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What is the Difference Between Fraud and Abuse in Healthcare?

Doctor writing fake medical examination, taking bribe, expensive checkups

Healthcare fraud and abuse are often mentioned in the same breath, and they are sometimes used interchangeably. They are, indeed, related concepts, and the effects of each for patients and others may be difficult to distinguish. There are, however, important legal distinctions between the two concepts, including the potential penalties. Continue reading for a discussion of the distinction between fraud and abuse under the healthcare laws and regulations, and call a seasoned California healthcare law and compliance attorney for help with healthcare fraud allegations.

What is Healthcare Fraud?

Healthcare fraud is broadly defined as any deliberate and dishonest act committed with the knowledge that it could result in an unauthorized benefit to the person committing the act, or to another party likewise not entitled to that benefit. Healthcare fraud includes actions that are defined as fraud under federal or state law.

Common types of healthcare fraud include:

  • Billing for services never furnished
  • Falsifying medical necessity for a procedure
  • Fabricating medical records in order to justify payments
  • Falsifying eligibility

What is Healthcare Abuse?

Healthcare abuse concerns practices or incidents inconsistent with accepted and sound medical, business, or fiscal practices. When these practices result in unnecessary costs to Medicare, Medi-Cal, or other insurers, or result in reimbursement for services that are not medically necessary or otherwise fail to meet proper medical standards, they amount to abuse.

Comparing Fraud and Abuse

The difference between fraud and abuse often turns on the perpetrator’s intent. If the healthcare provider intentionally makes a false statement to another, such as by submitting a false bill to Medicare for services never rendered, and receives an unauthorized payment in return, they have committed fraud. If they engage in poor practices that are not deliberately false, such as maintaining shoddy billing practices, billing services at different rates to different carriers, or refusing to furnish or allow access to medical records, they could be guilty of abuse without committing fraud.

In practice, the harm to the insurer or government entity may be the same: overpayments and unjustified disbursements. Both can also give rise to whistleblower lawsuits.

Penalties for Fraud and Abuse

One principal reason that the distinction between fraud and abuse matters is because healthcare providers accused of each can face significantly different consequences. When someone is accused of healthcare fraud, the government can seek to exclude the responsible parties from certain programs (such as Medicare) or suspend their practice entirely, assess significant monetary penalties, and even seek criminal conviction under federal law. Perpetrators of healthcare fraud are liable to wind up in prison for their actions, should the government prove its case successfully.

Abuse, on the other hand, while still a concern, is considered a lesser offense. Typically, when abuse is discovered, the government will seek to recover any amounts paid in error, might assess additional civil fines, and could still suspend an abusive provider from programs like Medicare. Abuse can also give rise to civil liability from patients, insurance providers, and other individuals, but a criminal conviction is unlikely unless fraud is involved.

Considered Advice and Effective Representation for Your California Medical Practice

For help with matters involving healthcare regulatory compliance, auditing, fraud defense, employment disputes, mergers and acquisitions, business disputes, licensing, or any other California healthcare law matters, contact the Law Offices of Art Kalantar in Los Angeles or California statewide at 310-773-0001.

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