The Justice Department is increasing healthcare fraud enforcement, targeting illegal kickbacks, overbilling, and telemedicine schemes.
The Department of Justice has ramped up its efforts against healthcare fraud, and enforcement actions are on the rise. This push doesn’t seem to be slowing down, making it important for doctors to carefully assess their business relationships and consult legal professionals before entering into agreements that involve financial transactions.
The 2024 National Health Care Fraud Enforcement Action resulted in criminal charges against 193 individuals, including 76 medical professionals. The fraud schemes at play involved around $2.75 billion in intended losses and $1.6 billion in actual losses. Authorities focused on fraudulent activities related to wound grafts, unlawful prescriptions of Adderall and other stimulants, and questionable telemedicine and laboratory practices. Cases involving the healthcare industry also made up the biggest portion of False Claims Act settlements and judgments for the fiscal year.
Federal prosecutors have signaled their intent to crack down on a variety of fraudulent activities, including improper opioid prescriptions, unnecessary medical services, poor-quality care, Medicare Advantage overbilling, illegal kickbacks, Stark Law violations, and COVID-19-related fraud. These areas are expected to remain enforcement priorities.
A change in presidential administration often raises questions about whether enforcement will shift. However, fraud investigations under the False Claims Act and anti-kickback statutes take years to build, meaning they tend to continue regardless of who is in office. Additionally, the government recoups significant money through healthcare fraud enforcement, ensuring it remains a priority. That said, certain policy freezes, rollbacks of prior administration policies, and hiring slowdowns could influence how aggressively these cases are pursued. Efforts to modernize government technology systems may also play a role in identifying fraud more efficiently through improved tracking and analysis of claims data.
Because healthcare fraud enforcement is a reliable revenue source for the government, it’s likely that more funds will be allocated to it. If Trump’s new DOJ appointees decide to take a more involved approach, they could influence how settlements are structured and negotiated.
One key appointment is Mehmet Oz, tapped to lead the Centers for Medicare and Medicaid Services. Oz has described traditional Medicare as inefficient and suggested expanding Medicare Advantage, where costs could be shared by employers and employees. However, some Democratic lawmakers argue that Medicare Advantage providers overcharged the agency by $83 billion in 2024 through inflated billing practices. It remains to be seen how Oz’s approach to Medicare policy will affect fraud enforcement.
Despite any political changes, certain areas of healthcare fraud will remain in focus. These include clinical lab arrangements, medical equipment supplier contracts, telemedicine services, pharmacy benefit managers, and financial relationships between pharmaceutical companies and healthcare providers.
Many doctors don’t believe they will ever be caught up in a fraud investigation, but it can happen unexpectedly, especially amid the increase in enforcement actions. Sales reps, vendors, and even company executives can lead medical professionals into problematic arrangements. Some recent fraud cases involved telemedicine companies that ordered genetic tests for conditions like cancer and heart disease. These tests weren’t used to treat patients, making them fraudulent under federal law. Some doctors believe prescribing remotely or approving certain lab tests helps patients, but in some cases, it lands them in legal trouble they didn’t anticipate.
Physicians who accept federal insurance plans should scrutinize their business arrangements. If an agreement exists primarily to generate revenue, direct referrals, or funnel lab work to a provider they have a stake in, it could be legally problematic. Payments tied to referrals or ownership interests can bring serious consequences, including heavy fines and prison time. Legal counsel should review any business deals, confirm payment sources are legitimate, and determine whether arrangements fall within legal protections.
To avoid compliance headaches and enforcement actions, some doctors are moving away from traditional insurance-based practices. Many are opting for direct-pay or membership-based models to reduce legal risks. However, even in these setups, physicians must comply with state laws, maintain patient privacy, navigate employment rules, and run their practices like businesses. While this approach eliminates exposure to federal fraud enforcement, it comes with its own set of regulatory challenges.
For those staying within the traditional system, maintaining strong compliance programs is essential. Doctors and healthcare organizations need to remain cautious, avoid questionable business deals, and seek legal guidance when needed. The government is keeping a close watch on fraud, and staying informed is the best way to steer clear of trouble.
Sources:
DOJ Health-Care Fraud Enforcement Demands Physicians’ Diligence
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