Health Fraud Crackdown
By Crystal Conde Texas Medicine January 2010

Recoupment Effort May Increase Lawsuits Against Doctors

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Law Feature – January 2010



Tex Med. 2009;106(1):31-34.

By Crystal Conde
Associate Editor

In Washington, D.C., politicians are struggling to cover the cost of giving more Americans access to medical services. One popular idea to help pay for health system reform is to recover improper Medicare and Medicaid payments. Experts estimate fraud in the federal health programs costs taxpayers as much as $60 billion a year.

That's why an alphabet soup of federal agencies is stepping up antifraud efforts in health care, devoting $311 million this year to strengthen antifraud activities within the Medicare and Medicaid programs.

Congress passed the first major amendments to the False Claims Act (FCA) in 20 years in May. The modifications will affect physicians participating in Medicaid and Medicare, especially as related to overpayments.

In addition, a Department of Health and Human Services (HHS) and Department of Justice (DOJ) joint effort, known as the Health Care Fraud Prevention and Enforcement Action Team (HEAT), aims to strengthen existing programs against Medicare fraud. The initiative will pour new resources and technology into preventing fraud, waste, and abuse.

At the same time, the Centers for Medicare & Medicaid Services (CMS) is trying to recoup Medicare funds via its Recovery Audit Contractor (RAC) program. Any entity or individual that bills Medicare is fair game for an audit. The RACs examine Medicare Part A and Part B claims to identify both underpayments and overpayments. (See "Getting Ready for RACs," August 2009 Texas Medicine,  pages 49-52.) However, the RACs have an incentive to detect overpayments. They work on a contingency-fee basis and receive a percentage of the overpayments they recover.

These heightened government efforts to prevent waste, abuse, and fraud in federal health care programs mean participating physicians must be more diligent than ever to make sure their billing and coding are in line. If not, they could face big-time penalties.

Lewis Foxhall, MD, president of Harris County Medical Society and associate professor of clinical cancer prevention at The University of Texas M.D. Anderson Cancer Center, says the timing of ramped-up activities to recover funds for the Medicare program is significant.

"The Medicare system is running out of money," he said. "The federal and state governments are trying to find every penny they can to reduce costs. The fact that they need money to pay for health reform is also a factor."



New But Not Improved

Some FCA amendments have significant implications for physicians. One of them is a possible swell in lawsuits.

Plaintiff's lawyers, searching for new revenue streams since the enactment of tort reform, are actively trolling for whistle-blower cases. That's according to Edgar C. Morrison Jr., JD, former counsel to the HHS Health Care Financing Administration. He has an extensive background in Medicare and Medicaid regulatory and reimbursement matters, antitrust, fraud and abuse, physician referral legislation, and managed care issues.

It won't be the government knocking on a doctor's door, he says. It's likely to be a disgruntled ex-employee or some other person who wants to cause trouble for a physician.

"With whistle-blower lawsuits, any former billing clerk, unhappy employee who got fired, ex-spouse, or competitor might decide to jump on this gravy train," he said.

In FCA cases, whistle-blowers can bring allegations before any federal district court where "any one defendant can be found, resides, transacts business" or where the violation took place. The government investigates the allegations and decides whether to intervene or dismiss the complaint.

If they win, whistle-blowers can receive 15 percent to 30 percent of the government's total recovery plus litigation costs and attorney fees. If they lose, the court may award the defendant attorney fees and expenses from the whistleblower.

Mr. Morrison says a potential snowballing of whistleblower cases under the new FCA and the government crackdown on Medicare and Medicaid fraud and abuse, though designed to bring money into the programs, actually increase administrative hassles for honest, hardworking physicians.

"It's harder than ever to run a practice because of all these rules," he said.

For instance, under the amended FCA, in what traditionally was called a "reverse false claim," physicians now are liable for "retention of an overpayment" and are obligated not just to notify the carrier or contractor of overpayments, but also to refund them.

The act says any person who "knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the government" is liable to the federal government for a civil penalty. The law expands "obligation" to include "retention of an overpayment." This expanded liability is dangerous to physician practices, Mr. Morrison says. Physicians could be fined between $5,500 and $11,000, plus three times the amount of damages the government sustained.  

Mr. Morrison says how physicians reimburse Medicare or Medicaid isn't clear-cut. Even doctors who take steps to address overpayments pending cost report reconciliations and administrative appeals could still be liable under the FCA, simply due to the time it takes to get the attention of the Medicare or Medicaid contractor and agree on the amount of the overpayment. Determining the exact overpayment amount can be tough when dealing with complex billing anomalies.

"Physicians need to understand that they're at greater risk than before if they don't disclose and refund the overpayment. Doctors who aren't trying to defraud the system but who identify mistakes in coding that lead to overpayments are going to find this provision of the act onerous," Mr. Morrison said.

He suggests physicians contract with or hire in-house billing and coding experts and make sure their practices have procedures to identify overpayments.

Examples of mistakes that could lead to unintentionally retaining an overpayment include double payment for the same claim or not being paid in accordance with the fee schedule or contracted amount.

TMA offers services to help members ensure their evaluation and management (E&M) coding and documentation are in line. (See "Help With Coding From TMA.")

Mr. Morrison adds that physicians might want to hire a lawyer to help properly refund and disclose overpayments to Medicare and Medicaid.

Gary Eiland, JD, is a Houston attorney with more than 30 years of experience representing the health care industry in FCA investigation and defense, self-disclosures, and Medicare and Medicaid coverage and payment issues.

He says an important modification to the FCA implicates health care professionals specifically. Typically, physicians receive Medicare reimbursement through grantees or contractors, such as TrailBlazer Health Enterprises, the Medicare carrier for Texas; Medicare Advantage plans; and the Texas Medicaid & Healthcare Partnership  (TMHP).

The amended FCA no longer limits a physician's liability to claims presented directly to the government. Now, the FCA covers claims to entities administering government funds, such as TrailBlazer, Medicare Advantage plans, and TMHP.



Applying HEAT

In May, U.S. Attorney General Eric Holder and HHS Secretary Kathleen Sebelius announced the HEAT initiative. HEAT includes senior officials from DOJ and HHS charged with fighting Medicare and Medicaid fraud.

"Most providers are doing the right thing and providing care with integrity," Secretary Sebelius said. "But we cannot and will not allow billions of dollars to be stolen from Medicare and Medicaid through fraud, waste, and serious abuse of the system. It's time to bring the fight against fraud into the 21st century and put the resources on the streets and out into the community to protect the American taxpayers and lower the cost of health care."

Dr. Foxhall says the vast majority of physicians practice in good faith and abhor fraud, waste, and abuse in the health care system.

"I think all physicians are interested in protecting their patients and the public from abuses of the Medicare and Medicaid programs. These sorts of practices that are illegal or fraudulent are activities that no doctor wants to see happen in a community," Dr. Foxhall said. "It's not to the patient's advantage to have money wasted on unnecessary care or theft from the system. Those are dollars we don't have to care for patients."

HHS and DOJ report the antifraud efforts in President Obama's budget could save $2.7 billion over five years by increasing oversight in Medicare and Medicaid, including the Medicare Advantage and Medicare prescription drug programs.

Among those efforts are the expanding joint DOJ-HHS Medicare Fraud Strike Force teams, three of which operate in Houston. These teams, established in 2007, use what HHS and DOJ call "a data-driven approach to identify unexplainable billing patterns" that could lead to investigation of health care professionals for possible fraudulent activity.

In July, the Houston strike force unveiled seven indictments against 32 defendants, including doctors and health care executives in Houston, Boston, Louisiana, and New York, for allegedly submitting nearly $16 million in fraudulent Medicare claims. Charges against the defendants included conspiracy to commit health care fraud and criminal false claims.

The cases allege falsely billing Medicare for durable medical equipment supplies, such as power wheelchairs and scooters, orthotic braces and heating pads, enteral nutrition products, and feeding supply kits – all allegedly unnecessary or never delivered to patients.

Indictments seek more than $6.4 million in court-ordered restitution to the Medicare program. That figure is based on indictments, which are merely allegations; defendants are presumed innocent until and unless proven guilty.

To heighten the public's role in reporting suspected Medicare fraud, HHS launched a Web site and a hotline, (800) HHS-TIPS. Medicare beneficiaries billed for health care services or supplies they never received may contact HHS or Medicare directly.

According to the Medicare fraud Web site, if suspicious activity turns out to be fraudulent, the Medicare beneficiary who reported the activity may be eligible for a reward of up to $1,000. To be eligible for a reward, the suspicion must be reported, referred to the HHS Office of Inspector General (OIG) for review, not already under investigation, and lead directly to the recovery of at least $100 of Medicare money.

This type of reporting avenue is nothing new, says Mr. Morrison. The Texas Health and Human Services Commission's OIG, which monitors Medicaid to prevent and reduce fraud, has a reporting mechanism on its Web site.

As with any type of fraud-reporting system, Dr. Foxhall says, the potential exists to subject physicians to unwarranted review based on an inaccurate tip from the public. But he says everyone, including health care professionals, has a responsibility to identify fraudulent activities and report them.

Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by e-mail at Crystal Conde.




Help With Coding From TMA

Running a medical practice is stressful enough without having to contend with unwanted attention from federal and state auditing and fraud detection programs. To avoid the hassle, the Texas Medical Association can help practices get a handle on their coding.

TMA Practice Consulting offers evaluation and management (E&M) coding and documentation reviews that include a claims coding and medical record documentation analysis of 10 records per physician. An abbreviated checkup and a full review are available.

TMA Practice Consulting also can conduct a quarterly coding and documentation review to determine whether a medical practice is following payers' guidelines for appropriate billing year-round.

And TMA offers a training program for practices that need help understanding documentation guidelines or identifying inappropriate or inaccurate coding and weaknesses in medical record documentation. The two-hour session covers E&M documentation guidelines, time-based coding, modifiers, and audit triggers, among other topics. Services are available for a fee based on a practice's needs.

To get an idea of your practice's coding pattern, call TMA Practice Consulting at (800) 523-8776 or e-mail TMA Practice Consulting.

TMA also published TMA Practice E-Tips Greatest Hits, Vol. 3: Coding. The PDF, available free on the TMA Web site, has helpful information to ensure correct coding.

TMA also makes available to members on its Web site  an updated report from TrailBlazer Health Enterprises, the Texas Medicare carrier, which details the frequency of E&M coding by specialty. Member physicians can compare their billing patterns to those of their peers to identify areas for additional review.

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January 27, 2016

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