What Is Phantom Billing?
Phantom billing is charging Medicare and Medicaid, or Tricare, for care that was never provided: a treatment that never happened, a visit that never occurred, a patient who was never seen.
It is one of the most common forms of healthcare fraud, because it is the simplest to run.[1] Just one or two people can do it, and the bills look ordinary until someone compares them to the care actually delivered.
Healthcare is a $4.9 trillion system, and experts estimate up to 10% of medical claims contain some fraud.[2] Phantom billing is a violation of the False Claims Act, and a whistleblower who reports it can recover 15% to 30% of what the government collects.
If you have seen a provider bill for care that was never delivered, call (888) 713-6653 for a free, confidential review of your potential claim.
Phantom billing vs. upcoding vs. unbundling. These three get confused. Phantom billing is charging for care that never happened at all. Upcoding is billing a real service under a higher-paying code than what was actually done. Unbundling is taking one service that should be billed as a single package and splitting it into separate line items to collect more. All three are False Claims Act violations, but phantom billing is the most blatant because there is no underlying service at all.
How Phantom Billing Works
Phantom billing is the act of submitting bills for the payment of services, treatments, procedures or prescription drugs that were never performed or necessary.
This is identified as a specific form of medical fraud and is prosecuted under the False Claims Act (FCA).
Medical practitioners use fraudulent billing to make hundreds of thousands of dollars without any expense because the patients never existed and treatments never occurred.
Phantom invoicing for non-existent treatments is an unethical medical billing practice and is the most common form of fraud because it is so simple to commit.
Only one or two people need to be involved to accomplish this fraudulent act. This is one reason it is difficult to stop and easy to carry out.
Patients and staff members can be totally unaware of the illicit activities since medical procedures never actually happened.
Patients can also be part of the scam. A healthcare provider will offer monetary compensation to patients, in exchange for the patient cooperation.
Doctors and individuals are not the only ones responsible, although they will typically share in the blame since their medical license is involved.
Both large and small medical businesses are caught in massive billing fraud scams.
Common places to find perpetrators of false billing fraud:
- Medical Clinics
- Dental Offices
- Physical Therapy Centers
- Hospice Centers
- Hospitals
- Pharmacies & Pharmaceutical Companies
- Medical Laboratories
- Home Healthcare Agencies
- Insurance Providers
The phantom billing problem is spread across the entire healthcare system and includes billing for unnecessary services.
Discovering the existence of phantom billing can be difficult. Knowing what to look for is key. Here are some examples from successful FCA lawsuits for phantom billing.
Doctors & Physicians
- The Scam - Using a Doctor’s office to bill for physical therapy services that never took place
- The Process - The physician at his medical practice encouraged staff members to bill for non-existent treatments and authorized services that were never provided
- The Take - $237,187 in false bills
- The Outcome - $900,000 in fines, and the doctor was forced to sell his $3 million home[3]
Orthopaedic Care Facility
- The Scam - Submit fabricated bills for service that did not take place and double bill for x-rays
- The Process - Use Medicare, Tricare management administration and the Federal Employees health benefit program to pay for the fake invoicing
- The Take - Undisclosed
- The Outcome - $2.5 million settlement to the Federal Government[4]
These two examples of phantom billing fraud can be reported by employees or patients who are aware of the scam. Whistleblower rewards and protection are provided under the FCA and Whistleblower Protection Act.
Another racket used to extort money from the publicly provided medical programs under phantom billing is charging for unnecessary services.
Charging for Unnecessary Services: How it works
Phantom or Ghost billing fraud also includes claims for reimbursement of medically unnecessary treatments, drugs, exams or anything medically provided to a patient they had no need for.
This area of billing fraud can be difficult to clearly define as medical providers seek to cure patients ailments using exploratory treatments that will identify the cause of the illness. The false diagnosis is the root cause for the justification of unnecessary treatments.
Medicare coverage defines its coverage limitations using the concept of “reasonable and necessary”. Physicians and patients can utilize this insurance coverage for the diagnosis and treatment of illness as long as it is a justifiable remedy.
The medical services ordered must also be provided in an economically sound manner and only done when necessary.
When these rules are followed no laws have been broken. However, when healthcare professionals intentionally or willfully ignore the rules, an FCA violation for unnecessary billing exists.
Some common examples of unnecessary treatment include:
- Patients who can completely and safely provide transportation themselves are ordered ambulance transportation
- Testing and examining every patient for illnesses or diseases they are not at risk for or so symptoms of
- Foregoing common, less invasive treatment modalities like prescription drugs, for expensive and surgical treatments
In general, the scam involves perfectly healthy patients administered treatment they have no medical reason for receiving.
A perfect example can be found below.
Dentist
- The Scam - Target an employer health care plan that provides 100% coverage for dental work in cooperation with an employee union
- The Process - Submit false bills for dental procedures that were unnecessary. Patient’s perfectly healthy teeth received treatment for decay. Kickbacks were also given to patients for their cooperation
- The Take - More than $1 Million Dollars
- The Outcome - The dentist received a 3 year 10 month prison sentence and $75,000 in fines[5]
When not involved, unnecessary billing is more difficult for patients and even trained medical staff to figure out because diagnosis and treatment recommendations are trusted to the Doctor.
While this is true, any healthcare professional like pharmaceutical sales representatives, office managers, EMTs and others have all successfully filed claims under the FCA to stop unnecessary medical fraud and get rewarded.
Phantom Billing FAQ
- Q: What is phantom billing?
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A: Phantom billing is submitting a claim to Medicare, Medicaid, or Tricare for care that was never provided, a treatment that never happened, a visit that never occurred, or a patient who was never seen. It is a violation of the False Claims Act.
- Q: How do you prove phantom billing?
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A: The case is built on the gap between what was billed and what was actually delivered. The proof usually comes from patient records, appointment schedules, statements from patients who never received the service, and the Medicare Summary Notice that lists every claim paid in the patient's name.
- Q: Who can report phantom billing and get a reward?
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A: Billers, coders, office staff, nurses, and even patients can file. You file a qui tam case under the False Claims Act and recover 15% to 30% of what the government collects. Simply calling a fraud hotline reports the conduct but does not pay a reward.
- Q: Is phantom billing a crime?
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A: It carries civil liability under the False Claims Act (treble damages plus a penalty per claim) and can also be prosecuted criminally as health care fraud. Civil and criminal cases often proceed at the same time.
- Q: Can I report it without my employer knowing?
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A: A qui tam complaint is filed under seal, so your employer does not learn of it while the government investigates. Your identity is generally protected during that period, and the False Claims Act makes it illegal to retaliate against you for filing.
Report Billing Fraud & Get Rewarded
Medicare fraud can be reported anonymously, however whistleblowers will receive no reward for this action.
The FCA and the federal government provide rewards and protection for those willing to come forward and help stop waste and abuse.
Fraud takes a huge financial toll on the government every year causing rates and taxes to increase. Along with its own departments, the Government pays private companies millions of dollars to investigate medical fraud and it is still rampant.
That is why such high rewards and protection is offered. Whistleblowers can receive 15%-30% of what the government recovers from a phantom billing scheme.
In the Orthopedic Clinic case above the relator could have received up to $750,000 dollars.
The rewards can be tempting but whistleblowers need to understand they must have a reasonable claim for reporting. Individuals filing a claim under false pretenses can be held liable.
Phantom billing works because no one outside the billing office can see it. The patient was never there, so the only people who know are the ones looking at the claims.
Lawsuit Legal helps the people who see those claims turn what they know into a qui tam case, on contingency, with nothing owed unless there is a recovery.
Call (888) 713-6653 for a free, confidential review of your potential phantom billing claim. You Win or It's Free.
We work with the billers, coders, office staff, and patients who recognized a charge for care that never happened.
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