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The health care industry in the United States is plagued by fraud, abuse and waste. In fact, it costs us up to $60 billion every year. People often think of fraud as being identity theft or fraudulent billing practices, and while those things are certainly a big problem in our current system, fraud often occurs in the form of “kickbacks.”
Kickbacks are arrangements made between providers in which one party refers patients to another through services, goods or medicines. Let’s look at a scenario that might be classified as a kickback.
You go see your doctor for a lingering cough and your doctor prescribes you a new medicine that will help suppress your cough. So far, so good. But after doing some of your own research, you find that the medicine isn’t primarily a cough suppressant. It is intended to treat other things and may or may not improve your condition. You talk to a friend who went to the same doctor with a different problem and discover that the doctor also prescribed the same medicine for their condition.
In this hypothetical, the physician is giving out medicine not to treat their patient’s condition, but because they are receiving payments from the company that makes the drug. The more prescriptions that doctor writes for the drug, the more money they’ll get from the company. This is called a kickback, and it’s easy to see why such an arrangement would be considered illegal.
Healthcare providers are supposed to offer tests and treatments based on their knowledge of and experience, not because of financial incentives from other providers or companies. When they are motivated by kickbacks, providers make decisions that are not in the best interest of patients. That is the motivation behind our country’s anti-kickback laws.
Two U.S. laws prohibit kickbacks in the healthcare industry - the Anti-Kickback Statute and the Stark Law. According to the Office of the Inspector General, the AKS prohibits the “knowing and willful payment of ‘remuneration’ to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs.”
The Stark Law is the nickname for the Physician Self-Referral Law. The OIS says that the Stark Law prohibits “physicians from referring patients to receive ‘designated health services’ payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies.”
The AKS covers arrangements in which payments or benefits are given to providers for making a referral, while the Stark Law prohibits providers from engaging in practices that benefit their own bottom line because of an investment or stake they might have in the referring entity.
Essentially, these laws seek to rid our health care system of conflicts of interest. But kickbacks are still a common form of fraud. At the beginning of 2017, USA Today reported that several doctors, pharmacy owners and marketing professionals are accused of a kickback scheme involving a fake medical study. The study was allegedly used by the accused parties to receive “up to $102 million from the publicly funded federal health program for military family members.”
In another example, Walgreens was recently held accountable for a kickback scheme, agreeing to pay back $50 million for a influencing government health care beneficiaries to get their prescriptions filled at Walgreen’s stores. The settlement was the result of a joint effort by the government and a private whistleblower.
Whistleblowers, often employees of fraudulent providers and companies, are an important part of the fight against fraud. By coming forward with information about the wrongdoing within their company, a whistleblower provides the government with important details regarding the fraud they’ve witnessed. To understand just how important they are, let’s revisit the hypothetical scenario we discussed earlier.
When patient follows a provider’s advice about a good or service, they have little to no way of knowing their provider’s motivation. When you went to the doctor for a cough and they gave you a prescription, it was only after doing your own research and a chance conversation with a friend that you discovered something wasn’t quite right. To know that the doctor was prescribing medication as part of a kickback, you’d likely need to work alongside that doctor and to have seen the kickbacks firsthand. That is why whistleblowers provide a much-needed service; they are the ones who witness the fraud and can provide investigators evidence that fraud has occurred.
The U.S. health care industry is a complex system, which involves many players and a whole lot of money. That makes it vulnerable to fraud, abuse and waste. Stopping kickbacks is part of the effort to make sure that patients receive care based in rational decision-making by their providers, not by personal financial motives.
Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and.how they may affect a case. For specific technical or legal advice on the information provided and related topics, please contact the author.
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