How do medical cost reporting irregularities result in a False Claims Act violation?

Certain Medicare and Medicaid providers, particularly hospitals, nursing homes, and clinics, are paid "prospectively,” that is, they are reimbursed for anticipated expenses in advance of actual final review by the Government and the provider of the propriety of the billing or services provided. In order to annually reconcile the reimbursements and actual expenses, a comprehensive “cost report” is prepared by the provider and submitted to the Government. These cost reports frequently contain overcharges and if the overcharges are made "knowingly," the False Claims Act may be violated.

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