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Oberheiden, P.C. Blog

What Do Health Care Providers Need to Know about Tricare Audits and Investigations?

Doctor and Soldier

For health care providers who serve military servicemembers, veterans, and their families, ensuring compliance with the Tricare billing requirements is just as important as complying with the Medicare and Medicaid regulations. Even if treating Tricare beneficiaries makes up only a relatively small percentage of your practice, you are held to the same legal standards as all other Tricare-participating providers, and violations of the Tricare billing requirements can trigger the same civil and criminal penalties as Medicare and Medicaid fraud.

While most health care providers never envision being targeted by federal authorities, the risks of civil or criminal prosecution can suddenly come into sharp focus when you find out that your practice is the target of an audit or investigation. If you have been contacted by Tricare contract auditors or federal agents from the U.S. Department of Defense (DOD), the U.S. Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), the Drug Enforcement Administration (DEA), the Internal Revenue Service (IRS), or any other federal authority regarding your practice’s Tricare billing records, here are some of the key pieces of information you need to know:

5 Key Facts about Tricare Audits and Investigations

1. All Types of Health Care Providers are at Risk for Being Targeted in Tricare Audits and Investigations

In the past, you may have heard that Tricare audits and investigations generally focused on compound pharmacies. While this used to be true, in today’s world of aggressive health care fraud enforcement, auditors and investigators are targeting all types of health care providers. As a result, along with compound pharmacies, traditional pharmacies, physicians’ practices, therapy providers, testing laboratories, clinics, and other outpatient service providers (as well as entities such as marketing groups and durable medical equipment (DME) companies) are all at risk for being targeted for Tricare fraud.

2. Allegations of Tricare Fraud Can Take Many Different Forms

Just as Tricare audits and investigations are now targeting all types of health care providers, they are also being used to obtain the evidence needed to prosecute providers for all types of Tricare fraud. This includes intentional and unintentional billing errors as well as improper referral and compensation relationships that violate the Anti-Kickback Statute. Examples of billing violations that can be prosecuted as civil or criminal Tricare fraud include:

  • Billing for services not actually rendered or supplies not actually provided;
  • Billing for testing machines and other DME not actually purchased;
  • Billing for services or supplies that do not qualify as “medically-necessary” under the Tricare billing regulations; and,
  • Overbilling Tricare for services, supplies or equipment, whether due to an administrative error, failure to properly “bundle” related services, submission of an incorrect billing code, or intentional fraud.

While the most-common billing violations can be listed, when it comes to Anti-Kickback Statute (AKS) violations, a better way to understand your potential exposure is to understand what types of relationships are exempt from prosecution. This is because the prohibitory language of the statute is extremely broad, and its prohibitions are then subject to a variety of safe harbors and exceptions. The Anti-Kickback Statute’s prohibitions fall into two broad categories:

“Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind—(A) in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or (B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program, shall be guilty of a felony . . . .”

“Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person—(A) to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or (B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program, shall be guilty of a felony . . . .”

In both cases, potential penalties include up to $100,000 in fines and 10 years of federal imprisonment. Safe harbors and exceptions that can protect health care providers from prosecution include qualifying relationships involving:

  • Investment interests
  • Facility rentals and equipment rentals
  • Personal services and management contracts
  • Sale of a health care practice
  • Referral services and arrangements
  • Warranties and discounts
  • Employment and recruitment
  • Group purchasing organizations (GPOs) and cooperative hospital service organizations (CHSOs)
  • Waivers of copayments, coinsurance, and deductibles
  • Health plan and managed care organization exceptions and price reductions
  • Malpractice insurance subsidies
  • Ambulatory surgical centers (ASCs)
  • Electronic prescription and health record items and services
  • Local transportation

3. Tricare Audits and Investigations Can Be Equally Dangerous

If you are facing an audit rather than an investigation, it is imperative not to get lulled into a false sense of security. Although an audit may sound less severe than a DEA, DOD, DOJ, FBI, or IRS investigation, Tricare auditors have the authority to impose significant penalties for fraudulent billings (including substantial recoupments and prepayment review of future claims), and auditors also can – and often will – refer providers to these agencies for possible federal prosecution. Furthermore, since Tricare auditors are government contractors rather than government agencies, they are not necessarily held to the same standards, and they are also financially-incentivized to identify the largest volume and amount of overpayments possible. This (combined with the fact that auditors routinely make a variety of technical, substantive, and procedural mistakes) means that providers targeted in Tricare audits must take swift and proactive steps to protect themselves just as they would during a federal fraud investigation.

4. Tricare Audits and Investigations Can Lead to Civil or Criminal Prosecution

We have already alluded to this fact above, but it is worth clarifying: If your health care practice is being targeted for Tricare fraud (regardless of whether you are currently the subject of an audit or an investigation), at this point you are at risk for civil or criminal prosecution. While most Tricare fraud cases are civil in nature, federal prosecutors will file criminal charges when there is evidence to support them; and, in order to protect yourself against the risk of being sentenced to prison at trial, you need to do everything possible to keep your case civil in nature. This starts with hiring a team of highly-experienced Tricare fraud defense attorneys.

5. Simple Mistakes During Tricare Audits and Investigations Can Have Drastic Consequences

When facing an audit or investigation, many providers make the mistake of assuming that the right thing to do is to be as helpful as possible. They assume that the fact they have done their best to comply with the Tricare billing regulations means they have nothing to hide, and that if they cooperate, then the audit or investigation will resolve itself quickly, quietly, and without significant consequences.

However, this course of action is usually inadvisable for a variety of different reasons. First, in order to face civil liability, you do not need to have intentionally overbilled Tricare (or even necessarily have been aware that billing violations have occurred). If you unknowingly hand over evidence of unintentional billing violations, you could unnecessarily expose yourself to recoupments, prepayment review, and other penalties. Second, auditors and investigators often ask questions in a way that is designed to trip you up. If you misrepresent information, or if you guess at the “right” or “correct” answer, this can come back to bite you in a big way. Finally, if the facts are such that you may be at risk for civil or criminal prosecution, any information you provide will only be used against you.

When Facing a Tricare Audit or Investigation, Your Choice of Legal Representation Matters

With these facts in mind, when facing a Tricare audit or investigation, your first course of action should be to engage experienced legal representation. Your choice of law firms matters, and you need to choose a defense team with a proven record of success in federal health care fraud cases. At Oberheiden, P.C., our attorneys have decades of experience on both sides of high-stakes Tricare fraud matters, and we can use this experience to help mitigate the consequences of your audit or investigation – ideally avoiding recoupments and other penalties entirely.

Schedule a Free Initial Consultation at Oberheiden, P.C.

Have you been contacted by auditors or federal agents concerning your practice’s Tricare billing history? If so, we urge you to contact us immediately for a free and confidential case assessment. To speak with a member of our federal health care fraud defense team as soon as possible, call 888-519-4897 or send us a message online now.

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