Using Medical Necessity as a Defense Against Healthcare Fraud

Using Medical Necessity as a Defense Against Healthcare Fraud Charges

Healthcare fraud is a serious issue that costs taxpayers and insurance companies billions of dollars each year. Healthcare providers or organizations that are accused of fraud face severe penalties, including hefty fines, exclusion from federal healthcare programs, and even criminal prosecution. However, there are viable defenses that can be used to fight these allegations. One such defense is challenging whether the services billed were actually medically unnecessary.

What Constitutes Healthcare Fraud?

Healthcare fraud refers to intentionally deceiving or misrepresenting information to obtain reimbursement from Medicare, Medicaid, TRICARE, or private insurers that you are not entitled to. Some examples include[1]:

• Billing for services that were never performed
• Billing for unnecessary tests or procedures
• Falsifying diagnoses to justify tests, surgeries or other procedures
• Billing for a more expensive service than was provided
• Accepting kickbacks for patient referrals
• Waiving patient copays or deductibles

Most healthcare fraud cases involve allegations of billing for medically unnecessary services. The federal Anti-Kickback Statute and Physician Self-Referral Law (Stark Law) also target fraud by prohibiting remuneration meant to induce referrals.

Why Medical Necessity is Key in Healthcare Fraud Cases

For any healthcare service to be eligible for reimbursement by Medicare, Medicaid or private insurance, it must be medically necessary. This means it must be[2]:

• Appropriate for the symptoms and diagnosis or treatment of the patient’s condition
• Provided in accordance with standards of good medical practice
• Not mainly for the convenience of the patient or provider
• The most appropriate supply or level of service that can safely be provided

The concept of medical necessity is determined on a case-by-case basis, taking into account an individual patient’s condition and medical history. There is often no definitive yes-or-no answer when it comes to medical necessity determinations. Instead, there are differing opinions amongst medical experts.

In healthcare fraud cases, prosecutors typically allege that the defendant provider billed for services that were not medically necessary. The crux of this type of case rests on whether the billed services were actually unnecessary or inappropriate. If the defense can show there was a medical basis for providing the care, they may be able to defeat the fraud charges.

Using Medical Necessity as a Defense Strategy

In preparing a medical necessity defense, the legal team will want to review medical records and retain expert witnesses to assess whether there was any medical justification for the services provided. Some key questions include[3]:

• Did the patient have symptoms or conditions that made the billed services appropriate?
• Were less intensive or lower-cost alternatives available that were equally safe and effective?
• Did the provider follow accepted medical practice in ordering the services?
• Did the services yield any documented medical benefit for the patient?

Thoroughly documenting the answers to these questions through medical records, peer-reviewed studies, and expert testimony can demonstrate that the services were not fraudulent, but instead medically warranted.

Some other medical necessity defense strategies include[4]:

• Lack of intent – Since healthcare fraud requires intent, proving the provider had a good faith belief the services were necessary can defeat charges.
• Clinical differences of opinion – There may be legitimate disagreements between medical experts about when a service is required. This can create reasonable doubt about fraudulent intent.
• Industry standards – Showing the services billed fall within generally accepted industry protocols for diagnosis and treatment can justify medical necessity.
• Retrospective analysis – While some services may turn out to be unnecessary in hindsight, real-time medical decisions must be evaluated based on the provider’s perspective at the time.
• Patient demands – Services may be prescribed to satisfy patient demands, not because they are medically needed. However, this alone does not mean the provider had fraudulent intent.
• Clerical errors – Incorrectly coded claims or billing mistakes do not necessarily indicate willful fraud.

Bringing in medical experts early on to review records can determine if a medical necessity defense is viable. Thoroughly developing this defense requires expertise both in the specific medical issues in the case as well as healthcare law and fraud prosecution.

Legal Cases Challenging Medical Necessity Determinations

Several recent legal cases demonstrate how allegations of medically unnecessary care were defeated by challenging the medical necessity determinations[5]:

• In U.S. ex rel. Wall v. Vista Hospice Care, a hospice provider was accused of fraud for admitting patients who were not truly terminally ill. Their defense team utilized medical experts to successfully show the patients’ symptoms justified hospice admission based on established Medicare guidelines.
• In U.S. ex rel. J. Crews v. Elite Home Health Care, a home health agency disputed allegations they billed for unnecessary services. Their legal team cited clinical standards and expert testimony to prove the medical necessity of the billed care.
• In U.S. ex rel. Reuille v. Chapman, a cardiologist defeated fraud charges by having multiple experts review medical records and find his stent placements were warranted for patients.

These cases demonstrate that alleged fraud involving medical necessity can often be refuted when the defense thoroughly vets the medical justifications for care.

Proving Medical Necessity is Challenging

While a medical necessity defense can be successful in some cases, it does have limitations. Some key challenges include:

• The legal definition of “medical necessity” may differ from a provider’s good faith clinical judgment.
• There are often no definitive medical criteria, making necessity subjective and hard to prove.
• Prosecutors have access to a range of experts who can second-guess medical opinions.
• Providers may fail to adequately document reasons for care in the medical record.
• Differences of opinion between medical reviewers do not necessarily exonerate the provider.
• Records and expert opinions may appear “too perfect” and raise suspicions of being rigged for litigation.

Facing allegations of billing for unnecessary services can be daunting for providers. However, developing a strong medical necessity defense supported by robust medical evidence and expertise can help defeat these allegations in many instances. Partnering with experienced legal counsel is key.

The Bottom Line

While healthcare fraud charges should always be taken seriously, providers accused of billing for medically unnecessary care have a potential defense strategy by challenging the medical necessity determinations. Thoroughly evaluating the medical records, retaining qualified experts, and highlighting clinical justification for services rendered can in many cases defeat allegations of fraud. However, medical necessity is complex and subjective, so experienced legal guidance is critical when facing such allegations.