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In the crosshairs: The False Claims Act’s new targets in health care


The practice of medicine involves a delicate interplay between medical expertise and the unique needs of each individual. Ideally, medical decisions should prioritize the health and well-being of patients while being rooted in science and evidence-based practice. However, this noble mission inevitably becomes challenging in the context of reimbursement structures that inadvertently incentivize unnecessary procedures rather than focusing on the quality or necessity of care provided.

In an all-too-common scenario seen often in the U.S. health care system, I was the on-call junior surgeon when a 17-year-old patient with Medicaid presented with right lower quadrant abdominal pain. Her parents were concerned that she had appendicitis and wanted the appendix “taken out” as soon as possible because the school prom was next week. I examined the patient and obtained her history, determining the pain was not from appendicitis. The parents, unhappy with the diagnosis, sought a second opinion from another surgeon. The second surgeon performed a “negative” appendectomy. When the chief medical officer asked why the surgeon operated on a normal appendix, he responded that the parents wanted it done, and it was nine wRVUs (work relative value units) attributed to his compensation model. Unfortunately, the patient experienced complications postoperatively from a new onset of undiagnosed Crohn’s Disease. She did not attend her prom.

This story is not unique and emblematic of a broader issue. Reimbursement models that reward providers based on the quantity of services rendered are inherently flawed. These models have fostered a system where financial incentives drive the overutilization of medical services, leading to unnecessary procedures that compromise the patient-centered focus that should underscore every medical decision.

Indeed, nearly $1.4 trillion of U.S. health care spending in 2019 was attributed to the provision of medically unnecessary goods and services. It’s estimated that at least a quarter of that amount could be recovered through interventions targeting waste, and as a result, the government is taking note. The 1986 overhaul of the False Claims Act marked a pivotal moment in this endeavor, granting unprecedented power and heft to government agencies to pursue legal action against entities involved in a spectrum of fraudulent activities, from unnecessary procedures to deceptive billing practices. Medicare and Medicaid losses alone are estimated to be tens of billions of dollars annually due to fraudulent billing. The amended Act not only increased penalties for violations but also provided whistleblowers with greater incentives to come forward, fostering a culture of accountability.

The results have been significant, with the government successfully clawing back substantial amounts through enforcement actions related to health care fraud. Since the overhaul, the Federal government has recovered over $50 billion, showcasing the effectiveness of the False Claims Act in combating wasteful spending and holding entities accountable for providing medically unnecessary services. These interventions serve not only as a deterrent but also as a means to recover funds, contributing to the ongoing effort to ensure the fiscal responsibility and integrity of the U.S. health care system.

With such high stakes, the Department of Justice (DOJ) isn’t sitting idly by; instead, it’s expanding the scope of what constitutes fraudulent activities, ensuring it remains dynamic and responsive to emerging challenges. Recently, the DOJ has redirected its attention toward fraud involving value-based payment models. Although value-based payment models evolved as a way to enhance patient outcomes and control costs, the DOJ’s focus acknowledges the unfortunate reality of deceptive practices that threaten the integrity of these initiatives. In response to instances of manipulated patient outcome data, upcoding, patient steering, and other fraudulent activities within the realm of value-based care, the DOJ is actively investigating and prosecuting those who exploit these models for personal gain. Specific investigative emphasis by the DOJ is now focused on fraud vulnerabilities under Medicare Part C (Medicare Advantage). The DOJ is targeting health care entities that have a pattern of submitting higher and more severe risk-adjusted diagnostic codes under Medicare Advantage capitation arrangements.

It’s not only overt cases of abuse that are under investigation but also inadvertent missteps by health care providers. The element of knowingly submitting a fraudulent claim under the False Claims Act is defined as actual knowledge, deliberate ignorance, or reckless disregard giving the DOJ broad investigative and prosecutorial discretion. The DOJ’s expanded focus emphasizes the importance of providers comprehensively understanding the dos and don’ts of health care billing for various payment models. Lack of awareness could inadvertently lead to legal trouble, making it imperative for health care entities to stay informed about evolving regulations. Strict adherence to fraud and abuse laws, coupled with a commitment to demonstrating medical necessity, becomes paramount in avoiding unintentional pitfalls that might draw scrutiny.

As the Department of Justice refocuses on fraud within value-based payment models, there is a collective obligation to ensure the health care landscape aligns with patient well-being and fiscal responsibility. Health care providers must understand the evolving regulatory landscape to avoid inadvertent missteps, reinforcing the need for constant vigilance, adherence to laws, and a commitment to demonstrating medical necessity. In embracing these changes, health care providers play a crucial role in upholding the highest standards of care and integrity.

Scott Ellner has been a general surgeon for over 20 years, and can be reached at PEAK Health. He has transitioned into health care executive roles due to his passion for patient safety, quality, and value-based care delivery. His authentic leadership style inspires team members to navigate challenging situations, such as resistance to change and innovation, in order to bring about meaningful transformation. Most recently, he served as the CEO of Billings Clinic, the largest health system in Montana. During his tenure, Forbes recognized the clinic as the best place to work in the state. It was also at that time that he formulated a strategic growth plan that included the development of a level 1 trauma network and a rural-based clinically integrated network.






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