rcm glossary

False Claims Act

False Claims Act is a federal law that imposes liability on individuals or entities who knowingly submit false or fraudulent claims for payment to the government.

Accelerate your revenue cycle

Boost patient experience and your bottom line by automating patient cost estimates, payer underpayment detection, and contract optimization in one place.

Get a Demo

What is the False Claims Act?

The False Claims Act (FCA), also known as the "Lincoln Law," is a federal law in the United States that imposes liability on individuals and organizations who knowingly submit false or fraudulent claims for payment to the government. Enacted during the Civil War in 1863, the primary purpose of the FCA was to combat fraud committed by government contractors supplying goods and services to the Union Army. Over the years, the scope of the FCA has expanded to cover a wide range of industries, including healthcare.

Under the FCA, any person or entity that submits a false claim to the government is liable for significant penalties and damages. The Act allows both the government and private individuals, known as whistleblowers or relators, to file lawsuits, known as qui tam actions, on behalf of the government to recover funds lost due to fraudulent claims. If successful, the whistleblower is entitled to receive a percentage of the recovered amount as a reward.

Difference between the False Claims Act and other similar terms

While the False Claims Act is a specific law targeting fraudulent claims made to the government, there are other related terms and laws that are often mentioned in the context of healthcare revenue cycle management. Here are a few key differences:

1. Stark Law: The Stark Law, also known as the Physician Self-Referral Law, prohibits physicians from referring Medicare patients for certain designated health services to entities with which they have a financial relationship, unless an exception applies. Unlike the FCA, which focuses on false claims, the Stark Law primarily addresses the issue of self-referral and potential conflicts of interest.

2. Anti-Kickback Statute: The Anti-Kickback Statute (AKS) makes it illegal to offer, pay, solicit, or receive any form of remuneration in exchange for referrals or generating business reimbursed by federal healthcare programs. While the FCA can be triggered by violations of the AKS, the AKS itself is a separate law that primarily targets illegal kickbacks and inducements.

3. Health Insurance Portability and Accountability Act (HIPAA): HIPAA is a comprehensive federal law that protects the privacy and security of individuals' health information. While the FCA focuses on fraudulent claims, HIPAA primarily addresses the privacy and security of patient data, including electronic health records (EHRs) and other protected health information (PHI).

It is important to note that these laws often intersect, and violations of one law can lead to investigations and penalties under others. Healthcare organizations must ensure compliance with all relevant laws and regulations to avoid potential legal and financial consequences.

Examples of False Claims Act violations in healthcare

False Claims Act violations in the healthcare industry can take various forms. Here are a few examples:

1. Billing for services not rendered: Submitting claims for medical services or procedures that were never provided to patients is a common violation of the FCA. This can include billing for phantom patients, fictitious procedures, or inflating the level of services provided.

2. Upcoding and unbundling: Upcoding involves billing for a higher level of service than what was actually provided, while unbundling refers to billing separately for services that should be billed together as a single procedure. Both practices can result in increased reimbursement and are considered fraudulent under the FCA.

3. Kickbacks and improper financial relationships: Offering or receiving kickbacks, such as cash payments, gifts, or other incentives, in exchange for patient referrals or business can violate the FCA. Similarly, improper financial relationships between healthcare providers and suppliers, such as ownership interests or compensation arrangements, can also lead to FCA violations.

4. Off-label promotion: Promoting the use of a drug or medical device for purposes not approved by the Food and Drug Administration (FDA) can be considered a false claim under the FCA. Manufacturers and healthcare providers must adhere to FDA-approved labeling and indications to avoid potential FCA liability.

These examples illustrate the diverse ways in which the False Claims Act can be violated in the healthcare industry. It is crucial for healthcare organizations to establish robust compliance programs, conduct regular audits, and educate their staff to prevent and detect potential FCA violations.

In conclusion, the False Claims Act is a powerful tool in combating fraud and abuse in the healthcare industry. It imposes liability on individuals and organizations that knowingly submit false claims for payment to the government. Understanding the FCA and its implications is essential for healthcare revenue cycle management professionals to ensure compliance and protect their organizations from potential legal and financial risks.

Get paid in full by bringing clarity to your revenue cycle

Full Page Background