Abandoning Self-Audits at Your Medical Practice is a Mistake

May 30, 2013
Rachel V. Rose, JD, MBA
Rachel V. Rose, JD, MBA

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.

A recent court case illustrates why physicians need to be vigilant in reporting incorrect claim submissions every time, all the time.

Under 42 U.S.C. §1320a-7k, receiving Medicare or Medicaid overpayments in relation to a claim requires the reporting and return of the overpayment within 60 days after the date on which the overpayment is identified. Failing to report and return the overpayment can result in civil monetary penalties, exclusion from federal healthcare programs and triggers the False Claims Act. (See 77 Fed. Reg. 9179 (Feb. 16, 2012).

A recent case highlights the importance for physicians to ensure that the claims they are submitting are proper under the evaluation and management (E&M) codes. United States and Wisconsin, ex rel. Keltner v. Lakeshore Med. Clinic, Ltd., Case No. 11-cv-00892 (E.D. Wis. Mar. 28, 2013), illustrates that self-audit results can impact compliance and liability implications. In this case, a large medical group was sued by a former employee under the False Claims Act and similar state law, alleging that fraudulent Medicare and Medicaid payment claims had been filed for E&M services. Specifically, an internal audit had been conducted that revealed that two physicians had "upcoded" more than 10 percent of their respective claims. While the identified claims were reported and returned to the government, the non-audited claims were not and the code review process was terminated by the practice. Given the court’s decision, the employee and the government may proceed with their claims, having overcome the motion to dismiss.

"The court’s decision in Lakeshore Med. Clinic demonstrates certain vulnerabilities to qui tam lawsuits resulting from self-audits," writes Robert E. Mazer in a recent edition of Health Lawyers Weekly. "Additionally, although the employee did not rely on statutory provisions that require return of an overpayment within 60 days of identification, the decision provides a context for analyzing issues related to this requirement."

Given the potential liability associated with incorrect claims submissions, physicians should be vigilant about the accuracy of the claims they submit. Moreover, if errors are found, it is better to pay the penalty up front and continue with internal audits than to abandon them. Doing so can mitigate the potential of a FalseClaims Act suit and other penalties.