The Medicare and Medicaid Patient Protection Act of 1987, 42 U.S.C. §1320a-7b provides for criminal penalties for certain acts impacting Medicare and state health care (e.g., Medicaid) reimbursable services. Of primary concern is the section of the statute which prohibits the offer or receipt of certain remuneration in return for referrals for or recommending purchase of supplies and services reimbursable under government health care programs.

The average price wholesalers pay manufacturers for drugs that are sold to retail pharmacies. The transactions used to calculate AMP are to reflect cash discounts and other reductions in the actual price paid.

The lowest manufacturer price paid for a drug by any purchaser (defined by the Medicaid statute as “any wholesaler, retailer, provider, health maintenance organization (HMO), or nonprofit or government entity” with some exceptions. A drug’s reported best price is required to reflect all discounts, rebates, and other pricing adjustments.

A collected body of information on the standards of strength, purity, and quality of drugs. The official compendia in the United States are the United States Pharmacopoeia, the Homeopathic Pharmacopoeia of the United States, and their supplements.

Federal Enforcement and Recovery Act.

A listing of drugs intended to include a large enough range of medications and sufficient information about them to enable health practitioners to prescribe treatment that is medically appropriate. Hospitals maintain formularies that list all drugs commonly stocked in their pharmacies. Third-party organizations such as insurance companies usually maintain formularies that list drugs that the company will cover under plan benefits.

(“group purchasing organization”) - An entity utilized by health care providers-such as hospitals, nursing homes and home health agencies-to aggregate purchases to negotiate discounts with manufacturers, distributors and other vendors.

Health Care Financing Administration.

New York City and Chicago have enacted their own versions of the False Claim Act with qui tam provisions, enabling them to recover money at the state or municipal level.

A third party administrator of prescription drug programs. They are primarily responsible for processing and paying prescription drug claims. They also are responsible for developing and maintaining the formulary, contracting with pharmacies, and negotiating discounts and rebates with drug manufacturers.

Qui tam is an abbreviation from the Latin phrase “qui tam pro domino rege quam pro sic ipso in hoc parte sequitur”, meaning “who as well for the king as for himself sues in this matter”. A qui tam action allows private citizens to file a lawsuit in the name of the federal or state governments charging fraud by contractors and others who receive or use government funds.

This is the term used to identify a whistleblower who brings a qui tam suit under either the federal or state false claims acts.

A law that governs and limits physician self-referral for Medicare and Medicaid patients. The law is named for United States Congressman Pete Stark, who sponsored the initial bill.

Currently, 24 states have enacted their own false claims acts that mirror the federal law.

Also called the “Lincoln Law”, the “Informer’s Act”, or the “qui tam” statute, The FCA was first enacted in 1863 to urge whistleblowers to come forward by giving them a portion of the money recovered by the government. It was applicable to all government contractors, federal programs, and other circumstances involving the use of federal revenue. The False Claims Act was amended in 1943, 1986, and again in 2009, to assure the whistleblower’s share of recovery, the ease of bringing a whistleblower lawsuit, and to clarify prohibited misconduct and punishment for defendants.

Exploding Medicare reimbursement A fraudulent practice in which provider services–eg, blood or chemistry panels are broken down to their individual components, resulting in a higher payment by Medicare.

A fraudulent practice in which provider services are billed for higher CPT procedure codes than were actually performed, resulting in a higher payment by Medicare or 3rd-party payors.