Are your billing and coding practices beyond reproach? If you're not sure, it's time to take a hard look at them, because you could be committing insurance fraud without even realizing it.
If you perform a high volume of Medicare cases, you may already know that the government has stepped up efforts to reclaim illegal billings. The Clinton Administration initiated Operation Restore Trust in May 1995, for example, to combat waste, fraud, and abuse in high-spending areas of the Medicare and Medicaid programs, including nursing homes and home health care agencies. So far, this initiative has recovered more than 200 million dollars in overpayments, and health care providers, including surgery centers, are falling under increased government scrutiny.
Understanding what actually constitutes fraud and abuse and putting compliance protocols in place is key to avoiding trouble. Here we'll review areas where even the most vigilant facilities can run afoul of the law. We'll also provide suggestions for dealing with the seven basics of any compliance plan.
How You May Be Committing Fraud and Abuse
The kickback. Perhaps the most obvious kickback situation is a physician or healthcare facility paying or receiving remuneration for referrals. But a kickback needn't be so blatant. It's important to be aware of the kickback in a less obvious form??that of an inappropriate relationship between you or your employees and a supplier.
Attorney Carolyn McElroy, a former president of the National Association of Medicaid Fraud Control Units who now works in the Health Care Section of Mintz Levin Cohn Ferris Glovsky and Popeo PC, in Washington, DC, provides the following example: The head of a radiology department in a large hospital ordered drain cleaner from a telemarketing company that promised him a TV in return for choosing this company as the hospital's sole supplier for this item. Once the radiology technician agreed and received his TV, the supplier threatened to tell his boss about the deal if he did not order additional drain cleaner (which involved a bonus VCR). By the time the technician was prosecuted for accepting bribes, the hospital had purchased enough drain cleaner to last 50 years and had paid five times the going rate for the cleaner, according to Ms. McElroy.
"A preliminary work-up of the case against the telemarketing firm suggested that there were dozens of hospitals around the country that were being similarly victimized," she says.
Many suppliers unabashedly invite inventory managers to behave in an illicit way. In doing compliance checks, the hospital in the above instance discovered that many of the catalogs offered points toward free goods and services when a certain amount was ordered, and they didn't always stop there. Ms. McElroy says, "Some of the catalogs went so far as to mention that the points would not be reflected on the invoices and that the merchandise could be shipped anywhere."
Failure to refund or report credit balances. In the whirl of dual insurance and complex deductible arrangements, it is very common for a facility to collect from more than one insurer, and to find, at the end of the day, that the insurer has overpaid for some services. It is time consuming to send the money back and tempting to just not bother; more than one facility has amassed six-figure credit balance accounts. Medicare requires annual certifications of credit balance funds??part of the almost four hundred million dollar Fresenius clinic case involved the company's failure to refund or account for these balances, points out Ms. McElroy.
Crooked coding services. A great number of large civil settlements have involved coding services, which receive a percentage of reimbursement amounts collected. (Coding companies thus have direct incentive to overstate health care services rendered.) Administrators often happily rely on the billing service as revenues go up, neglecting to periodically check the coding work. This is a mistake. And if you are not keeping an eye on your service's practices, someone from the coding company may be, with serious consequences: When a whistle blower who worked for an Oklahoma coding company filed a qui tam suit (this is when a private party, often a former employee, files a suit on the government's behalf, often receiving up to 30 percent of the government's settlement), the health care provider was found to be jointly liable for multiple damages.
On-site upcoding. If you handle most of your coding tasks on site, you'll need to make sure all of your surgeons and employees understand and follow your policies to the letter. A surgeon listing a breast biopsy as a partial mastectomy, or an anesthesiologist billing separately for time spent in routine pre-op care (which is, under Medicare rules, incorporated into reimbursement for the case itself) are a few examples of obvious fraud. Here are a few examples of other types of upcoding:
- Failure to adequately train staff: Inadequate training of billing personnel is more of a problem than many facility managers would like to admit. To illustrate the neglect that some facilities are capable of, Ms. McElroy points to the billing department of one well-known hospital, which was found by the Medicaid Fraud Control Unit (MFCU) to have used wholly inappropriate coding for medical supplies and drugs. The MFCU extracted a repayment of overbillings and a promise from administrators that the facility would implement a compliance plan. Four years later, when the MFCU discovered the same problem, the hospital could not even locate a copy of its compliance agreement. Having gone relatively easy on the facility the first go-around, the MFCU saw that this time the hospital paid treble damages for its carelessness.
- Coding by rote: This may occur whether or not you use a coding company or do most of your coding on site. It involves using established rules (staff training or an instruction booklet) to maximize revenues by allowing or encouraging employees to overstate services. One general example Ms. McElroy gives is that of an emergency room physician (or billing person) using supplemental codes/modifiers to charge overtime rates for a night or weekend service when, because of the 24/7 nature of an emergency room, the service is actually rendered within the physician's normal shift. Another example is when a surgery center "unbundles" a certain service to collect two fees-for example, reports a laparoscopic hernia repair using both the code for a diagnostic laparoscopy and the code for laparoscopic hernia repair, although the diagnostic phase is already included in the hernia repair code.
Designing a Compliance Plan
"There is no fool-proof way to avoid being the subject of a fraud-and-abuse investigation," says Adam F. Dorin, MD, director of the Surgery Center of Chevy Chase, in Maryland. "But one way of decreasing the likelihood of problems is to form and regularly practice a corporate compliance program."
Ms. McElroy agrees, and says further to beware of designing a compliance plan and not implementing it. "Providers should not draft plans, file them in the bottom drawer, and be lulled into thinking they've got cheap insurance against a bad outcome in a government inquiry. It may actually be more dangerous for a provider to have a compliance plan that is not enforced than it is to have none at all. The government will point to the program as evidence that the provider knew what was necessary and was deliberately negligent."
In putting together any compliance plan for your facility, keep in mind the seven components recommended by the Office of the Inspector General (OIG) of the Department of Health and Human Services. If the OIG pays your facility a visit, surveyors will look for these items, which are applicable to all health care facilities, from the smallest single-specialty surgery center to the largest acute-care hospital.
Single-specialty surgery center to the largest acute-care hospital.
"Something like 25 percent of patients who have an elective procedure will have a total of six elective procedures in their lifetime. With favorable financing, it's very likely the patient will return for another procedure," notes Mr. Cavallaro.
Because plans vary in their terms and acceptance policies, it's often a good idea to have more than one plan to offer patients. The surgery facility managers we spoke to advise having two or three available.
No risk. If a plan offers an extremely high reimbursement rate (over 90 percent) or an extremely low interest rate, double-check to make sure your practice or surgery center isn't assuming some of the risk. In other words, if the patient defaults on the loan, your center will take some or all of the loss.
Perform self-audits. You don't have to check every claim, but you must check a representative sample thoroughly, reviewing all aspects of how each service was provided and billed. Ms. Welsh says that at her facility, about 10 percent of the medical records get audited every month. "You can examine medical records in conjunction with what's been billed, or what's been coded. Or you can compare this data with insurance claims," she says. At Ms. Welsh's workplace, findings are reported to a medical advisory committee and then circulated to the business and nursing staffs. These staff reports not only keep everyone up to date, but also serve as a reminder of how seriously the facility takes billing and compliance. In addition, Ms. Welsh recommends that you don't stop with the self-audit. "You need to be self-monitoring, but you also need an objective set of eyes. Have an agency come in once a year or once every two years to look at what you're
Enforce policies and standards, and establish and publicize adverse consequences for employees who engage in or acquiesce in instances of inappropriate conduct. You don't need to stop there. Ms. Welsh regularly circulates to her staff insurance newsletters that contain stories of billing scandals and their consequences. "It's another part of training," she says.
Engage in prompt corrective action for any offenses. "You want to work with people; if they've done something incorrect, take them back through the correct way of doing things," says Ms. Welsh, who also makes a case for prompt disciplinary action for repeat offenses. "You've got to set an example for your employees," she urges.
Developing a compliance plan may sound complicated, and is surely expensive and time-consuming, but it will arguably pay for itself-facilities with complex costs require well?thought-out procedures and oversight systems. You'll sleep easier knowing that you're doing the best you can and that your facility won't fall through the cracks of legal technicalities.
Staying on Top of Medicare Laws |
When dealing with Medicare and Medicaid claims, "there are several areas of potential liability," Dr. Dorin points out. He suggests that health care providers, physicians, and administrators be aware of federal civil and criminal laws that bar the submission of false claims to the government, as well as the referral issues addressed by Stark laws. Stark laws basically prohibit physicians from referring patients for treatment or other "designated health services" to any healthcare facility where the physician has a financial relationship, such as an ownership or compensation arrangement. The primary civil weapon in combating fraud against the government is False Claims Act (31 U.S.C. Section 3729?3733). Criminal prosecution is possible, but civil cases predominate due to the lesser standard of proof necessary to successfully prosecute. In a nutshell, violating this act applies to anyone who "presents or causes to be presented a false or fraudulent claim for money or property against the US." Violators are subject to fines of $5,000 (abuse) to $10,000 (fraud) per claim, plus triple the amount of damages to the government. The government may also recover litigation and investigative costs, and need not prove specific intent to defraud, in most instances, but rather prove deliberate ignorance or reckless disregard. Pharmacies, nursing homes, health care home services, billing consultants, and surgery centers are among the entities that have been taken to court under the False Claims Act. Since 1986, approximately two billion dollars have been recovered through whistle-blower action alone under this act, according to Dr. Dorin. To stay informed about all the shifting laws and regulations, Dr. Dorin recommends the following Web sites:
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