of the ACA. For example, under the ACA, covered entities (often employers who employ more than 50 employees) are now required to file an annual certification to the Internal Revenue Service. If that certification is false in any way or there is retribution to an individual who reports the falsity of the certification, there may be an actionable claim.

How would an employee see this in his/her own workplace? A typical scenario may begin with an employer offering its employees a very low cost, low value health insurance plan that does not even meet the standards of the lowest, acceptable minimum coverage, which is known as a Minimum Essential Coverage plan (MEC). MECs are permissible, as distinct from this example. In the event an employer offers a plan that fails to provide even this minimal level of coverage such as an MEC, essentially forcing an employee to go to the independent health care exchanges or risk a penalty himself or herself, an employee may qualify for a subsidy. Such qualification and payment of a subsidy to the employee would have the consequential effect of exposing the employer to a penalty. In this scenario and generally, the employer would likely be assessed a tax penalty if any of its full-time employees receive a premium tax credit through an independent exchange. Due to the nature of this tax credit-tax penalty relationship, there is a lot of potential for an employer to retaliate against an employee. Forms of retaliation include any adverse change in the terms and conditions of one's employment, which take the form of discipline, termination, alienation, negative performance reviews and unusual scrutiny when not otherwise warranted. Retaliation based on protected activity is illegal, i.e., the law protects a person who engages in lawful behavior and is retaliated against as a result. The Law Firm of Jacobson & Rooks, LLC, also has extensive experience representing whistleblowers who have been retaliated against due to blowing the whistle".

Other Whistleblower Work We Do: Sarbanes Oxley Act (SOX) And The Dodd-Frank Wall Street Reform And Consumer Protection Act Of 2010 (Dodd-Frank)

SOX and Dodd-Frank address fraud relating to finance, shareholders and compliance issues in the banking and securities industry. Examples include improper reporting to the public in the form of securities law filings, e.g., annual and quarterly reports, investor letters and prospectuses, misrepresenting a successful new asset, proposed merger with or acquisition of another company, or other profitable relationship when it is not the actual case.

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