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Medicare and Maine Medicaid Healthcare Fraud Settlement Case

  • by Steve Nesnidal, MD, CPC, AHFI
  • May 17, 2023, 11:02 AM
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In a recent press release, the U.S. Attorney's Office, District of Maine, announced a fraud settlement with a physician1. This family practitioner agreed to pay over $330,000 to settle allegations of violating the False Claims Act. The settlement involved billing false claims to Medicare and Maine Medicaid (MaineCare) for services that were either never provided or were not medically necessary. The services involved in this case were Tobacco Cessation Counselling, Osteopathic Manipulative Treatment (OMT), and Drug Testing services, as well as Evaluation and Management (E/M) services.

To highlight how claims for medically unnecessary services can add up to a high dollar amount if billed fraudulently, take for example tobacco cessation. Medicare allows tobacco cessation therapy CPT codes 99406 and 99407 per their national coverage policy 2. These codes must meet specific medical necessity diagnosis codes [JD1] and may not exceed 8 sessions per 12-month period. The dollar amount can add up in a 12-month span if all 8 sessions are billed but no medical necessity was established.

At the local contractor level3, Osteopathic Manipulative Treatment (OMT) CPT codes 98925-98929 must also meet specific diagnosis codes for medical necessity. Per local policy, OMT specifically encompasses only the procedure itself. E/M services are covered as a separate and distinct service when medically necessary and appropriately documented. A provider can submit a higher dollar amount claim by adding an E/M to the OMT claim.

Another service highlighted in this case is drug testing. Medicare specifies medical necessity for CPT codes 80305, 80306, 80307 and HCPCS codes G0480, G0481, and G0659. The local contractor policy provides a specific list of diagnosis codes that support medical necessity for Urine Drug Testing services4.

While this case involves Medicare and Medicaid, it is true that providers engaging in such billing behavior will rarely limit themselves to government programs and will also bill commercial health plans the same way. Most commercial plans follow CMS guidelines in these situations. Guarding against these situations is very important.

Context 4 Healthcare’s medical necessity rules will identify claims that do not meet medical necessity per national and geographical local contractor levels. Our rules will also identify utilization beyond allowable.   

For more details on Context 4 Healthcare’s Payment Integrity Solution, which includes a complete and effective ruleset, among which include the NCD/LCD rules and E/M rules mentioned above, visit us at: https://www.context4healthcare.com/solutions/payment-integrity/medical-payment-integrity


  1. https://www.justice.gov/usao-me/pr/arundel-resident-agrees-pay-over-330000-settle-allegations-false-claims-act-violations
  2. https://www.cms.gov/medicare-coverage-database/view/ncd.aspx?ncdid=342&ncdver=1&
  3. https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?lcdid=33616&ver=10&bc=0
  4. https://www.cms.gov/medicare-coverage-database/view/lcd.aspx?lcdid=36037&ver=46&bc=0


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