Government health-care programs, including Medicare, Medicaid and TRICARE, will not make payments to providers for items and services provided to patients if those items and services are not “medically necessary.” As a condition of payment for services, providers are required to certify that the services for which they seek payment were medically necessary and that documentation of medical necessity can be provided upon request.

Some providers may render medically unnecessary items and services to patients with the intent to increase reimbursements from payers. Knowing submission of claims for such services to federal government payers is considered health-care fraud in violation of the federal False Claims Act (FCA). Under the FCA, knowledge of false information is defined as:

1. Actual knowledge
2. Deliberate ignorance of the truth or falsity of the information, or
3. Reckless disregard of the truth or falsity of the information.

The FCA is a civil statute that imposes stiff monetary penalties on any person who knowingly submits or causes the submission of false claims to the government (including claims for medically unnecessary services or services that were the result of an illegal kickback). Claims under the FCA can be brought by federal prosecutors pursuant to a government investigation, or such claims may serve as the basis for a qui tam lawsuit in which a private whistleblower (also called a “relator”) file suits on behalf of the government. To incentivize the filing of qui tamlawsuits, citizens who successfully bring whistleblower actions may receive up to 30% of the government’s recovery.

In ophthalmology, two recent settlements in Connecticut and Georgia provide real-world examples of FCA investigations and litigation arising from medically unnecessary services.

CASE 1. TRANSCRANIAL DOPPLER SCANS AND KICKBACK PAYMENTS

In July 2022, a Connecticut ophthalmologist pled guilty in federal court in Massachusetts to one count of conspiracy to commit health-care fraud and one count of conspiracy to violate the anti-kickback statute arising from an alleged scheme involving the receipt of kickback payments for ordering medically unnecessary transcranial doppler (TCD) brain scans.

The case resulted from a U.S. Attorney’s Office investigation, after which the government alleged that the ophthalmologist defendant conspired with a salesperson for a medical diagnostics company to order and perform medically unnecessary TCD using fraudulent diagnoses with the goal of obtaining payment from Medicare and other insurance companies. The charges against the ophthalmologist also included allegations that the doctor received illegal kickback payments from the salesperson for each test he ordered and performed.

Specifically, the charging documents state that, from April 2014 until June 2019, the ophthalmologist defendant entered into an agreement with the sales representative to order TCD scans for his patients in exchange for payments of $100 to $125 per test. Allegedly, the salesperson instructed the physician to document a diagnosis of vertebrobasilar artery insufficiency for each patient on TCD test order forms to mislead Medicare into believing that the patients fit the coverage criteria for TCD testing.

The government also alleged in charging documents that the physician received cash payments from the sales representative “in the parking lot of a shopping center,” which represented a per-test fee and sham “administrative fees” paid to the doctor to incentivize him to refer patients for TCD testing. The physician received approximately $148,000 in kickbacks and the scheme resulted in fraudulent bills of more than $3 million to Medicare and private insurance companies, federal authorities claim.

Sentencing for this case has not yet occurred, but the doctor involved faces a possible sentence of up to 10 years in prison, 3 years of supervised release and a fine of up to $250,000 for the charge of conspiracy to commit health-care fraud and a possible sentence of up to 5 years in prison, 3 years of supervised release and a fine of up to $250,000 for the charge of conspiracy to violate the anti-kickback statute.

CASE 2. MEDICALLY UNNECESSARY CATARACT SURGERIES AND DIAGNOSTIC TESTS

In January 2023, an ophthalmologist in Georgia agreed to pay $1.85 million to settle allegations that she performed and billed for medically unnecessary cataract surgeries and diagnostic tests. In this case, a former employee of the ophthalmologists’ practice brought a qui tam case against the physician. The relator alleged that, from January 2011 to December 2016, her former employer knowingly submitted false claims to federal health-care programs for medically unnecessary cataract extraction surgeries and YAG laser capsulotomies.

The government alleged that the ophthalmologist performed these procedures on patients who did not qualify for the procedure under accepted standards of medical practice and, in some cases, caused injury to her patients. Additionally, the government alleged that the ophthalmologist falsely diagnosed patients with glaucoma to justify unnecessary diagnostic testing and treatment that was billed to Medicare. The government alleged that many of the diagnostic tests the physician ordered were not properly performed, were performed on a broken machine or were not interpreted in the medical record, as required by Medicare.

Specific allegations in the original complaint included claims that the practice routinely billed payors and patients for extended visual field (VF) examinations when, in fact, staff had been instructed to spend no more than 3 minutes for each eye when conducting such exams. The whistleblower also alleged that the doctor instructed staff to bill the full amount for VF exams even if the test was incomplete. Furthermore, the relator claimed that the doctor knew that the VF exam device became non-operational in March 2013, yet the practice continued to bill patients and payors for VF exams for years after that date.

The complaint also stated that the ophthalmologist defendant frequently billed payers and patients for office visits during the 90-day global period following surgery by assigning false diagnosis codes to claims that would appear unrelated to the surgical diagnosis (such as “floaters” or “aphakia”). The practice would then attach billing modifier 24 to the surgical CPT code to attest that the additional evaluation and management services were unrelated to the postoperative care and would, therefore, be separately payable.

There were additional allegations of impropriety in this practice as well. Allegedly, with respect to both cataract surgeries and office visits, the practice engaged in “upcoding.” Data showed that the practices rate of complex cataract surgery was as high as 45% when industry groups estimate that the average rate of complex cataract surgery should be 1% to 4%.

Finally, the government alleged that the physician performed cataract surgeries on patients who presented with little or no vision complaints and whose visual acuity would not warrant surgery, and that billing data suggested the use of fraudulent diagnostic practices to increase reimbursement rates. Allegedly, in 2013, the percentage of the physician’s Medicare patients diagnosed with a glaucoma-related diagnosis exceeded the national average more than 10 times over.

KEY TAKEAWAYS

As these two cases make clear, government regulators and private whistleblowers continue to ensure that medical necessity standards are strictly enforced.

Remember that, with submission of each claim to government payers, the provider is certifying that he or she has earned the payment requested and complied with all billing requirements. Examples of improper claims include billing in the following circumstances:

• Services that were not actually rendered
• Services that were not medically necessary
• Services that were performed by an improperly supervised or unqualified employee
• Services that were performed by an employee who has been excluded from participation in the Federal health-care programs
• Services of such low quality that they are virtually worthless, and
• Billing separately for services already included in a global fee, such as billing for an evaluation and management service the day after surgery. OM

Allison Shuren, JD, co-chairs the Life Sciences and Healthcare Regulatory practice at Arnold & Porter in Washington, DC. She advises a wide range of health-care clients on regulatory, compliance, enforcement and legislative matters. She counsels on referral arrangements as well as sales and marketing programs and represents clients in government investigations and qui tam actions involving False Claims Act, Anti-Kickback Statute, Stark Law and health-care fraud allegations.

Loreli Wright, JD, MS, counsels clients at Arnold & Porter in Denver, on a broad range of regulatory and transactional matters in the health-care industry, primarily on regulatory matters related to the expansion and acquisition of provider entities. She advises health-care organizations, health-care professionals and private equity firms on regulatory issues, including licensure and certification of health-care facilities, corporate practice restrictions, Medicare and Medicaid program participation requirements, telemedicine, and federal and state health-care fraud, abuse and self-referral laws.