Medicare audits can be very intimidating. Those that do not involve an accusation of false or fraudulent billings should be taken seriously. Those that have an element of suspicion of fraud will come from a Zone Program Integrity Contractor (ZPIC) and these are much more serious. If an audit from the ZPIC hits your door, you should seek the experience and knowledge of a licensed attorney in your area.

Medicaid is a federally- and state-funded program, and therefore the government of each jurisdiction must work together to determine there is no Medicaid fraud. Audits are the beginning of the investigation for suspected healthcare fraud. In addition to seeking legal counsel if you are audited, you should also read the letter carefully and prepare to produce any information or documentation that they request. Make all billing statements and records of tests or treatments (including a full medical record, if requested) available to the investigator. Always respond timely to the investigator. The letters in the audit will include a date by which all of the supporting documents are due – follow these instructions to the tee.

Section 18 U.S.C. § 1347 (health care fraud), prohibits an individual or entity from knowingly and willfully executing, or attempting to execute, a scheme and artifice to defraud Medicare, and to obtain, by means of materially false and fraudulent pretenses, representations, and promises, money and property owned by, and under the custody and control of, Medicare. There are additional claims, including ‘the Anti-Kickback Statute’ and False Claims Act. However, very often, the government will add charges for money-laundering, which can increase the penalties for up to 20 years’ imprisonment for each count charged and convicted. Defending against this myriad of claims will require the advice of an attorney with in-depth knowledge of the Medicare act.

Some defenses that can be made are to create a distinction between fraud and error. To commit fraud, someone must knowingly engage in a plan, scheme or activity to provide falsehoods, with the intent to achieve some financial gain. This is not the same as mistakenly billing for a treatment a patient did not receive. The best defense, however, is a good offense – that is, corporations and doctors need to be proactive, and create oversight to prevent the possibility of an insurance investigation. This includes a system in place for all employees and teaching its staff to recognize insurance fraud.

One recent case in New York illustrates the seriousness with which the government treats government fraud. Oscar Huachillo was sentenced to 87 months in prison, and ordered to pay over $3 million in restitution, and $31 million in forfeiture. Huachillo had set up and operated several health clinics in New York that alleged they provided injection treatments to HIV/AIDS patients. In actuality, they billed for medications that were never provided or were unnecessary because the patient did not actually need the treatments. Several cases involve the defrauding of HIV/AIDS clinics and patients. These kinds of crimes are particularly heinous because they defraud the American people, as well as take advantage of the poorest and most vulnerable sects of society.

If you are hit with a Medicare audit, no matter where it comes from, you should take it seriously, and consult with legal counsel as soon as possible.