Compliance Laws

All providers should be aware of the following Federal fraud and abuse laws. It is crucial to understand these laws not only because following them is the right thing to do, but also because violating them could result in criminal penalties, civil fines, and exclusion from Federal and State health care programs. Medicaid is considered a Federal health care program because states receive approximately 50% funding from the Federal government. 

False Claims Act [31 U.S.C. § 3729-3733]

It is illegal to submit claims for payment that you know or should know are false or fraudulent. Under the FCA, no specific intent to defraud is required. The civil FCA defines “knowing” to include not only actual knowledge but also instances in which a person acted in deliberate ignorance or reckless disregard of the truth or falsity of the information. Ignorance of the law is not an excuse.

Anti-Kickback Statue [42 U.S.C. § 1320a-7b(b)]

In Federal health care programs, paying for referrals is a crime. The statute covers the payers of kickbacks (those who offer or pay remuneration) as well as the recipients of kickbacks. Taking money or gifts from a drug company or a DME company is not justified by the argument that you would have prescribed that drug or ordered the supply or equipment even without a kickback.

Physician Self-Referral Law [42 U.S.C. § 1395nn]

Commonly referred to as the Stark Law, the Physician Self-Referral Law prohibits physicians from referring patients to receive “designated health services” payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship. Examples of designated health services defined in the law include: clinical laboratory, home health, DME and supplies, radiology and imaging, and OT, PT and Speech Therapy. For a complete list please see CMS’ Stark Law Web site.

Exclusion Statute [42 U.S.C. § 1320a-7]

The OIG is legally required to exclude from participation in all Federal health care programs individuals and entities convicted of Medicare or Medicaid fraud, as well as other criminal offenses. In the case of excluded physicians, they may not bill directly for treating Medicare or Medicaid patients, nor may their services be billed indirectly through an employer or group practice. Providers should use the HHS, OIG online exclusion database, available at to screen managing employees, physicians, nurses, and contractors to determine whether any of them have been excluded from Federal health care programs.

Civil Monetary Penalties Law: mistakes could be (very) costly

The Civil Monetary Penalties Law (CMPL) authorizes the Secretary of Health and Human Services to impose civil money penalties, an assessment, and program exclusion for various forms of fraud and abuse involving the Medicare and Medicaid programs. Penalties range from $2,000 to $100,000 for each violation, depending on the specific misconduct involved. The monetary sanctions imposed generally far exceed the damages actually sustained by the government. The Health and Human Services Inspector General must prove liability by a “preponderance of the evidence” rather than the more demanding “beyond reasonable doubt” standard required in criminal actions. A health care provider can be held liable based on its own negligence and the negligence of its employees. There is no requirement that intent to defraud must be proved.