Do you know the laws?

Are you familiar with the law on health care fraud? It affects all health care providers, including hospital-affiliated agencies and other home health care providers. The following glossary on criminal and civil laws was excerpted from the Web page of health care attorneyJohn C. Gilliland II f Crestview Hills, KY. For more information on compliance and fraud and abuse issues, see

Health Care Fraud. he Health Insurance Portability and Accountability Act of 1996 adopted a new criminal law which assesses criminal penalties for "knowingly or willingly executing, or attempting to execute, a scheme to defraud a health care program. This law extends to all payer sources and provides for fines of the greater of $250,000 for individuals/ $500,000 for organizations or an amount of two times the gain or loss accrued by such acts as well as up to 10 years in prison.

• False Claims Act.The Medicare/Medicaid False Claims statute prohibits any person or entity from "knowingly or willfully making or causing to be made any false statement or representation of a material fact in any application for benefit or payment under Medicare or Medicaid." The law is applicable to both fraudulent acts involving intentional misrepresentations that lead to payment such as claims for no-show visits, ineligible, "non-homebound" patients, or for visits not properly authorized or certified, and to abusive acts such as claims for services not "medically necessary," improper cost-reporting entries for travel or gifts, or other acts that result in invalid or unnecessary costs to the programs. The Medicare/Medicaid False Claims provision includes a criminal penalty of up to five years imprisonment and the greater of $250,000 for individuals/$500,000 for organizations or two times the amount of gain or loss accrued.

Another false claims act with criminal penalties exists that prohibits any person or entity from presenting "to any person in the civil, military, or naval service of the Unites States or to any department or Agency thereof, any claim upon or against the United States or department or agency thereof, knowing such claim to be false, fictitious, or fraudulent." A false claim may also arise as a result of a false statement or representation, or a deceitful withholding of information, which is used to induce payment of a claim by an agency of the federal government.

Inspector General June Gibbs Brown stated that the Operation Restore Trust Program expects a $17 or more return for every dollar it spends on investigation and prosecution of Medicare and Medicaid fraud and abuse. The False Claims Act includes monetary fines of up to three times the amount of each claim as well as criminal penalty of five years imprisonment for each claim. This statute also contains a whistleblower provision called a qui tamaction which permits disgruntled employees, patients, or even competitors to raise allegations of false claims and bring suit as a "private attorney general." If successful, the whistleblower can receive up to 30% of the proceeds of the penalties imposed on the provider.

• Medicare/Medicaid Anti-Kickback & Self-Referral Restrictions. he anti-kickback/self-referral prohibition is the more commonly known fraud and abuse law which provides criminal penalties for individuals and entities that knowingly and willfully offer, pay, solicit, or receive any remuneration (including any kickback, bribe, or rebate) if one purpose of the payment, etc., is to induce business reimbursed under the Medicare or Medicaid programs. Examples of problem arrangements or payments include discounts, price reductions, office or property leases in which payments are less than fair market value, and vendor arrangements which offer goods or services that are disguised kickbacks. The Office of Inspector General has expressly identified these more subtle violations as situations in which agencies provide free home care coordinators or discharge planners to hospitals. The penalty for violation of this law is imprisonment up to five years and a fine up to $25,000.

There are some exceptions or "safe harbors" for specific arrangements such as space rental agreements and personal services contracts. However, to fall within a safe harbor the arrangement must be constructed to fully comply with the rules of the safe harbor as stated in regulations. The safe harbors provided in the regulations are: (1) Investment Interests; (2) Space Rentals; (3) Equipment Rentals; (4) Personal Services and Management Contracts; (5) Sales of Practice; (6) Referral Services; (7) Warranties; (8) Discounts; (9) Employees; (10) Group Purchasing Organizations; (11) Certain Part A Waivers of Coinsurance; (12) Certain Managed Health Care Plans.

• Mail Fraud Act. he federal mail fraud
law prohibits the use of the U.S. Postal Service
as a means of soliciting fraudulent payment or conducting fraudulent activities. A violation of this act is a separate offense with separate penalties that can be added to the laundry list of possible punishments.

• Civil Fraud and Civil Monetary Penalties.In addition, if the particular situation does not rise to the level of a criminal act beyond a reasonable doubt, the government can prosecute a civil action for fraud and assess civil monetary penalties for each violation of the various laws including false claims, mail fraud, and violations of the anti-kickback and self-referral restrictions. Civil monetary penalties are up to $10,000 for each violation and three times the amount claimed.

• Program Exclusion.Finally, any conviction, guilty plea, or even a no contest plea leads to mandatory program exclusion. Yet, an investigation alone raises the potential of certification survey problems that can jeopardize an agency’s recertification for participation. As a result of provisions in the Balanced Budget Act and Health Insurance Portability and Accountability Act, new rules exist for mandatory exclusion and permissive exclusion from the programs both for individuals and organizations. n