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Tele-radiology, Medicare Fraud & the False Claims Act

Jared Jacobson, Esq. and Franklin J. Rooks. Jr., PT., MBA, Esq. on 12/16/2014
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It is no secret that the healthcare industry is rapidly expanding in the United States and globally, although some sectors are seeing more growth than others. Surprisingly, in 2013 alone, healthcare spending grew only 3.6% in the U.S., which was the lowest annual increase since the Centers for Medicare and Medicaid Services began tracking the statistic in 1960. However, one segment of the healthcare market that is seeing a huge push is the tele-radiology market, which is expected to grow by 23% globally over the next several years into a $3.7B market. Such rapid growth in the healthcare industry has traditionally led to a stream of whistleblower claims under the False Claims Act. Simply put, whistleblowing is speaking up against activity that one reasonably believes is against the law. Although 80% of government fraud takes place within the Healthcare Industry, companies that do any business with the federal government or any government program are at risk of qui tam claims including defense contractors, nursing homes, ambulance companies, affordable care living, pharmaceutical companies and medical device companies. It is generally done through a qualified whistleblower lawyer. If a whistleblower is successful, it is not uncommon for the relator to recover millions of dollars.

Tele-radiology is the electronic transmission of radiologic images from one location to another so that a physician acting at another location can interpret the images. Tele-radiology services do not require a face-to-face encounter with the patient and can be performed by providers 24 hours a day, 365 days a year.

Radiologic imaging contains both a technical component (TC) and a professional component (PC). The TC is the actual performance of the diagnostic test while the PC is a radiologist’s interpretation of the diagnostic test results, i.e., "reading" the test result. As you can see, with tele-radiology, the professional component and the technical component of the radiologic tests may be provided in different physical settings. To achieve economic savings on the costs of imaging interpretations and to take advantage of the 24/7 availability imaging interpretations, outsourcing of the PC is increasing and is perhaps ahead of the laws that govern such an arrangement, leading to potential Medicare fraud and billing fraud.

Medicare rules permit a physician or supplier to bill for both the technical and professional components, even when the professional component is outsourced. When radiologic interpretations are outsourced to a different entity, Medicare requires separate billing of each component. That is, if different providers perform the TC and the PC of a radiology study, the components must billed separately. Medicare allows global billing (billing for both the professional and technical components) when both components are furnished by the same physician or supplier entity in the same fee schedule locality. Medicare’s place of service (POS) rules govern the reimbursement for services performed in varying fee localities. While the professional and technical component may be performed in different localities, both components must be performed within the United States. Medicare will not reimburse for radiologic interpretations performed in India or other countries (if Medicare is aware of it), although this is not stopping many entities from outsourcing, regardless of whether it is because they are unaware of the prohibition or simply write it off as the cost of doing business.

If the PC is outsourced, Medicare tempers the reimbursement for this component with the "anti-markup rule." The anti-markup rule prohibits the billing physician from marking up the cost of that component to Medicare unless that physician "shares a practice" with the party from whom that component was purchased. There is a set of rules which must be applied to determine whether the two parties "share a practice."

As you might expect, outsourcing the PC presents some complexity when billing Medicare and other government payors. Potential Stark law and False Claims Act issues loom if providers circumvent the billing compliance requirements. One practice that has developed is "ghost reading," which is when a radiologist located outside of the United States reads a radiologic image, provides an interpretation, and a U.S. based radiologist signs off on the interpretation. Medicare is then billed as if the PC took place within the United States. This is Medicare Fraud. Examples of other fraudulent schemes include: misrepresenting the place of service; intentionally billing globally, rather than by the respective components when such separate billings are required; or billing for interpretations performed by persons who are not qualified to do so. Besides the legality of fraudulently billing Medicare, out-sourcing of radiologic interpretations could also compromise patient safety, which may constitute a False Claims Act violation by itself.

Tele-radiology services offer many advantages, but also provide yet another mechanism for Medicare Fraud under the False Claims Act. Compliance with the Anti-Kickback statute and Stark laws is essential. When compliance is skirted, opportunities for recovery under the False Claims Act may be presented. Whether you are a compliance officer working with tele-radiology services, a hospital employee, or an employee who is working at such a company and are aware of the improper and illegal billing, should you wish to bring fraudulent billing to life, you need to be careful to work with a qualified whistleblower lawyer or False Claims Act attorney to preserve your rights, protect you from retaliation, and perhaps help you to recover a substantial sum of money for doing so.

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