Medicare fraud and abuse are issues the government takes seriously. For providers, coding is a core area of focus.
Codes form the basis of claims submissions for government and private payers alike. Providers attest on various forms (e.g., CMS Form-1500) that they are submitting a “clean” claim that various laws, including the Anti-Kickback Statute, are being met in a compliant manner.
So, what is upcoding and downcoding? Why does it matter to the government? What can physicians and other providers do to ensure that they are being compliant?
Both upcoding and downcoding are significant because these actions have been interpreted as a basis for abusing and defrauding the federal government and its programs. According to CMS, “[a]buse describes practices that, either directly or indirectly, result in unnecessary costs to the Medicare Program.” Abusive coding practices include:
- Upcoding – a code with a higher reimbursement rate despite not providing the service or meeting the medical necessity requirement
- downcoding – a lesser code on a claim, perhaps to induce patients to keep coming back for other services
- excessive charges for services or supplies.
The aforementioned abusive coding practices are illegal. Laws that may be implicated include the False Claims Act, Anti-Kickback Statute, Stark Law, Social Security Act, and the United States Criminal Code. The U.S. Department of Justice (DOJ) has both prosecuted and settled cases where physicians and other providers have defrauded the government by not meeting medical necessity, using modifiers that were not appropriate and resulted in higher reimbursement, and overcharging for goods (i.e., durable medical equipment) and services. Here are some recent examples:
- TeamHealth Holdings, a successor company to IPC The Hospitalists, Inc. settled a case for $60 million plus interest with the DOJ for “knowingly and systematically encouraged false billings by its hospitalists, who are medical professionals whose primary focus is the medical care of hospitalized patients.” The physician filed the False Claims Act case.
- Georgia Cancer Specialists fraudulently obtained payments from the United States Government by participating in an overbilling scheme, which resulted in a $4.1 million settlement. The physician group inappropriately utilized modifier -25 on multiple submissions for payment.
- Southeast Orthopedic Specialists agreed to pay the government $4.488 million to resolve allegations that it violated the False Claims Act for knowingly submitting certain claims with modifier -25. A separate evaluation and management service had not been performed.
From a prevention standpoint, how can providers avoid the most common types of improper payments—mistakes, inefficiencies, bending the rules, and intentional deceptions? The first step is to identify the issues. The best way to do this is to collect a statistically significant sample of claims and have them evaluated by an external consultant. After this is done, internal audits can be performed to look for outliers.
If mistakes or inefficiencies are at issue, those are most likely due to negligence or lack of knowledge. Training can help both providers and coders align their goals and understand each other’s role in the process. If the issues are “bending the rules” or “intentional deception,” then those are more problematic because of the knowledge and intent that the person has when carrying out the conduct. This is where criminal liability can arise. The best way to prevent any type of miscoding is to have a compliance program in place that monitors the practices of everyone involved in the claims submission process.
Implementing a culture of compliance that focuses on the prevention, detection, and correction of improper coding and billing can mitigate the risk of a False Claims Act or other adverse action by federal and state governments.
Rachel V. Rose, JD, MBA, advises clients on compliance and transactions in healthcare, cybersecurity, corporate and securities law, while representing plaintiffs in False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.