Medically Unnecessary Services

What are medically unnecessary services?

Health care items and services are considered “medically unnecessary,” and therefore not reimbursable by Medicare or Medicaid, when they are not “reasonable and necessary for the diagnosis or treatment of illness or injury.”

There are many qui tam whistleblower cases in which health care providers have violated the False Claims Act by providing services that were medically unnecessary.

In general, the Medicare program only pays for items and services that are “reasonable and necessary for the diagnosis or treatment of illness or injury.” See 42 U.S.C. § 1395y(a)(1)(A). Federal law and regulations require that any health care provider who furnishes health care services that may be reimbursed under Medicare, Medicaid, or TRICARE must ensure that, to the extent of his or her authority, those services are provided “only when, and to the extent, medically necessary.” See 42 U.S.C. § 1320c-5(a); 42 C.F.R. § 1004.10.

This requirement makes the health care provider the “gatekeeper” who, through the exercise of unbiased medical judgment, plays a critical role in determining what services will be reimbursed with federal funds. If the gatekeeper’s medical judgment is somehow bypassed, or perhaps corrupted – for example, by the receipt of kickbacks from a party who would benefit from the gatekeeper’s decision to purchase or use that party’s products in the course of patient care – then the federal health insurance system is at risk of paying for services that are not really medically necessary.

It can be very difficult to pursue a qui tam False Claims Act case based on the provision of medically unnecessary services where, in the unbiased judgment of a doctor, a service was considered to be reasonable and necessary. In the successful cases in this area, one of the following is typically present: (a) a service, such as a medical test, was provided to a patient (and billed to a federal health insurance program) under circumstances indicating that the doctor did not know that the service was being ordered; or (b) a person or company was falsifying records to make it appear that patients met medical criteria for a service, when in fact, the patients did not meet those criteria; or a doctor who provided or ordered a service, prescribed a drug, or used a specific medical device, did not have unbiased judgment because the doctor was receiving a kickback from another party that benefited from the fact that the service, drug, or medical device was being provided.

VSG’s Healthcare Qui Tam Lawyers Are Experienced in Handling Medically Unnecessary Services Cases

VSG represented a whistleblower who alleged that National Medical Care (NMC), Inc., a pharmaceutical company, was paying unlawful kickbacks to induce physicians and nurses to provide unnecessary intravenous nutrition to dialysis patients covered by Medicare. Fresenius Medical Care North America, the successor company to NMC, paid $385 million to settle civil claims in that case and another related qui tam case, and the VSG client received an award of several million dollars. VSG also represented a whistleblower who alleged that Home Americair of California, Inc., a durable medical equipment (DME) company, was creating and using false records to make it appear that patients needed home oxygen, when in fact the patients did not meet the medical criteria that Medicare established for reimbursement for the use of home oxygen. The company paid $5 million to the Government to settle the claims, and the whistleblower received a significant reward.

In another set of qui tam whistleblower cases brought by VSG attorneys, UroCor, Inc., and Dianon Systems, Inc., medical laboratory companies, paid $9 million and $4.8 million respectively, to resolve allegations that they were billing Medicare for medically unnecessary lab tests that physicians did not even realize were being ordered. The whistleblower client was awarded more than a million dollars.