Health Care Fraud and Abuse Laws Affecting Medicare and Medicaid: An Overview

Jennifer Staman
Legislative Attorney

A number of federal statutes aim to combat fraud and abuse in federally funded health care programs such as Medicare and Medicaid. Using these statutes, the federal government has been able to recover billions of dollars lost due to fraudulent activities. In March 2010, Congress enacted comprehensive health care reform legislation. One focus of this legislation, the Patient Protection and Affordable Care Act (PPACA) as amended, is improved health care fraud and abuse enforcement. PPACA, among other things, creates new health care fraud enforcement tools and expands upon the types of prohibited conduct. This report provides an overview of some of the more commonly used statutes used to fight health care fraud and abuse and discusses some of the changes made to these statutes by PPACA. 

Title XI of the Social Security Act contains Medicare and Medicaid program-related anti-fraud provisions, which impose civil penalties, criminal penalties, as well as exclusions from federal health care programs on persons who engage in certain types of misconduct. PPACA amends these administrative sanctions and authorizes the imposition of several new civil monetary penalties and exclusions. 

Under the federal anti-kickback statute, it is a felony for a person to knowingly and willfully offer, pay, solicit, or receive anything of value (i.e., "remuneration") in return for a referral or to induce generation of business reimbursable under a federal health care program.The statute prohibits both the offer or payment of remuneration for patient referrals, as well as the offer or payment of anything of value in return for purchasing, leasing, ordering, or arranging for, or recommending the purchase, lease, or ordering of any item or service that is reimbursable by a federal health care program. PPACA revises the evidentiary standard under the anti-kickback statute and eliminates the requirement of actual knowledge of, or specific intent to commit a violation of the statute. This amendment may make it easier for the government to prove its case. 

The Stark law and its implementing regulations prohibit physician self-referrals for certain health services that may be paid for by Medicare or Medicaid. Under the Stark law, if (1) a physician (or an immediate family member of a physician) has a "financial relationship" with an entity, the physician may not make a referral to the entity for the furnishing of these health services for which payment may be made under Medicare or Medicaid, and (2) the entity may not bill the federal health care program or any individual or entity for services furnished pursuant to a prohibited referral. PPACA limits certain exceptions to the Stark law. 

The federal False Claims Act (FCA) imposes civil liability on persons who knowingly submit a false or fraudulent claim or engage in various types of misconduct involving federal government money or property. Health care program false claims often arise in billing, including billing for services not rendered, billing for unnecessary medical services, double billing for the same service or equipment, or billing for services at a higher rate than provided ("upcoding"). Civil actions may be brought in federal district court under the FCA by the Attorney General or by a person known as a relator (i.e., a "whistleblower"), for the person and for the U.S. Government, in what is termed a qui tam action. PPACA appears to make it easier for certain relators to bring qui tam actions, thus potentially allowing some FCA actions to proceed that would have been dismissed under prior law.


Date of Report: August 10, 2010
Number of Pages: 14
Order Number: RS22743
Price: $29.95

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