Fraudulent Billing to Medicare: Services and Procedures Must Be "Reasonable and Necessary" for the Patient's Treatment

American Sleep Medicine agreed recently to settle a whistleblower lawsuit by paying $15.3 million, as discussed in a blog post, False Medicare Billing Results in $15.3 Million Whistleblower Settlement. Daniel Purnell, the whistleblower claimed in the lawsuit, that American Sleep Medicine had wrongful and falsely billed Medicare, Tricare and the Railroad Retirement Medicare Program for sleep disorder diagnostic procedures that were performed by unqualified technicians.

Here are some more particulars and specifics of Purnell's whistleblower complaint under the federal False Claims Act:

(1) services and items (such as medical devices and procedures) are excluded from coverage under Medicare if they "are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member." 42 USC 1395y(a)(1)(A)

This is a basic point: Medicare cannot be properly billed for a service, procedure or device if it is not "reasonable and necessary for the diagnosis or treatment" of the particular patient. Medicare is falsely/fraudulently billed if it pays for a service, procedure or device that is not reasonable and necessary for the patient's treatment.

(2) numerous regulations give greater and more specific definition to whether a service, procedure or device is "reasonable and necessary" for the patient's treatment. Furthermore, many of these regulations spell out in detail how and when a service, procedure or device may or should be deemed" reasonable and necessary" for the patient's treatment.

The upshot of thisis that as to certain services, procedures and/or devices Medicare in its regulations require that certain steps be followed; these steps are required to sure that the service, procedure or device in question is in fact "reasonable and necessary" for the patient's treatment.

(3) Medicare rules require that the sleep disorder tests in question be performed on Medicare patients only by licensed or certified sleep technicians (if not by physicians) in order to qualify for reimbursement from Medicare for such testing services.

Purnell's complaint, among other things, is that American sleep medicinedid not have the sleep disorder test performed by licensed or certified sleep technicians as required by Medicare. In fact it was alleged that American sleep medicine "failed even to make an effort to maintain enough credentialed technologists on staff to handle the Medicare patients who are tested at defendant's facilities."

(4) American sleep medicine had its technicians perform what Medicare required to be doctors work including the initial diagnosis of sleep disorders, the preparation of physicians reports, and the determination of the appropriate pressure settings for the individual patients' Continuous Positive Airway Pressure (CPAP) devices.

This is another example of how Medicare reimbursement requirements can be violated: rules require that certain steps to be performed, in this instance, by a physician not a technician.

(5) American Sleep Medicine routinely ordered a second round of testing without a physician's order. Again, Medicare rules require that such testing must be ordered by a physician to be reimbursable.  

The above is an example of how Medicare's requirements can be evaded and Medicare fraudulently billed tens of millions of dollars. The federal False Claims Act helps to recover that wrongly paid out money; the False Claims Act is a check against fraudulent Medicare billing.