In 2009, Congress made an important improvement to the False Claims Act, expanding the “Reverse False Claims” provision to reach those who consciously retain an overpayment of government funds. The impact of this amendment will not be realized for years, but the potential size of the overpayment iceberg is truly remarkable.

For example, an FY 1996 Medicare audit found that Medicare overpayments amounted to $23.2 billion (or 14% of the total program costs), due to fraud, waste and abuse.  Certainly a significant portion of those overpayments were due to fraud (or at least the wrongful retention of overpayments). Recent smaller-scale audits have returned similar percentages.

Another telling sign was revealed in a recent CMS report, which announced that the Medicare Recovery Audit Contractor (RAC) program has collect $575 million in overpayments from October 2009, when the RAC program was expanded nationally, through June 2011. Notably, RAC overpayment collections have grown steadily in fiscal year 2011, from $81 million for the first quarter to $233 million for the third quarter.

Sometimes referred to as “armchair investigations,” Medicare RAC investigations rarely unravel complex overpayment schemes. Corporate insiders are much better positioned to fully expose overpayment schemes. The federal False Claims Act pays substantial whistleblower rewards to do so.

For more information about qui tam law and Medicare fraud, contact Nolan and Auerbach, P.A.