New Rules Target Medicare and Medicaid Fraud

The new health care reform law and the new Patient Protection and Affordable Care Act made some changes to the Medicare and Medicaid programs, as well as other health care programs receiving federal aid. Why? To stop the steady bleeding of money to crooks.

Fraud, Waste & Abuse

In late September 2010, the US Department of Health and Human Services (HHS), and particularly its Centers for Medicare and Medicaid Services (CMS), will propose new rules to stop fraud, waste, and abuse in Medicare and Medicaid programs. The idea is save billions of dollars and use that money to help pay for the new programs contained in the health care reform law.

It could mean billions. In 2009, Medicaid and Medicare fraud reportedly cost US taxpayers $90 billion. In July 2010 alone, 36 people across five states, including doctors and nurses, were arrested for defrauding Medicare of $251 million.

Rule Specifics

Health care providers like doctors, as well as suppliers that sell medical supplies to Medicare recipients, must follow all sorts of requirements and rules in order to be allowed to bill Medicare for services and goods provided to patients. Generally, Medicaid has similar requirements, but they vary from state to state because the states, not the federal government, are primarily in charge of Medicaid programs.

The new rules proposed by HHS make sure only qualified providers and suppliers participate in Medicare and Medicaid programs and they follow the rules. For example, one rule suspends payments to a provider or supplier if a credible allegation of fraud is found. With a credible allegation, a lower level of suspicion or proof can trigger a suspension than under the current rule.

Also, unlike the current rule, a suspension may last longer than 180 days. Perhaps the most important new rule involves screening of providers and suppliers more thoroughly.  The screening may include: 

  1. Checks for valid and up-to-date state-required licenses
  2. Criminal background checks
  3. Fingerprinting
  4. Unscheduled or unannounced site visits to the site.

The level of screening depends on the risk a particular provider or supplier may commit fraud, waste, or abuse.

  • Limited or low-risk providers and suppliers and providers may only go through a license check and other low-impact checks
  • High-risk providers and suppliers may go though everything, from license checks to fingerprinting to criminal background checks. This includes new and privately owned home health agencies and suppliers, those not publicly traded on the NYSE or NASDAQ stock exchanges

This last rule may cause some legal waves. Some providers and suppliers not publicly traded may claim the tougher screening creates an unlawful double-standard bordering on discrimination. On the other hand, as explained by HHS in the new rules, investors, corporate boards of directors, and the Security and Exchange Commission (SEC) closely monitor publicly traded companies for fraud, abuse, and waste already. It's worth keeping an eye on this potential problem.

In any event, providers, suppliers, and members of the general public have 60 days (from September 24, 2010) to send HHS any comments or opinions about the new rules. The new rules have instructions on how to send your comments to HHS. If you have an opinion, let your voice be heard. After 60 days, HHS may make changes and pass the final rules.

Identify and Prevent Fraud

The most common forms of Medicare and Medicaid fraud are billing a patient for goods or services she doesn't need or for services or equipment she never receives. Protect yourself by reading your Medicare and Medicaid statements very carefully. Check for items you didn't order and check to make sure you - and the government - weren't overcharged. For example, when ordering medical supplies or equipment covered by Medicare, find out their exact costs and then check your statement to make sure you were charged the right amounts. 

Be wary of companies contacting you by phone, mail, or email offering goods and services and promising to bill Medicare or Medicaid for you.

If you suspect Medicare or Medicaid fraud, contact HHS or your state attorney general's office immediately.

Questions for Your Attorney

  • Will the new rules affect my benefits or qualification for benefits?
  • What happens to me if one of my healthcare providers is accused of fraud?
  • Where can I get help to ensure my company is incompliance with the new rules?
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