Healthcare providers are no strangers to Medicare audits and the havoc they can impose, but with careful billing, attention to detail, and adequate documentation, it is possible to turn the tide. However, a recent trend indicates that these audits are being examined much more closely and are quickly morphing into something far more serious—an investigation under the False Claims Act (FCA).
The Medicare audit process typically involves a review of healthcare claims, medical records, billing codes, and supporting documentation. When alleged discrepancies are found—such as improper coding, overbilling, or inaccurate claims—providers may face repayment demands and other related consequences, usually contained within the administrative Medicare framework and not escalated to a matter under the FCA… Until now.
What is the False Claims Act (FCA)?
The FCA is a powerful federal law designed to hold individuals and organizations accountable for submitting fraudulent or false claims for payment from the government. In the healthcare sector, the FCA is often invoked to prosecute providers who engage in perceived fraudulent billing practices. Common allegations include submitting claims for services that were never rendered, misrepresenting the procedures or services actually provided, or inflating billing codes to increase reimbursement rates.
How Medicare Audits Can Lead to FCA Claims
The key connection between Medicare audits and FCA allegations lies in the assertion of alleged fraud or improper conduct during the audit process. What often starts as a routine review of documentation and patient files can quickly escalate if discrepancies or signs of fraudulent activity are alleged by the Medicare contractors. For example, if the findings of an audit assert that a provider consistently submits claims for services that were never rendered or inadequately documented, it may raise red flags that trigger an FCA investigation. From that point, the legal consequences can become significant.
The Financial and Legal Impact of FCA
A violation of the FCA can be costly. The breakdown of potential penalties for providers could be as follows:
- Per-Claim Penalties: The law imposes a penalty for each false claim submitted. As of 2025, these penalties range from $13,508 to $27,018 per claim.
- Treble Damages: In addition to the per-claim penalties, violators may be required to pay up to three times the amount of damages sustained by the government due to the false claims.
- Exclusion from Government Programs: Those liable under the FCA may face exclusion from participating in federal healthcare programs, like Medicare and Medicaid.
- Criminal Charges: While the FCA is a civil statute, in the most egregious cases, it can lead to criminal charges.
Key Trends for 2025
Using the FCA as a tool to combat alleged Medicare fraud is here to stay. Recent United States Department of Justice (DOJ) commentary has emphasized Medicare as a key enforcement priority for the FCA. Furthermore, artificial intelligence (AI) and data analytics are revolutionizing the audit process, potentially heightening the risk of FCA claims. According to Medical Coding News, Medicare auditors are anticipated to increasingly utilize AI to identify purported unusual patterns or anomalies—like excessive billing for particular procedures or services—allowing for quicker, yet not necessarily more accurate, analysis of extensive claims data.
This shift toward AI-driven audits means that providers should become more diligent in ensuring their documentation is both accurate and comprehensive. Potential errors or discrepancies in medical records, no matter how small, can be flagged by automated systems, leading to heightened scrutiny and quite possibly a heightened risk of an FCA investigation.
Looking Forward
As 2025 progresses with numerous changes and developments with federal oversight and healthcare generally, providers must remain vigilant in their billing practices and documentation. Taking steps to ensure compliance is quite often the best defense against Medicare audits and FCA allegations.
For over 40 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to Medicare audits or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com