A recent $600,000 False Claims Act settlement between the United States Department of Justice (“DOJ”) and an Orange County healthcare practice serves as a critical reminder of the importance of proper credentialing and supervision of providers. The settlement arose from allegations that the practice had billed Medicare and Medicaid for services rendered by non-credentialed providers and, to hide their conduct, falsified patient records to justify these claims. The related DOJ press release can be found here.

For physicians, the settlement underscores the importance of ensuring that every healthcare provider in your practice is fully credentialed and meets the necessary qualifications before delivering services that will be billed to government healthcare programs. Of course, commercial and private insurance plans have similar credentialing requirements that physicians must be aware of as well. Physicians are encouraged to consult with legal and credentialing experts to ensure their practice is compliant.

Credentialing is not merely an administrative task, but a legal requirement. Failing to properly credential a provider or allowing certain mid-level providers to render services unsupervised can be deemed fraudulent, as seen in this case. This could result not only in significant financial penalties, but in more severe cases, in revocation of billing privileges and even criminal referral.

Moreover, the settlement highlights the dangers of altering patient records. In this case, the offending practice altered the records to reflect falsely that a particular physician had seen a patient when, in fact, the patient had been seen by a different provider. Falsifying records, whether to justify billing or for any other reason, can lead to severe legal consequences, including insurance overpayment actions and even license revocation.

To avoid these pitfalls, it's essential to implement and regularly audit a robust credentialing process within your practice. This includes verifying that all providers are properly credentialed and maintaining strict documentation standards. Regular internal audits can help ensure that your practice complies with all relevant laws and regulations.