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Making Copays for Patients

We have blogged in the past about a common Medicare fraud scheme that involves waiving patient copayments and deductibles. The basic scheme works like this. Medicare normally requires that healthcare providers collect a copayment equal to 20% of the covered item or service. Crooked healthcare providers will waive or forgive this 20% copay as a form of hidden kickback to the patient. “Come to me, and I won’t charge you any copay.”

The government has been wise to this fraud for many years. Indeed, HHS-OIG warned about this fraud as early as 1994. Publication of OIG Special Fraud Alerts, 59 Fed. Reg. 65372, 65374 (Dec. 19, 1994). For that reason, many fraudsters know that the excessive waiver of copays will raise a red flag with insurance company and government auditors.

Fraudsters — ever clever in their schemes to hide and conceal their frauds — have come up with new ways to hide this scheme. Some fraudsters have taken to “collecting” the copays by means of prepaid credit cards, the kind that can be commonly purchased at any local Walmart or grocery store. These prepaid credit cards are largely untraceable and, most important for the fraudsters, provide a seemingly valid debit card number that can be inserted into its books and records as the source of the alleged “payment” for the copay or deductible.

This bit of deception satisfies two aims. First, it relieves any burden from the patient to satisfy the copay. This allows the fraudster to continue to commit the fraud without any complaint by the patient, who has never been asked to pay for anything.

Second, it provides a reasonably good “CYA” trail in case the government or investigators examine the record of copay collections. With this scam, the copay was not “waived” at all on the books and records. Instead, it was fully “collected” with a seemingly valid credit card receipt. Little do auditors know that the credit card at issue was purchased by the fraudster.

The only way to catch this scheme would be for an inside whistleblower to come forward and report it to the government, or for auditors to stumble upon the odd coincidence that multiple patients are paying their copays using the same credit card!

Schemes like this are the reason taxpayers continue to lose billions every year to healthcare fraud. The government simply cannot catch all of the fraud on its own and relies upon honest employees who are willing to come forward to report the frauds of their employers.

If you know about a healthcare provider that engages in this type of deceptive practice, you may be able to bring a qui tam whistleblower case. Contact our attorneys for a free consultation.

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