Hospitals and Outpatient Clinics

Background

Given the size and importance of hospital systems within their communities and the range of healthcare services they offer, hospitals are vulnerable to many kinds of fraud and abuse schemes under the False Claims Act (FCA). Outpatient clinics and ambulatory surgery centers have come to play a similarly important role, delivering care that was previously only available on an inpatient basis. Some outpatient clinics are hospital-based and owned, while others are standalone ambulatory surgery centers. The billing rules for these facilities can differ, but they are susceptible to many of the same fraud and abuse risks. Barrett Johnston Martin & Garrison, PLLC has successfully represented whistleblowers pursuing various types of healthcare fraud against a number of different hospitals and hospital systems around the country.

Some of the healthcare fraud schemes most commonly associated with hospitals and outpatient clinics are:

Kickback and Stark Violations

Hospitals and outpatient clinics are common defendants in Stark and kickback-based FCA cases. In many of these cases, the facility will offer kickbacks to lucrative physician practices (e.g., oncology, cardiology, orthopedic surgery) to induce them to perform high-value surgical procedures at that hospital or clinic rather than a rival one. The kickbacks can take various forms:

Paying doctors with high-value referrals as “medical directors.”
Providing medical office space at below-market rates.
Offering free nursing or administrative staff.
Inducing referrals through profit-sharing arrangements.

Whether the compensation is direct or indirect, if the hospital or clinic is offering something of value and expecting patient referrals in exchange, then that relationship likely implicates the Anti-Kickback Statute and potentially also the Stark Law.

Improper Admissions

Government payors like Medicare and Medicaid generally pay hospitals more for inpatient services than outpatient services. That creates a strong financial incentive for hospitals to admit patients on an inpatient basis even when they know the patient could be treated just as effectively and less expensively on an outpatient basis. There have been several large settlements resolving claims of hospital systems systematically over-admitting patients, including a $98 million dollar resolution in a case where Barrett Johnston Martin & Garrison, PLLC, represented one of the whistleblower groups.

Unbundling

Hospitals and surgery centers are also susceptible to “unbundling” fraud (i.e., separately billing for multiple services that are required to be billed together). Medicare, for example, will typically reimburse hospitals a fixed amount for a particular beneficiary’s inpatient stay based on the severity of the diagnosis and the resources expected to be used in treatment. If a patient needs a specific exam or procedure, such as bloodwork or a biopsy, during that hospital stay, the hospital is not supposed to bill separately for it. However, sometimes hospitals will try to manipulate their records to make it appear as though the tests being done are distinct from the patient’s inpatient stay, allowing the hospital to bill for those tests separately.

Upcoding and Unnecessary Services

Under most federal healthcare programs, both the hospital or clinic and the individual physician can bill for procedures—the physician for the professional service rendered and the hospital or clinic for a “facility fee” or “technical component.” As a result, many FCA cases involving “upcoding” (the practice of billing for a more valuable service than what was performed) or performing procedures that are not medically necessary will implicate the hospital or clinic as well as the individual doctor, so long as there is evidence of the facility knowing about the fraud and turning a blind eye in order to benefit financially.

The coverage and billing rules for hospitals and surgery centers coverage can be complex, and the schemes to defraud that arise in this space are often sophisticated. That makes it all the more important for individuals considering blowing the whistle on such fraud to engage attorneys with experience and a track record of success in pursuing such claims.

Contact a Whistleblower Attorney

These descriptions of Anti the fraud that can occur in hospitals & outpatient clinics are general in nature and do not constitute legal advice. Fraud schemes targeting federal dollars are complex and ever-evolving. The attorneys at Barrett Johnston Martin & Garrison, PLLC, understand the detailed legal requirements and details of these elaborate scams and are happy to discuss any potential matter further. If you would like more information or would like to speak to an attorney at Barrett Johnston Martin & Garrison, PLLC, please contact us for a confidential consultation.

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