The National Epidemic of False Claims against Federal and State Health Care Programs

The National Epidemic of False Claims against Federal and State Health Care Programs

Introduction

In a study published in the Journal of the American Medical Association in April of 2012, former CMS Administrator Donald M. Berwick and RAND Corporation analyst Andrew D. Hackbarth estimated that fraud and abuse added as much as 98 billion dollars to Medicare and Medicaid spending in 2011 alone. Berwick D, Hackbarth A, Eliminating Waste in US Health Care, JAMA, 307(14): 1513-1516 (April 11, 2012). Financial waste from “overtreatment” of Medicare and Medicaid patients added as much as another 87 billion dollars in Medicare and Medicaid spending in 2011. The authors defined “overtreatment” as the “waste that comes from subjecting patients to care that, according to sound science and the patients’ own preferences, cannot possibly help them—care rooted in outmoded habits, supply-driven behaviors, and ignoring science.”

At a time of major federal budget deficits and escalating healthcare costs, there is general agreement across all political parties on the need to eliminate unnecessary spending or improper payments in federal and state health care programs. As stated by Berwick and Hackbarth, “No matter how polarized politics in the United States have become, nearly everyone agrees that health care costs are unsustainable.” Id. at 1513.
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Overview of Federal Stark and Anti-Kickback Laws

Overview of Federal Stark and Anti-Kickback Laws

Introduction to Federal Stark Laws

With limited exceptions, Federal Stark Law provides that if a physician has a financial relationship with a hospital or entity, then:

(A) The physician may not make a referral to the entity for the furnishing of designated health services for which payment otherwise may be made under this subchapter, and
(B) the entity may not present or cause to be presented a claim under this subchapter or bill to any individual, third party payor, or other entity for designated health services furnished pursuant to a referral prohibited under sub paragraph (A).

42 U.S.C. § 1395nn (a)(1).

In addition to prohibiting a hospital from submitting claims under these circumstances, the Stark Law also prohibits payments by federal health care programs of such claims: “No payment may be made under this subchapter for a designated health service which is provided in violation of subsection (a)(1) of this section.” 42 U.S.C. §1395nn (g)(1).1
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