Miscoding and fraudulent billing can destroy a medical practice. Use these tips to get robust oversight of your medical billing and coding in place.
The work billers and coders do for a medical practice plays a large role in its survival. Coders and billers are tasked with translating the care delivered by medical professionals into billable services, using a complex system of CPT, ICD-10, and HCPCS codes, all while maintaining compliance with ever-evolving insurance industry regulations.
Because of the tediousness of the job, coding and billing mistakes in medical practices are common. However, when a miscoded procedure is the result of substantial negligence or fraud, it can be detrimental to a medical practice or physician. That is why it’s vital for medical practices to establish robust oversight, audit and remediation procedures that work to ensure accurate coding and billing.
The reality of mitigating risk as a solo practitioner or running a small practice often means spending less time with patients and more time completing practice management tasks, like coding and billing. In many private practices, the doctor is solely responsible for selecting codes at the time the note is complete, based on their documentation of the visit in a paper chart or through an electronic medical record (EMR). In some health care systems and hospital groups, all the coding is performed by a certified medical coder. Other times, the provider codes the service and then the coder either verifies or re-codes it.
While it's clear that various methods of coding and billing can involve multiple people that prepare and submit claims, doctors should know that liability ultimately falls to the provider whose National Provider Identifier (NPI) the service was billed under, and a physician’s signature on a claim attests that the medical services provided were necessary and reasonable. Because physicians are responsible for ensuring that submitted claims accurately reflect the services they provided, they need to take an active role in their practice’s coding and billing processes.
Many medical coding and billing errors are not malicious in nature but are due instead to incorrect patient information, duplicate billing, unclear claim numbers, wrong codes, and poor documentation. While it’s not common for simple errors to escalate to the level of fraud, physicians can put processes and policies in place that help them manage that risk.
For example, I have a Gastroenterologist client that codes 95% of the services she performs herself but will flag an encounter through EMR to be inspected by her coder when the procedure is an infrequent one. The coder and my client use their combined expertise to move forward together with complete transparency to decide which codes should be billed.
Another of my clients, an old school Cardiologist, relies mainly on dictation for his medical charting and coding. To ensure he is providing enough detail to his coders, he makes sure to dictate the amount of face-to-face time spent with the patient, the details of any chief complaints, ROS, HPI, PFSH, and physical exams, clearly stated treatment plans, and accurate details. Using this system, he feels confident he can accurately back up any details for claims that are called into question.
In contrast to medical coding and billing errors, medical fraud occurs when a false claim misrepresenting the facts is intentionally submitted to insurance to receive payment. Although most physicians oppose outright fraud, some still unknowingly participate in behaviors or systems that inflate health care costs.
The case of Dr. Michael Stevens is an example of worst-case scenario when fraud impacts medical billing and code. An anesthesiologist and owner of a pain management clinic, Dr. Stevens was forced to surrender his medical license when it was found that his medical biller was committing fraud. The biller, Edward Bailey - a family member with no experience or expertise in medical billing – had met with a Medicare contract provider to seek guidance on which CPT codes to use for a new treatment the practice had started to provide. Soon, claims that had previously been denied by payors started to come back approved.
However, when the state licensure board began investigating Dr. Stevens, they noticed that the practice routinely billed the same 5 CPT codes for the treatment, one of which was not a routine test. It turned out that Mr. Bailey had taken it upon himself to find the combination of CPT codes that would ensure payment for the new treatment, whether those services were performed or not.
When questioned, Dr. Stevens admitted that he did not review the claims that his biller submitted and that he was not aware of the specific CPT codes that were being billed on the claims. Dr. Stevens said he believed that Mr. Bailey was using the correct CPT codes as directed by the Medicare contract provider. While Mr. Bailey pleaded guilty to healthcare fraud, the medical licensure board eventually concluded that Dr. Stevens “engaged in dishonorable, unethical, or unprofessional conduct" and he relinquished his medical license, effectively ending his medical career.
Several government entities are involved in detecting and overseeing medical abuse and fraud, including the Department of Health and Human Services, the Office of Inspector General (OIG), the Centers for Medicare and Medicaid Services, and the Department of Justice, which negotiated $2.3 billion in judgments relating to health care fraud and abuse in 2018, including 1139 criminal fraud investigations.
It’s now easier than ever for these agencies to detect medical fraud through the use of algorithms that monitor and analyze incoming claims and payments and flag suspicious patterns of behavior. Practices and providers who are identified through these systems can be investigated and if found to have a pattern or history of coding mistakes, may face fines or penalties.
The False Claims Act (FCA) imposes liability on anyone who knowingly presents, or causes to be presented, a false or fraudulent claim for payment, or who conspires to submit a false claim for payment. Statute 31 U.S.C. § 3729 (b) defines “knowingly” as:
There are several fraudulent types of medical billing that physicians need to be aware of that can result in prosecution under the False Claims Act. These are:
The bottom line is that to reduce risk, doctors need to provide oversight in the billing and coding processes of their practices, whether they hire a credentialed in-house coder or choose to outsource the process. At a minimum, in house coders, billers, and providers should be trained annually on updates to CPT codes and other regulatory changes. Coders should also feel empowered to ask providers about anything they identify as questionable before billing to payors and meet with providers regularly to provide feedback and identify areas of risk.
When outsourcing your practice’s coding and billing services, it’s critical the service carry errors/omissions insurance and liability coverage, which will pay for breach disclosure communications and lawsuits in the event of a security breach involving patient records.
Whether coding and billing are kept in-house or outsourced, physicians can always submit reports to their CPAs to check for transparency and accuracy and hire additional qualified professionals to perform independent audits.
An event like a Medicare recovery audit or a private healthcare insurance audit can be very frightening for doctors. Physicians should consult with their medical malpractice insurance broker to see if their malpractice policy covers them if a medical coding or billing error causes them to be sued for negligence by a governing body. If a doctor is found to be in violation of improper payment practices, even if they can keep their license, it will most likely affect their ability to find a competitively priced medical malpractice insurance policy or to credential with CMS or private payers for reimbursement.
Author Max Schloemann is a 12-year medical insurance industry veteran and the founder of MEDPLI, a national medical malpractice insurance brokerage. The company’s clients include over 200 doctors and surgeons, as well as physician assistants, nurse practitioners and healthcare entrepreneurs.