Providers Beware: Ensure That Diagnostic Tests are Medically Necessary!

A fundamental principle of providing healthcare services to Medicare beneficiaries is that the services must be “medically necessary,†which means that they must be “reasonable and necessary for the diagnosis or treatment of illness or injury.†42 U.S.C. § 1395y(a)(1)(A).

This requirement also imposes an obligation on healthcare providers to ensure that health services ordered are “provided economically and only when, and to the extent, medically necessary†42 U.S.C. § 1320c-5(a)(1). Economically means that the provider should always opt for the less expensive alternative when treating a patient.

However, when it comes to certain diagnostic tests, some providers do not strictly follow these requirements, which creates civil False Claims Act. (FCA) exposure.

For example, the U.S. Department of Justice recently announced that a cardiologist from Michigan paid $2 million dollars to resolve a FCA lawsuit, stemming from excessive testing.  In that case, the government alleged that the cardiologist’s practice routinely ordered certain diagnostic tests to assess blood pressure and evaluate blood flow, without an order from a physician or without regard to medical necessity. It was also alleged that the physician was routinely ordering unnecessary nuclear stress tests to some patients.

While certain diagnostic tests may benefit patients, providers must keep in mind that the tests must be medically necessary. This means that the tests must not only be reasonable and necessary to diagnosis and treatment but must also be economical. If not, then the provider may be liable for millions of dollars owed to healthcare benefit programs, such as Medicare.

FCA cases, such as the one mentioned above, usually start with a whistleblower who tips off the federal government. The federal government may then issue a Civil Investigative Demand to review patient records or other documents to assess medical necessity.

If the OIG or DOJ has notified you that you and/or your entity are under investigation for alleged violations of the False Claims Act, you should immediately contact legal counsel. The Health Law Offices of Anthony C. Vitale has extensive experience in defending FCA cases and responding to various government documents requests including but not limited to Civil Investigative Demands, subpoenas, etc. For more information call 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.