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Improper Billing and Testing Results in Fines and Jail Time for Providers

Improper billing and testing can result in fines and jail time.  The government is taking a very aggressive stance.  Providers beware!

Most providers aren’t even aware that they may be guilty of improper billing.  Many times providers appear before the courts and say they didn’t know.  Unfortunately, they soon learn that ignorance is not a defense.

Two recent cases underscore the importance of making sure the provider listed on the claim submission form is the same provider that performed the services, and the same one who documents and signs the medical note.

April was a busy month for the U.S. Department of Justice (DOJ). Two settlements highlight the notion that the U.S. government has a low tolerance for providers who defraud its programs such as Medicare, Medicaid, TRICARE, and the Federal Employee Health Benefits Program (FEHB).

Garrett Okubo (Honolulu) 

According to the DOJ, Garrett Okubo, the owner and operator of a physical therapy business in Honolulu, submitted claims for physical therapy services between January 2011 and October 2017 for payment from Medicare, Medicaid, TRICARE, and the Hawaii Medical Service Association. Okubo, in violation of 18 USC § 1347, executed a scheme by “falsely stating that Okubo himself had personally provided the physical therapy services to his patients, when in reality the services were provided by Okubo’s unlicensed staff members, including at times when Okubo was traveling on the U.S. mainland or in a foreign country.”

Although Okubo is not a physician, the issues raised in his case, which resulted in both monetary penalties and jail time, parallel those of improper billing of non-physician providers (NPPs) such as physician assistants, nurse practitioners, and clinical nurse specialists.

In general, Title 42 must be consulted regarding the scope of the reimbursement. If a nurse practitioner, for example, is billing under their own Medicare provider number, then the reimbursement by Medicare is 85 percent of the Medicare Physician Fee Schedule. It is also imperative to read the respective state law in order to ascertain the scope of practice, licensure requirements and level of supervision.

Biotheranostics, Inc. (San Diego)

According to the Acting Assistant Attorney General of the DOJ’s Civil Division, “laboratories that knowingly submit claims for non-reimbursable services will be held accountable.”

On April 19, Biotheranostics, Inc. agreed to pay $2 million to resolve allegations that it both submitted and caused to be submitted Breast Cancer Index (BCI) tests for Medicare reimbursement. These tests were not “reasonable and necessary” and, therefore, failed to meet the medical necessity standard.

The Medicare statute expressly states that laboratory tests may be reimbursed by Medicare only if they are “reasonable and necessary for the diagnosis or treatment of a patient’ illness or injury.” Relying on evidence-based medicine standards, the DOJ determined that the BCI test was being performed on breast cancer patients who neither had been in remission for five years nor had been taking tamoxifen. Therefore, substantiating that a number of claims that were submitted for Medicare payment were unauthorized and unnecessary.

The take-a-ways for physicians are as follows:

  • Make sure that NPPs are billing in the appropriate manner in conjunction with state and federal law and that the definition of “supervision” in a respective state is understood;
  • The person’s name on the claim’s submission form needs to be the one performing the service and indicated in the medical records;
  • Ensure that the diagnostic tests or treatment being order is substantiated by medical necessity; and
  • Failing to be compliant can and often does result in False Claims Act cases, which can carry both civil and criminal penalties.


By: Rachel V. Rose, JD, MBA. 
Rose is an attorney who represents and advises both corporate clients and individuals on healthcare, cybersecurity, securities, False Claims Act and Dodd-Frank causes of action.  She is also a Principal at Rachel V. Rose – Attorney at Law, PLLC, who also teaches bioethics at Baylor College of Medicine.
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