Tastes Like Chicken. Smells Like Fraud.

June 24, 2019

When most people think of kickback schemes in the healthcare context, they immediately go to notions of payments to physicians for referrals.

Now, that’s not an unwarranted assumption because, unfortunately, much of the history of the application of the federal Anti-Kickback Statute involves physician-referral issues.

Within large medical groups, and similarly within physician-owned facilities such as ambulatory surgery centers, exactly what your employed, subcontracted and affiliated physicians are up to is a matter of concern, both directly, as in potentially tainting the entity itself, and indirectly, in terms of what can be horribly adverse publicity.

But there’s another twist entirely, one that’s, unfortunately, tremendously common in other industries and becoming prevalent in healthcare, too.

That’s the activity of non-physicians, specifically administrators and even rank-and-file administrative personnel, especially those in purchasing and accounting positions, who run scans within the confines of your practice or business.

What appears to the unknowing and unsuspecting to be a normal day-to-day business transaction is really something quite different.

Let’s start with a quick story from the non-healthcare context.

Sally, not her real name, was the bookkeeper at a significant-size manufacturing company. Highly efficient (but as it turns out, not highly efficacious) she paid all invoices on a timely basis keeping vendors happy to deliver quick, timely and even last-minute (no problem!) services and supplies.

The problem? Well, several of those quickly paid vendors never actually delivered anything to the company. They were shell entities controlled by Sally. Oops.

In similar fashion, earlier this year, John Davis, the former CEO of what became a defunct 21-office Tennessee pain clinic practice, Comprehensive Pain Specialists, was convicted of federal Anti-Kickback Statute violations in connection with a scam in which he encouraged practice employees to make DME referrals to an entity which kicked 60% of the profit back to him via a shell company.

Ferreting out, as well as preventing, fraud in businesses across the board involves a combination of enforcing business methods and regular compliance auditing.

Although many of the notions are similar, in healthcare, from medical practices to ASCs to labs and other facilities, the issues are far more complex.

A significant amount of the compliance auditing crosses over from “simple” business process and financial concerns to the way that impropriety results in civil and, potentially, criminal liability for the entity, both at the state and federal levels.

And, in healthcare, as was apparently the case in the Davis affair, medical practices and facilities have the additional concern that internal schemes might attract federal prosecutors.

What appears to be normal might not be. Unless you regularly engage in broad compliance audits within your practice or facility, you might not find out. That is, until it’s too late.

Be diligent.

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