What Is the Federal False Claims Act?

federal false claims act

The Federal False Claims Act places civil liability on practices that knowingly submit, or cause the submission of, a fraudulent or false claim. What could happen if your practice were found guilty of such an action? Keep reading to find out.

Penalties Under the Federal False Claims Act

Obviously, penalties abound for filing false or fraudulent claims. Civil penalties may include fines that amount to three times the cost of damages incurred by the government, and more charges of up to $21,563 per false claim.

Criminal penalties may include fines, as well – but you could be talking imprisonment, too. In the worst-case scenario, you’d face both.

With consequences like these, it’s vital to make sure that no one in your practice is filing false or fraudulent claims. If they are, and you don’t know about it, the liability is astronomical.

Healthcare Fraud: Deceit on a Large Scale

The U.S. Department of Justice reports that of the $3.5 billion the Federal False Claims Act recovered in 2015, $1.9 billion – that’s more than half – came from the healthcare industry.

Since 2009, $16.5 billion in healthcare fraud has been recovered and returned to federal healthcare programs. In 2015 alone, hospital settlements and judgments amounted to nearly $330 million. Settlements of $250 million were paid by nearly 500 hospitals for the alleged implantation of cardiac devices into Medicare patients, going against CMS criteria and/or without involving a cardiologist in the process.

The Overpayments Rule

The Affordable Care Act (ACA) mandates the Overpayments Rule, which requires practices to report an overpayment from either the state or federal government within 60 days from the day the overpayment is discovered.

Physicians who do not abide by this rule could find themselves subject to the Federal False Claims Act and its accompanying penalties – and the “ostrich defense” doesn’t actually give them any protection. According to the Centers for Medicare and Medicaid Services (CMS), “If the requirement to report and return overpayments only applied to situations where providers or suppliers had actual knowledge of the existence of an overpayment, then these entities could easily avoid returning improperly received payments and the purpose of the section would be defeated.”

That means your practice has to do enough due diligence to know whether there has been an overpayment – or risk being subject to the Federal False Claims Act.

Outsource Your Medical Record-Keeping to Stay Diligent

If you want to make sure your practice’s claims are handled properly, the best course of action is to hire a third-party billing and revenue cycle service provider. Medical Business Management can maintain your revenue cycle, process your claims, and keep your A/R days low. Contact us for more information!