LESSON 1: WHAT IS FWA?

Lesson 1: Introduction and Learning Objectives This lesson describes Fraud, Waste, and Abuse (FWA) and the laws that prohibit it. Upon completing the lesson, you should be able to correctly:

•Recognize FWA in the Medicare Program;

•Identify the major laws and regulations pertaining to FWA; and

•Recognize potential consequences and penalties associated with violations.

 

Fraud

Fraud is knowingly and willfully executing, or attempting to execute, a scheme or artifice to defraud any health care benefit program, or to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program.

The Health Care Fraud Statute makes it a criminal offense to knowingly and willfully execute a scheme to defraud a health care benefit program. Health care fraud is punishable by imprisonment for up to 10 years. It is also subject to criminal fines of up to $250,000.

In other words, fraud is intentionally submitting false information to the Government or a Government contractor to get money or a benefit.

 

Waste and Abuse

Waste includes overusing services, or other practices that, directly or indirectly, result in unnecessary costs to the Medicare Program. Waste is generally not considered to be caused by criminally negligent actions but rather by the misuse of resources.

Abuse includes actions that may, directly or indirectly, result in unnecessary costs to the Medicare Program. Abuse involves payment for items or services when there is not legal entitlement to that payment and the provider has not knowingly and/or intentionally misrepresented facts to obtain payment.

 

 

Examples of FWA

 

Examples of actions that may constitute Medicare fraud include:

• Knowingly billing for services not furnished or supplies not provided, including billing Medicare for appointments that the patient failed to keep;

• Billing for non-existent prescriptions; and

• Knowingly altering claim forms, medical records, or receipts to receive a higher payment.

 

Examples of actions that may constitute Medicare waste include:

• Conducting excessive office visits or writing excessive prescriptions;

• Prescribing more medications than necessary for the treatment of a specific condition; and

• Ordering excessive laboratory tests.

 

Examples of actions that may constitute Medicare abuse include:

• Billing for unnecessary medical services;

• Billing for brand name drugs when generics are dispensed;

• Charging excessively for services or supplies; and

• Misusing codes on a claim, such as up coding or unbundling codes

 

 

 

Differences Among Fraud, Waste, and Abuse

There are differences among fraud, waste, and abuse. One of the primary differences is intent and knowledge. Fraud requires intent to obtain payment and the knowledge that the actions are wrong. Waste and abuse may involve obtaining an improper payment or creating an unnecessary cost to the Medicare Program, but does not require the same intent and knowledge.

 

Understanding FWA

To detect FWA, you need to know the law.

The following screens provide high-level information about the following laws:

• Civil False Claims Act, Health Care Fraud Statute, and Criminal Fraud;

• Anti-Kickback Statute;

• Stark Statute (Physician Self-Referral Law);

• Exclusion; and

• Health Insurance Portability and Accountability Act (HIPAA).

 

For details about the specific laws, such as safe harbor provisions, consult the applicable statute and regulations.

 

Civil False Claims Act (FCA)

The civil provisions of the FCA make a person liable to pay damages to the Government if he or she knowingly:

•Conspires to violate the FCA;

•Carries out other acts to obtain property from the Government by misrepresentation;

•Knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay the Government;

•Makes or uses a false record or statement supporting a false claim; or

•Presents a false claim for payment or approval.

 

Damages and Penalties

Any person who knowingly submits false claims to the Government is liable for three times the Government’s damages caused by the violator plus a penalty. The Civil Monetary Penalty (CMP) may range from $5,500 to $11,000 for each false claim.

For more information, refer to 31 United States Code (U.S.C.) Sections 3729-3733 on the Internet.

 

EXAMPLE

A Medicare Part C plan in Florida:

•Hired an outside company to review medical records to find additional diagnosis codes that could be submitted to increase risk capitation payments from the Centers for Medicare &Medicaid Services (CMS);

•Was informed by the outside company that certain diagnosis codes previously submitted to Medicare were undocumented or unsupported;

•Failed to report the unsupported diagnosis codes to Medicare; and

•Agreed to pay $22.6 million to settle FCA allegations.

 

Civil FCA (continued)

Whistleblowers

A whistleblower is a person who exposes information or activity that is deemed illegal, dishonest, or violates professional or clinical standards.

Protected: Persons who report false claims or bring legal actions to recover money paid on false claims are protected from retaliation.

Rewarded: Persons who bring a successful whistleblower lawsuit receive at least 15 percent but not more than 30 percent of the money collected.

 

Health Care Fraud Statute

The Health Care Fraud Statute states that “Whoever knowingly and willfully executes, or attempts to execute, a scheme to … defraud any health care benefit program … shall be fined … or imprisoned not more than 10 years, or both.”

Conviction under the statute does not require proof that the violator had knowledge of the law or specific intent to violate the law. For more information, refer to 18 U.S.C. Section 1346 on the Internet.

 

EXAMPLE

A Pennsylvania pharmacist:

• Submitted claims to a Medicare Part D plan for non-existent prescriptions and for drugs not dispensed;

• Pleaded guilty to health care fraud; and

• Received a 15-month prison sentence and was ordered to pay more than $166,000 in restitution to the plan.

 

The owners of two Florida Durable Medical Equipment (DME) companies:

• Submitted false claims of approximately $4 million to Medicare for products that were not authorized and not provided;

• Were convicted of making false claims, conspiracy, health care fraud, and wire fraud;

• Were sentenced to 54 months in prison; and

• Were ordered to pay more than $1.9 million in restitution.

 

Criminal Fraud

Persons who knowingly make a false claim may be subject to:

• Criminal fines up to $250,000;

• Imprisonment for up to 20 years; or

• Both.

 

Anti-Kickback Statute

The Anti-Kickback Statute prohibits knowingly and willfully soliciting, receiving, offering, or paying remuneration (including any kickback, bribe, or rebate) for referrals for services that are paid, in whole or in part, under a Federal health care program (including the Medicare Program).

For more information, refer to 42 U.S.C. Section 1320A-7b(b) on the Internet.

 

Damages and Penalties

Violations are punishable by:

• A fine of up to $25,000;

• Imprisonment for up to 5 years; or

• Both.

 

For more information, refer to the Social Security Act (the Act), Section 1128B(b) on the Internet.

 

EXAMPLE

A radiologist who owned and served as medical director of a diagnostic testing center in New Jersey:

• Obtained nearly $2 million in payments from Medicare and Medicaid for MRIs, CAT scans, ultrasounds, and other resulting tests;

• Paid doctors for referring patients;

• Pleaded guilty to violating the Anti-Kickback Statute; and

• Was sentenced to 46 months in prison.

 

Stark Statute (Physician Self-Referral Law)

The Stark Statute prohibits a physician from making referrals for certain designated health services to an entity when the physician (or a member of his or her family) has:

• An ownership/investment interest; or

• A compensation arrangement (exceptions apply).

For more information, refer to 42 U.S.C. Section 1395nn on the Internet.

 

Damages and Penalties

Medicare claims tainted by an arrangement that does not comply with the Stark Statute are not payable. A penalty of up to $15,000 may be imposed for each service provided. There may also be up to a $100,000 fine for entering into an unlawful arrangement or scheme.

For more information, visit https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral on the CMS website and refer to the Act, Section 1877 on the Internet.

 

EXAMPLE

A physician paid the Government $203,000 to settle allegations that he violated the physician self-referral prohibition in the Stark Statute for routinely referring Medicare patients to an oxygen supply company he owned.

http://www.gpo.gov/fdsys/pkg/USCODE-2013-title42/pdf/USCODE-2013-title42-chap7-subchapXVIII-partE-sec1395nn.pdf

https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral

https://www.ssa.gov/OP_Home/ssact/title18/1877.htm

 

 

Civil Monetary Penalties Law

The Office of Inspector General (OIG) may impose Civil penalties for a number of reasons, including:

• Arranging for services or items from an excluded individual or entity;

• Providing services or items while excluded;

• Failing to grant OIG timely access to records;

• Knowing of an overpayment and failing to report and return it;

• Making false claims; or

• Paying to influence referrals.

 

Damages and Penalties

The penalties range from $10,000 to $50,000 depending on the specific violation. Violators are also subject to three times the amount:

• Claimed for each service or item; or

• Of remuneration offered, paid, solicited, or received.

 

For more information, refer to the Act, Section 1128A(a) on the Internet.

 

EXAMPLE

 

A California pharmacy and its owner agreed to pay over $1.3 million to settle allegations they submitted claims to Medicare Part D for brand name prescription drugs that the pharmacy could not have dispensed based on inventory records.

 

Exclusion

No Federal health care program payment may be made for any item or service furnished, ordered, or prescribed by an individual or entity excluded by the OIG. The OIG has authority to exclude individuals and entities from federally funded health care programs and maintains the List of Excluded Individuals and Entities (LEIE). You can access the LEIE at https://exclusions.oig.hhs.gov on the Internet.

The United States General Services Administration (GSA) administers the Excluded Parties List System (EPLS), which contains debarment actions taken by various Federal agencies, including the OIG. You may access the EPLS at https://www.sam.gov on the Internet.

If looking for excluded individuals or entities, make sure to check both the LEIE and the EPLS since the lists are not the same. For more information, refer to 42 U.S.C. Section 1320a-7 and 42 Code of Federal Regulations Section 1001.1901 on the Internet.

 

EXAMPLE

A pharmaceutical company pleaded guilty to two felony counts of criminal fraud related to failure to file required reports with the Food and Drug Administration concerning oversized morphine sulfate tablets. The executive of the pharmaceutical firm was excluded based on the company’s guilty plea. At the time the executive was excluded, he had not been convicted himself, but there was evidence he was involved in misconduct leading to the company’s conviction.

 

Health Insurance Portability and Accountability Act (HIPAA)

HIPAA created greater access to health care insurance, protection of privacy of health care data, and promoted standardization and efficiency in the health care industry.

HIPAA safeguards help prevent unauthorized access to protected health care information. As an individual with access to protected health care information, you must comply with HIPAA.

 

Damages and Penalties

Violations may result in Civil Monetary Penalties. In some cases, criminal penalties may apply.

For more information, visit http://www.hhs.gov/ocr/privacy on the Internet.

 

 

EXAMPLE

A former hospital employee pleaded guilty to criminal HIPAA charges after obtaining protected health information with the intent to use it for personal gain. He was sentenced to 12 months and 1 day in prison.

Lesson 1 Summary

There are differences among FWA. One of the primary differences is intent and knowledge. Fraud requires that the person have intent to obtain payment and the knowledge that their actions are wrong. Waste and abuse may involve obtaining an improper payment but do not require the same intent and knowledge.

Laws and regulations exist that prohibit FWA. Penalties for violating these laws may include:

• Civil Monetary Penalties;

• Civil prosecution;

• Criminal conviction/fines;

• Exclusion from participation in all Federal health care programs;

• Imprisonment; or

• Loss of provider license.

You completed Lesson 1: What Is FWA?

Now that you have learned about FWA and the laws and regulations prohibiting it, let’s look closer at your role in the fight against FWA. 

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Payer Compliance Reporting Resources

Payer/Organization	Hotline	Online Reporting	Address
Your Direct PO/ PHO	PO Phone #		Compliance Official For your PO/ PHO
Medicare – HHS Office of Inspector General	800-447-8477   TTY: 800-337-4950	https://oig.hhs.gov/fraud/report-fraud/index.asp	U.S. Department of Health and Human Services Office of Inspector General ATTN: OIG HOTLINE OPERATIONS P.O. Box 23489 Washington, DC 20026
Medicare - Railroad	888-355-9165 Option 5
Medicaid – Michigan Department of Attorney General	800-242-2873 Medicaid Members: 800-222-8558	Email: MDHHS-OIG@michigan.gov   Online form: https://secure.ag.state.mi.us/complaints/medicaid.aspx	Department of Attorney General Health Care Fraud Division P.O. Box 30218 Lansing, MI 48909
Aetna	800-338-6361	Email: AetnaSIU@aetna.com
Blue Cross/Blue Shield PPO (BCBSM) Blue Care Network (BCN) Blue Cross Complete (BCC)	800-482-3787 Medicare – 888-650-8136	https://www.bcbsm.com/health-care-fraud/report-fraud/report-fraud-form.html	Blue Cross Blue Shield of Michigan Corporate & Financial Investigation Department MC 1825 600 E. Lafayette Detroit, MI 48226
CIGNA	800-667-7145	Email: specialinvestigations@cigna.com	Cigna Special Investigations 900 Cottage Grove Road W3SIU Hartford, CT 06152
CuraNet	877-746-2501
Health Alliance Plan (HAP) Alliance Health & Life Insurance Company	877-746-2501		HAP Compliance Department 2850 West Grand Boulevard Detroit, MI 48202
HAP Midwest Health Plan	877-746-2501		HAP Midwest Health Plan Midwest Information Privacy & Security Office 2850 W. Grand Blvd Detroit, MI 48202
Meridian Health Plan	844-667-3560	Email: FWA.mi@mhplan.com	Meridian Health Fraud, Waste and Abuse Department 1 Campus Martius, Suite 700 Detroit, MI 48226
Molina Health Care	866-606-3889	https://MolinaHealthcare.AlertLine.co​m
Priority Health – HMO & PPO	800-560-7013		Priority Health Compliance Officer 1231 East Beltline, NE, MS 3230 Grand Rapids, MI 49525