GUIDING PHYSICIAN BILLING AND FRAUD AND ABUSE COMPLIANCE

GUIDING PHYSICIAN BILLING AND FRAUD

AND ABUSE COMPLIANCE

James B. Wieland , Esq.

INTRODUCTION: THE BUSINESS OF HEALTH CARE

Consolidation in the health care industry and increased attention to the bottom line in an era of significant cutbacks in reimbursement have made physician billing and payment issues an important topic. The need to pay close attention to these issues has been heighten by the recent growth of qui tam actions based upon False Claims Act liability. This paper outlines several of the important areas where technical compliance is required and where the Medicare rules are not always simple. It also addresses the increasingly important role of the Medicare Carrier in detecting in potentially fraudulent or abusive conduct and either resolving it at the carrier level or referring it to the enforcers for appropriate action.

PART ONE: SERVICES AND SUPPLIES RENDERED “INCIDENT-TO”

COVERED PHYSICIAN SERVICE.

Services and supplies (including drugs and biologicals which cannot be self-administered) are covered by Medicare, if: (i) furnished incident to a physician's professional service‘ (ii) of kinds which are commonly furnished in physicians' offices (or physician-directed clinics)‘ and (iii) are commonly either rendered without charge or included in physicians' bills.

Incident to a Physician's Professional Services.

Incident to a physician's professional service means that the services or supplies are furnished as an integral, although incidental, part of the physician's personal professional services in the course of Medicare covered diagnosis or treatment of an injury or illness. The services of non-physicians must be rendered under the physician's direct supervision by employees of the physician. “Direct Supervision” and “Employment” have technical meaning for this purpose, as discussed below. This does not mean that to be covered as “incident to”, each occasion of service by a non-physician (or the furnishing of a supply) need also always be the occasion of the actual rendition of a covered personal professional service by the physician. Such a service or supply could be considered to be “incident to” when furnished during a course of treatment where the physician performs an initial service and subsequent services of a frequency which reflect the physicians active participation in and management of the course of treatment. However, the direct supervision requirement must still be met with respect to every nonphysician service.

The litmus test for employment status is the issuance of a W-2 form. However, the National Office of the Medicare Program has indicated, in private letters

responding to specifc inquiries, that local Carriers may find that application of the “common law control test” as to Leased Employees is sufficient in certain

circumstances to meet this requirement. (See, for example, CCH Medicare Guide ¶ 41,675.)

Services and supplies which are commonly furnished are not precisely delineated by the program, but are those customarily considered incident to physicians' personal services in the office or physician-directed clinic setting. This requirement

is not considered to be met where supplies are clearly of a type a physician is not expected to have on hand in his or her office or where services are of a type not considered medically appropriate to provide in the office setting.

Commonly Furnished in Physicians' Offices by Office Staff.

Coverage of services and supplies incident to the professional services of a physician in private practice is limited to situations in which there is direct physician supervision of non-physician employees. This applies to services of auxiliary personnel employed by the physician and working under his or her supervision, such as nurses, nonphysician anesthetists, psychologists, technicians, therapists, including physical therapists, and other aides. Thus, where a physician employs auxiliary personnel to assist him or her in rendering services to patients and includes the charges for their services in his or her own bills, the services of such personnel are considered incident to the physician's services if there is a covered physician's service rendered to which the services of such employed personnel are an incidental part and there is direct personal supervision by the physician.

Direct personal supervision in the office setting does not mean that the physician must be present in the same room with the employed personnel. However, the physician must be present in the office suite and immediately available to provide assistance and direction throughout the time the aide is performing services. If auxiliary personnel perform services outside the office setting, for example, in a patient's home or in an institution, their services are covered incident to a

physician's service only if there is direct personal supervision by the physician. The example given to Medicare Carriers is that if a nurse accompanied the physician on house calls and administered an injection, the nurse's services are covered‘ if the same nurse made the calls alone and administered the injection, the services are not covered (even when billed by the physician) since the physician is not providing direct personal supervision. Services provided by auxiliary personnel in an institution (for example, a skilled nursing facility, nursing or convalescent home) present a special problem in determining whether direct physician supervision exists. The availability of the physician by telephone and the presence of the physician somewhere in the institution does not constitute direct personal

supervision. There are special instructions in the Medicare Coverage Issues Manual for instructions used if a physician maintains an office in an institution. Note that, with very limited exceptions, such as for medically directed nurse anesthetists, the “rebundling” provisions that were implemented along with hospital prospective payment/DRGs make incident-to coverage under Part B inapplicable in hospitals (whether or not the hospital is covered by prospective payment). See § 3110 of the Medicare Intermediary Manual.

Supplies usually furnished by the physician in the course of performing his or her services, for example, gauze, ointments, bandages (including ace bandages), and oxygen, are also covered. Charges for such services and supplies must be included in the physicians' bills. Special rules apply regarding coverage of drugs and

biologicals (including allergenic extracts). To be covered, supplies, including drugs and biologicals, must represent an expense to the physician. For example, where a patient purchases a drug and the physician administers it, the cost of the drug is not covered.

Services of Nonphysician Practitioners Furnished Incident to Physician's

Services.

In addition to coverage being available for the services of such nonphysician personnel as nurses, technicians, and therapists when furnished incident to the professional services of a physician (as discussed above), a physician may also have the services of certain nonphysician practitioners covered as services incident to a physician's professional services. These nonphysician practitioners, who are being licensed by the States under various programs to assist or act in the place of the physician, include certified nurse midwives, certified registered nurse

anesthetists, clinical psychologists, clinical social workers, physician assistants, nurse practitioners, and clinical nurse specialists.

Services performed by these nonphysician practitioners incident to a physician's professional services include not only services ordinarily rendered by a physician's office staff (for example, medical services such as taking blood pressures and temperatures, giving injections, and changing dressings) but also services ordinarily performed by the physician himself or herself such as minor surgery, setting casts or simple fractures, reading x-rays, and other activities that involve evaluation or treatment of a patient's condition.

A nonphysician practitioner such as a physician assistant or a nurse practitioner may be licensed under State law to perform a specific medical procedure and may be able to perform the procedure without physician supervision and have the service separately covered and paid for by Medicare as a physician assistant's or nurse practitioner's service. In order for services of a nonphysician practitioner to be covered as incident to the services of a physician, however, the services must meet all of the requirements for coverage discussed above. For example, the services must be an integral, although incidental, part of the physician's personal professional services, and they must be performed under the physician's direct supervision by employees.

Incident to Physician's Service in a Physician-Directed Clinic.

physicians) is present to perform medical (rather than administrative) services at all times the clinic is open, (b) each patient is under the care of a clinic physician, and (c) the nonphysician services are under medical supervision. The same general rules described above apply. However, Medicare recognizes that in highly organized clinics, particularly those which are departmentalized, direct personal physician supervision may be the responsibility of several physicians as opposed to an individual attending physician. The physician ordering a particular service need not be the physician who is supervising the service. Therefore, services performed by therapists and other aides are covered even though they are performed in another department of the clinic.

Supplies provided by the clinic during the course of treatment are also covered. When the auxiliary personnel perform services outside the clinic premises, the services are covered only if performed under the direct personal supervision of a clinic physician as described above. If the clinic refers a patient for auxiliary services performed by personnel who are not employed by the clinic, such services are not incident to a physician's service.

PART TWO: REASSIGNMENT OF MEDICARE CLAIMS

Basic Prohibition.

physician or other supplier who furnished the service and may not pay assigned benefits to any other person or organization under a reassignment or power of attorney or under any other arrangement where the other person or organization receives the payment directly.

These provisions preclude Medicare payment of amounts due a physician or other supplier to a person or entity providing financing to the physician or supplier, even if the physician or supplier sells his/her claims to that person or entity or pledges them to that entity as collateral on a loan. This is known, in Medicare parlance, as “factoring.”

The use of a power of attorney to avoid this prohibition is precluded, subject to limited exceptions. There is a similar prohibition for care provided by institutions. A “power of attorney” means any written authorization by a principal to an agent: 1. To receive in the agent's own name amounts due the principal‘

2. To negotiate checks payable to the principal‘ or

3. To receive in any other manner direct payment of amount due the principal. Payment is considered to be made directly to an ineligible person or organization if that person or organization can convert the payment to its own use and control without the payment first passing through the control of the physician or other supplier or a party eligible to receive the payment under the exceptions in subsection B below. This is important in billing agent relationships, discussed in exception 10 below.

Exceptions

1. Payment to Employer. The Medicare program may pay the employer of the

physician or other supplier if the physician or other supplier is required, as a condition of his employment to turn over to his employer the fees for his services. The litmus test is the issuance of a W-2. Independent contractors may not reassign under this exception.

2. Payment to Facility. The Medicare program may pay the facility in which the

service was famished if there is a contractual arrangement between the facility and the physician or other supplier under which the facility bills for the physician's or other supplier's service within the facility premises. Employment is not required. 3. Payment to Organized Health Care Delivery System. The Medicare program

may pay an organized health care delivery system if them is a contractual arrangement between the organization and the physician or other supplier under which the organization bills for the physician or other supplier's services. This exception mainly applies to physician-directed clinics, for services within the clinic premises. Employment is not required.

4. Payment to Physician for Purchased Diagnostic Tests. Medicare may pay a

physician (or a physician's medical group) for diagnostic laboratory tests (other than clinical diagnostic laboratory tests) which that physician (or group) purchases from an independent physician, medical group, or other supplier.

5. Payment to Supplier for Diagnostic Test Interpretations. Medicare may pay a

person or entity that provides diagnostic tests for diagnostic test interpretations which that person or entity purchases from an independent physician or medical group, if specified requirements are met relating to independent initiation and interpretation of the test.

patient's regular physician for services provided to his/her patients by another physician on an occasional reciprocal basis.

7. Payment under Locum Tenens Arrangements. Medicare may pay the patient's

regular physician for services of a locum tenens physician during the absence of the regular physician where the regular physician pays the locum tenens on a per diem or similar fee-for-time basis and certain other requirements are met relating to length of arrangement, nature of payment to the covering physician and the like. 8. Payment to Governmental Agency. The Medicare Act does not preclude the

Medicare program from paying benefits due a physician or other supplier to a governmental agency or entity. For payment to be made, the reassignment must satisfy the requirements of the Federal Assignment of Claims Act 31 U.S.C. 3727. According to the Carrier's Manual, however, HCFA has determined that it is impracticable to satisfy those requirements.

9. Payment Pursuant to Court Order. Medicare may make payment in accordance

with a reassignment established by, or pursuant to the order of, a court of

competent jurisdiction. The reassignment must satisfy certain specified conditions. 10. Payment to Agent. Medicare may make payment in the name of the physician or

other supplier or party eligible to receive payment under one of the exceptions discussed above to an agent who furnishes billing or collection services. The payment arrangement must satisfy the conditions set forth, particularly including fixed (as opposed to percentage) fees to the agent. Note, however, that the reassignment prohibition does not apply where the billing agent cannot endorse checks, such as in a “lock-box” situation.

When one supplier purchases or rents items (as distinguished from services) from another supplier and resells or rerents those items to the beneficiary, no

reassignment issue arises. The supplier that sells or rents the items to the beneficiary is considered to furnish them.

Medicare recently imposed certain requirements on multiple levels of

reassignment, such as where a hospital retains an emergency medicine group to staff an emergency room with the hospital billing Part B for the physician services. The requirements are directed at “indirect contractual relationships” and mandate a direct reassignment to the hospital from the physicians employed or retained by the group.

Effect of Payment to Ineligible Recipient of Reassignment.

An otherwise correct Medicare payment made to an ineligible recipient under a reassignment or other authorization by the physician or other supplier does not constitute a program overpayment. Sanctions may be invoked against a physician or other supplier to prevent him from executing or continuing in effect such an authorization in the future, but neither the physician or other supplier nor the ineligible recipient is required to repay the Medicare payment.

This does not mean that violations of the reassignment rules can be taken lightly. In a qui tam action, United States ex. rel. Semtner v. Medical Consultants, Inc. , (No. Civ-94-617 D. Okla) there are a number of allegations against an emergency physician and billing group for false claims involving upcoding and miscoding of services. The complaint, however, also alleges that the billing agency violated the reassignment provisions just described.

Teaching physicians are physicians who involve residents and interns in their individual patient care services, typically in a hospital or clinic affiliated with a medical school. The specific longstanding concern of the Medicare program is to distinguish individual patient care services covered under Part B from teaching services covered, if at all, under Part A of the program through the direct or indirect medical education components of Part A payments to hospitals. Residents and interns in approved programs are not considered physicians by Medicare. As long as certain long-standing standards designed to ensure the personal responsibility and involvement of the teaching physician as the individual patient's attending physician were met, teaching physician services were able to be reimbursed under RBRVS. The standards required generally that the teaching physician have a degree of personal responsibility for the individual patient's care equal to that of an attending physician, as demonstrated by a personal examination of the patient and a review of his or her history‘ be responsible for confirmation or revision of the diagnosis and plan of treatment‘ personally perform or supervise the actual treatment‘ be present during complex or dangerous procedures or services‘ and be recognized by the patient at his or her personal physician. (Intermediary Letter 372 (April 1969), CCH Medicare and Medicaid Guide ¶ 3270.05.) If those standards were met, Medicare would reimburse the teaching physician for his individual patient care, even though aspects of the care were provided by interns or residents. All indications are that teaching physicians will increasingly be the target of Medicare audits and qui tam actions. For example, The Clinical Practice of the University of Pennsylvania recently entered into a settlement agreement with the federal government to resolve allegations that it submitted false claims to Medicare for services furnished by teaching physicians. The University will pay more than $30 million and implement a compliance plan.

The alleged false claims related to (a) teaching physician billing for services furnished in whole or in part by residents when the IL 372 billing criteria were not met‘ (b) failure to document that the IL 372 criteria were met‘ (c) “upcoding” of evaluation and management codes on teaching physician bills‘ and (d) “other” errors.

The amount was determined on the basis of a sampling audit for the years 1989– 1994. The press release regarding the settlement indicates that the amount of alleged improper billing is $10,000,000, subject to being trebled under the Civil False Claims Act.

The Settlement Agreement expressly states that no individual other than the University is released from liability, leaving possibility of additional enforcement action against billing representations or the physicians who were listed as the providers.

The new regulations provide that services furnished by teaching physicians in teaching settings are payable under the physician fee schedule only “if the services are personally furnished by a physician who is not a resident” or the “services are furnished by a resident in the presence of a teaching physician.”

After many false starts, the rules for teaching physician reimbursement were changed, in connection with the 1996 Medicare RBRVS changes 60 Federal Register 236 at 63135 (December 8, 1995). In the most important, and most controversial change, the teaching physician must be present “during the key portion of any service or procedure for which payment is sought”, although presence not required for the entire duration of the patient encounter except in

certain circumstances.

For “surgical, high-risk, or other complex procedures, the teaching physician must be present during all critical portions of the procedure and immediately available to furnish services during the entire service or procedure.” For other surgeries,

however, the teaching physician need not be present during “opening and closing of the surgical field” in order to bill.

For evaluation and management services, the teaching physician must be present “during the portion of the services that determines the level of service billed,” except for the outpatient services as noted below.

There are exceptions to the requirement of teaching physician physical presence for evaluation and management services of “lower and mid-level complexity” in a hospital outpatient department or other ambulatory setting in which the residents are counted for purposes of the hospital's direct GME payment. The exceptions was designed to protect Family Practice and similar teaching programs. There the teaching physician can bill if he or she is “immediately available,” and (a) the resident has completed at least six months of an approved residency program‘ b) the teaching physician is not concurrently supervising more than four residents in the clinic setting‘ (c) the teaching physician has no other responsibilities at the time‘ (d) the teaching physician has assumed “management responsibility for those residents seen by the residents”‘ (e) the teaching physician ensures that the services furnished are appropriate‘ (f) the teaching physician reviews with each resident either during or immediately after each visit the patient's history, physical examination, diagnosis, record of tests and therapies‘ and (g) the teaching physician documents the extent of his or her participation in the “review and direction of the services furnished to each beneficiary”

The level of evaluation and management services assigned by the teaching physician should be the complexity for the teaching physician , and not the complexity for the less experienced resident.

PART THREE (continued): BILLING AND MANAGEMENT

REPRESENTATIVES.

The reservation in the settlement agreement with the University of rights to pursue physicians and billing personnel raises several points of general application to relationships between physician and entities that furnish management and/or billing services to physicians:

(a) Cases such as the United States v. Metzinger (see CCH Medicare and Medicaid Guide ¶ 43,437) indicate an increasing willingness on the part of the enforcers and on the part of qui tam relators to pursue management companies and billing representatives on a False Claims Act basis for billing improprieties. While case law in this area is just developing, two features seem to be important. First, management or billing representatives that market their services based upon aggressive billing or upon assurances that the physician client will receive

additional reimbursement through the techniques employed by the management or billing agency are alleged to have a general financial motive to bill improperly. Where the management company or billing agent is paid a percentage fee, this imputed motive to bill improperly is even easier to ascribe to the management or billing organization.

(b) Physicians need to bear in mind that they remain responsible to the Medicare program for bills sent in the Physician's name, over the physician's signature, even

if the physician had no actual knowledge of a billing impropriety. The relevant portions of the federal statue authorizing civil monetary penalties were amended several years ago to specifically incorporate common law principals of respondeat superior. Furthermore, the attestation on the Medicare 1500 form also contains an attestation that all services were properly billed.

(c) In light of this, physicians negotiating management or billing agreements need to be careful not to abdicate responsibility for billing to managers or billing agents. While it might not be a defense in a civil monetary penalty or false claim case, any management or billing agreement should be in writing and should clearly allocate responsibility for making Medicare coding decisions from the patient encounter information. In some specialties, such as surgery, billing agents may perform coding assignments from raw patient encounter data such as operative reports. In other specialties, such as radiology or primary care, the coding assignment may be made by the physician and simply transmitted to the billing agent to be put in the claim form.

PART FOUR: CODE MANIPULATION

Two recent developments highlight some of the most challenging technical billing issues. The first is likely to become a part of routine carrier claims processing, the latter is highly critical of Medicare claims screening, and contains detailed examples of common problems such as upcoding and fragmenting charges.

(A) AdminaStar Correct Coding Policy

AdminaStar Federal, under contract with Medicare developed an official “correct cooing policy” for determining which CPT-4 code to assign to a service. The policy is current through 1994 CPT-4 codes, and will be updated regularly. The policy includes a “code matrix,” which identifies CPT-4 code combinations that are either against Medicare policy or represent services or procedures that would not or should not be performed at the same time. The code matrix is expected to be incorporated into Medicare carriers' claims processing systems.

The correct coding policies cover the following general areas:

• CPT Procedure Coding Definition: Perform all of the services included in

the code descriptor‘ otherwise, submit a less comprehensive code. Products should follow the Medicare policy if it differs from CPT-4 descriptors.

• Mutually Exclusive Codes: Code combinations representing services that

under standard medical practice could not or should not be performed together should not be billed together.

• Separate Procedures: In those limited situations where Medicare has

identified “separate procedures” that may be provided as part of a more

comprehensive procedure, the separate procedures may be submitted along with the more comprehensive code.

• Most Extensive Procedures: For services in a CPT code series (i.e, range of

related codes within the same numerical sequence, denoting increasing

complexity), only the code describing the most extensive service actually provided should be submitted.

• Sex designation: Where applicable codes differentiate between male and

female, use the appropriate designation.

procedure are billed as part of the procedure. Separate billing is unbundling. • Anesthesia: Medicare prohibits separate payment for anesthesia when

performed by the operating surgeon. CPT codes for anesthesia services should not be used with surgery codes.

• Lab Panels: If there is a CPT code for a “panel” of lab tests that are

commonly provided together, use the panel code, not the separate codes for individual tests.

• Sequential Procedures: If there are several unsuccessful attempts in direct

succession before successful completion of a procedure, then only the successful procedure should be billed. This policy normally applies when a limited procedure is unsuccessful, but is followed by a more comprehensive one that is successful. Contemporaneous diagnostic procedures required to make the decision to perform the comprehensive service may be separately billed.

(B) Government Accounting Office Study

The Medicare program cost $158 billion during fiscal year 1994. Federal outlays for physician services and supplies — one category of Medicare spending — totaled almost $36 billion in 1994. According to a recent report of the General Accounting Office, “GAO Recommendation on Commercial Fraud Detection,” (CCH Medicare and Medicaid Guide ¶ 44,133), the Medicare program is plagued by abuse due to inadequate funding for fraud and abuse prevention activities, uneven implementation of payment controls, and flawed payment policies. The GAO report focused on one area of abuse, which it called “code manipulation”‘ providers submitting claims containing an inappropriate combination of billing codes that can, if not detected and corrected, lead to overpayment for the services provided.

Medicare pays health care providers using the American Medical Association's coding system, the Physicians' Current Procedural Terminology 4th Edition (CPT-4). Many private insurers employ fee schedules that use CPT codes and their accompanyiog narrative descriptions as the basis for paying providers. The coding system is difficult to use because it attempts to identify codes for all accepted medical procedures, including codes to describe minor procedures that are components of more comprehensive procedures. Payment policies add to the difficulty. The Medicare global fee for surgery includes the cost of related services for the global service period, that is, for a set number of days before and after the surgery. Medicare needs to identify claims for surgery which include codes that represent related services and reduce the payment accordingly.

Medicare has implemented policies that prohibit common abuses such as unbundling, global service period violations, duplicate procedures, and inappropriate use of assistant surgeons.

Types of Code Manipulation

Unbundling Billing for two or more codes to describe

a procedure when a single, more comprehensive, code exists that accurately describes the procedure Global service period violations Billing for major procedure—such as

surgery— and related procedures, when the fee for the major procedure already includes the fee for related procedures provided during a predefined time period (the global service period)

Duplicate procedures Billing for the same procedure twice although it was only provided once Unnecessary assistant surgeon Billing for an assistant surgeon when an

assistant was not warranted

Unbundling.

This coding above includes several related abuses. Simple unbundling occurs when a provider charges a comprehensive code as well as one or more component codes. Because thousands of comprehensive codes exist with one or more component codes, numerous combinations of comprehensive and component codes can be submitted on a claim. An example of unbundling is set forth below‘ this and other examples are from the May 1995 GAO report.

Example of Unbundling: A physician was paid for two x-ray exams of the abdominal region on the same date of service. According to CPT code descriptions, the x-ray of the upper gastrointestinal tract includes the x-ray of the abdomen.

CPT Code Procedure HCFA Allowed HCFA Should Have Allo

74000 x-ray exam of abdomen $23

74241 x-ray exam of upper GI tract $75 $75

Total: $98 $75

Savings: $23

Fragmentation .

This coding above is a more complex form of unbundling. The provider bills for several component codes instead of a more comprehensive code. Comprehensive codes are normally reimbursed at a lower level than the sum of the individual components.

Example of Fragmentation : A physician was paid for interpreting two x-rays of the pelvis and two x-rays of the hip. According to CPT code descriptions, there is a more comprehensive CPT code—73520—that describes the four separate

procedures as one.

Codes Submitted Procedure HCFA Allowed HCFA Should Have Allo

72170-26 x-ray of pelvis, 1 view (2 charges @ $8) $16 $ 0

73500-26 x-ray of hips, 1 view (2 charges @ $8) $16 $ 0

Total: $32 $ 0

Code Added:

73520-26 x-rays of hips & pelvis, 2 views of each $16

Overpayment: $16

Another, more complicated form of unbundling is billing for multiple procedures that are either impossible to perform together or, by accepted clinical practice standards, should not be performed at the same time.

Performance of the services may be legitimate since, in some cases, a physician may try one approach and in mid-operation decide on another approach. The accepted payment practice in such circumstances is to pay for the more clinically intense procedure, not for both.

which use different methods to achieve the same objective—determining how effective an antibiotic is in treating the patient's bacterial infection. These two procedures, therefore, are considered to be mutually exclusive of each other.

CPT Code Procedure HCFA Allowed HCFA Should Have Allo

87181 antibiotic sensitivity‘ agar diffusion (3

charges @ $88, 5 @ $44)

$484 $484

87184 antibiotic sensitivity‘ disk (3 charges @

$21, 5 @ $11)

$118 $ 0

Total: $602 $484

Overpayment: $118

Global service period violations .

These codes manipulations are possible because the fee for most surgery includes all related services for a set number of days before and after the surgery.

Global Service Period Violation : A surgeon was paid for an office visit the day before a major surgical procedure. This visit should not have been paid because the fee for the surgery includes related services provided on the day before the surgery.

CPT Code Procedure HCFA Allowed HCFA Should Have Allo

29881 knee arthroscopy $372 $372

99213 office visit $ 32 $ 0

Total: $404 $372

Overpayment: $ 32

Duplicate procedures .

Code manipulator in this area would involve charging for the same procedure twice when it was only provided once.

Example of Duplicate Procedures : A physician was paid for 3 separate

encounters with a patient for the same day of service for the same condition—atrial fibrillation—irregular contractions of the heart. Medicare allows a physician to only be paid for one visit per date of service if all encounters are for the same or related condition, except for critical care services.

CPT Code Procedure HCFA Allowed HCFA Should Have Allo

99214 office visit $ 53 $ 0

99223 initial hospital care $ 73 $ 0

99285 emergency department visit $110 $ 110

Total: $235 $110

Overpayment: $125

PART FIVE: THE MEDICARE CARRIER ROLE IN FRAUD AND

ABUSE

The Medicare program pays for health care items and services for millions of beneficiaries and provides payment to terms of thousands of providers and suppliers of services. Within a program of such complexity and magnitude, the opportunities for fraud, abuse, and waste are considerable, as evidenced by the AdminaStar Correct Coding Policy and The GAO reports discussed in Part Four. Medicare Carriers are responsible for accomplishing the major portion of integrity

review development, whether for fraud or abuse. Carriers are also responsible for investigating and developing suspected fraud and abuse cases before referring them to the OIG Office of Investigations Field Office.

This responsibility requires that Carrier personnel conducting each segment of claims adjudication, payment utilization review, and professional relations functions be aware of their responsibility for identifying fraud and abuse and be familiar with internal procedures for forwarding potential fraud cases to the Medicare Fraud Unit. Primary program integrity responsibilities reside in the Medical Review (Medical Review) Unit and the Medicare Fraud and Abuse Unit (hereafter referred to as the Fraud Unit).

Medical Review Unit.

The Medical Review unit's responsibilities include looking for questionable billing patterns and practices, i.e., program abuse. The term “abuse” describes incidents or practices of providers that are inconsistent with accepted sound medical practice. Abuse may, directly or indirectly, result in unnecessary costs to the program, improper payment, or payment for services that fail to meet professionally recognized standards of care, or that are medically unnecessary. Abuse involves payment for items or services when there is no legal entitlement to that payment and the provider has not knowingly and intentionally misrepresented the facts to obtain payment. If the Medical Review unit finds, or suspects, such practices, it should consult with the Fraud Unit to determine whether the case should be referred to the Fraud Unit for further action.

Although these types of practices may be considered abusive, under certain circumstances, Carriers also assume that they may constitute or evolve into fraud. If a provider appears to have knowingly and intentionally furnished medically unnecessary services or filed claims for services not furnished as stated on the claim form, or made any false statement on the claim form to receive payment, the case is discussed with the Fraud Unit and referred if the Fraud Unit agrees there is potential fraud. When reviewing such situations, Carriers are specifically instructed not to assume that the abuse is the result of an error or misunderstanding of

program requirements.

If the situation does not appear to involve fraud, (and the Fraud Unit concurs) the Medical Review Unit notifies providers that particular practices or behaviors are abusive and must cease. It refers cases involving providers who fail to correct their practices or behavior following the educational contact and warning to the fraud unit.

Medicare Fraud Unit.

This unit is responsible for detecting and deterring Medicare fraud. It develops cases for referral to relevant Inspector General, Office of Investigations Field Office. Fraud is intentional deception or misrepresentation that the individual makes, knowing it to be false and that could result in some unauthorized benefit to them. The most frequent example of fraud arises from a false statement or misrepresentation that is material to entitlement or payment under the Medicare program. The violator may be a participating provider, a supplier of durable medical equipment, a beneficiary, or some other person or business entity, including a Carrier employee.

Carriers Manual include:

• Billing for services or supplies that were not provided. This includes billings for “no shows,” i.e., billing Medicare for services that were not actually furnished because the patients failed to keep their appointments‘

• Misrepresenting the diagnosis for the patient to justify the services or equipment furnished‘

• Altering claim forms to obtain a higher payment amount‘

• Deliberately applying for duplicate payment, e.g., billing both Medicare and the beneficiary for the same service or billing both Medicare and another insurer in an attempt to get paid twice‘

• Soliciting, offering, or receiving a kickback, bribe, or rebate, e.g., paying for a referral of patients in exchange for the ordering of diagnostic tests and other services or medical equipment‘

• Unbundled or exploded charges, for example, the billing of a multichannel set of lab tests to appear as if the individual tests had been performed‘

• A provider completing Certificates of Medical Necessity (CMNs) for patients not personally and professionally known by the provider‘

• Misrepresenting the services rendered (upcoding or the use of procedure codes not appropriate for the item or service actually furnished), amounts charged for services rendered, identity of the person receiving the services, dates of services, etc.‘

• Billing for noncovered services as covered services, e.g., routine foot care billed as a more involved form of foot care to obtain payment‘

• Claims involving collusion between a provider and a beneficiary, or between a supplier and a provider resulting in higher costs or charges to the Medicare

program‘

• Use of another person's Medicare card in obtaining medical care‘ • Alteration of claims history records to generate fraudulent payments‘ • False provider disclosures of ownership in a clinical laboratory‘

• Split billing schemes (e.g., billing procedures over a period of days when all treatment occurred during one visit)‘

• Use of the adjustment process to generate fraudulent payments‘ • Collusion between a provider and a carrier employee where the claim is assigned. (If the provider deliberately overbilled for services, Carriers are

instructed that adjustments could be generated with little awareness on the part of the beneficiary)‘

• A carrier employee acting on his/her own behalf where the claim is unassigned. (Through manipulation of beneficiary address or the claims history record, a carrier employee could generate adjustment payments against many beneficiary records and cause payments to be mailed to an address known only to him/her)‘ and • Billings based on “gang visits,” e.g., a physician visits a nursing home and bills for 20 nursing home visits without furnishing any specific service to, or on behalf of, individual patients.

Carrier Reviews.

even when there is no evidence of fraud. Some or all of the following reviews are done, depending on the Carriers funding level:

• Sampling of claims for a variety of items and services to determine propriety of payments‘

• Telephone contacts with beneficiaries to verify the delivery of items and services‘

• Random validation checks of physician licensure‘ • Reviews of certificates of medical necessity‘

• Analysis of high frequency/high cost, high frequency/low cost, low frequency/low cost, low frequency/high cost procedures and items‘

• Analysis of local patters/trends of practice/billing against national and regional trends beginning with the top 30 national procedures for focused medical review and other kings of analysis that help to identify cases of fraudulent billings‘ • Initiating other analysis enhancements to authenticate proper payments‘ and • On site inspection visits, as necessary. Before making an on site visit, first notify OIG Field Office and then, following approval, the provider. Indicate the purpose of the visit. If the provider objects to the visit or to disclosing the information the Carrier want to review, contact OIG Field Office for advice. Carriers are instructed that they should not under any circumstances go on site without the provider's permission unless accompanied by staff from the OIFO and an OIG Field Office -obtained subpoena.

The sources of cases to be “developed” for fraud and abuse include: • Complaints or tips from providers and beneficiaries received by mail, telephone or in person‘

• Referrals from related governmental agencies‘

• Aberrancies detected through internal controls, postpayment and other reviews, audits, or inspections‘

• Referrals from other agencies or sources of information, such as PROs, Medicaid Fraud Control units, or Office of the U.S. Attorney.

• Reports from the General Accounting Office (GAO), Congressional committees, OIG Office of Audit Services (OAS), OIG Office of Investigations (OI), or other oversight organizations at the Federal, State, or local level‘

• Suggestions from HCFA components, State agencies, contractors, and PROs, concerning areas where they have experienced problems or identified program matters that do not seem to be properly addressed in current policy‘

• Statistical leads indicating aberrant costs, upcoding, or charging practices produced by State contractor postpayment systems or other sources‘

• Newspaper and magazine articles, as well as local and national television and radio programs highlighting areas of possible mismanagement or abuse‘

• Carrier quality assurance (QA) staff‘

• Complaints or questions from providers, beneficiaries, recipients, or private citizens‘

• OIFO and HCFA fraud alerts‘

• Ideas stemming from ongoing or completed inspections.

Immediate Case Referrals to Office of Inspector General

Carriers are instructed to immediately advise OIG Field Office where allegations with one or more of the characteristics shown below are received and to forward all available information involving allegations, unless directed otherwise:

• Indications of contractor employee fraud‘

• Informant is an Employee or competitor of a physician or supplier‘

• Involvement of providers with prior convictions for defrauding Medicare or who are currently the subject of a fraud investigation

• Indications of beneficiary fraud‘

• Situations involving subjects of current program inspections or investigations‘ • Multiple carriers involved with any one provider (OIFO will coordinate activities with all involved carriers)‘

• Cases with, or likely to get, widespread publicity, or involving sensitive issues‘ • Allegations of kickbacks or bribes‘

• Allegations of a crime by a Federal employee‘ • Indications that organized crime may be involved‘ or

• Indications of fraud by a third-party insurer that is primary to Medicare.

Medicare Fraud and Abuse Information Coordinator.

The Coordinator is a carrier employee who works full-time in the Fraud Unit to ensure the networking of Medicare-related fraud and abuse information. It is the responsibility of the Coordinators to create an environment hostile to fraud‘ one in which the detection of those individuals and entities that would seek to defraud the Medicare program or its beneficiaries is facilitated.

The Coordinator is directed to establish and maintain contacts with individuals in organizations who have an interest in learning of Medicare fraud. Contacts are developed to ensure effective two-way communication between these organizations and the carrier. Contacts may be in writing, by telephone, or in person. Contacts are to include fraud alerts, lists of excluded/sanctioned providers, meetings, and newsletters. Subjects of contacts are to include:

• Current “scams” and fraudulent schemes operating in the area‘ • Topics of mutual concern and nature of current investigations‘ • Initiatives to educate providers and beneficiaries‘ and

• Fraud-related training programs scheduled by organizations in the area that accepts individuals outside their organization.

Close ongoing coordination with the Medical Review Unit is viewed as essential.

Prepayment Review.

The Medical Review staff identifies providers whose practices are abusive and, perhaps, fraudulent. The Medical Review staff denies claims submitted by these providers and makes educational contacts to explain that the particular practices are wrong. If there is a pattern of abuse, the Medical Review Unit warns the provider of the consequences of continuing the practice. If the provider continues, despite the Medical Review Unit's warning, there will be a referral of the case to the Fraud

Unit for development and referral to OIG Field Office, if appropriate.

The Fraud Unit identifies abusive behavior in the course of its normal activities. Investigations of complaints and independent data analysis identify providers who are engaging in abusive practices. If these providers are not the subject of review, notice, and warnings, there may be a referral for prepayment review or placement on the Provider Audit List, as the Medical Review Unit deems appropriate. Otherwise, the Fraud Unit develops these cases and refers them to OIG Field Office.

The Fraud Unit may also detect abusive practices that are brought to the attention of the Medical Review unit to enable development of prepayment screens, or a revision of an existing carrier medical policy or as a subject for a special study.

Complaints Filed by Beneficiaries and Others.

Complaints may be presented by telephone, in writing, in-person, or referred via the OIG Hot Line. Beneficiaries, as recipients of Medicare covered items and services, are in a unique position to assist in detecting fraud and abuse. It is essential that beneficiaries perceive Medicare Carriers as being genuinely

interested in learning of abusive and fraudulent practices and in acting promptly on such referrals.

Definition of a Complaint of Fraud and Abuse.

A complaint is a statement, oral or written, alleging that a provider, supplier, or beneficiary received a Medicare benefit of monetary value, directly or indirectly, overtly or covertly, in cash or in kind, to which they are not entitled under current Medicare law, regulations, and/or program policy. Included are allegations of misrepresentation and violations of Medicare requirements applicable to persons or entities that bill for Medicare covered items and services. Examples of complaints given in the Medicare Carriers Manual include:

• Allegations that items or services were not received‘

• Allegations that services received are inconsistent with the services billed (as indicated on the EOMB)‘

• Allegations that a provider or supplier has billed both the beneficiary and Medicare for the same item of service‘

• Allegations regarding waiver of copayments or deductibles‘

• Allegations that a supplier or provider has misrepresented itself as having an affiliation with an agency or department of State, local, or Federal government, whether expressed or implied‘ and

• Beneficiary inquiries concerning payment for an item or service, that in his/her opinion, far exceeds reasonable payment for the item or service that the beneficiary received (e.g., the supplier or physician has “up-coded” to receive higher payment). The following are not included on the “list” of fraud and abuse complaints: • Complaints (or inquiries) regarding Medicare coverage policy‘

• Complaints (or inquiries) regarding the status of claims‘ • Requests for claims appeal‘

• Complaints regarding the appeals process‘ or

• Complaints concerning providers or suppliers (other than those complaints meeting the criteria established above) that are general in nature and are policy or

program oriented.

Fraud and abuse complaints are sent to the fraud unit, which is solely responsible for determining whether it:

• Retains the complaint for further development‘

• Refers it to the Medical Review unit for its review and development‘ or • Refers it to the correspondence unit for response.

The Fraud Unit acknowledges complaints, in writing, within 30 calendar days following receipt of the complaint in the Carrier's mailroom. In its

acknowledgment, the Carrier thanks the complainant for their interest and for bringing the matter to its attention.

Developing Potential Fraud Cases.

When the Carrier receives an allegation of fraud, or identifies a potentially fraudulent case, it initiates an investigation immediately to determine the facts. Carriers consider complaints by current or former employees for early contact with OIG Field Office, who may wish the Carrier to do no more than immediately refer the case with only limited internal development.

The Carrier contacts the complainant/beneficiary whenever necessary for clarification of any aspects of the complaint/situation. The Carrier checks each incoming complaint against Fraud Unit files for other complaints involving the same provider. Also, it checks its provider correspondence files for

educational/warning letters or for contact reports that relate to similar complaints. Carriers maintain “complaint files,” organized by provider or supplier, which contain all complaints, investigation findings, warning letters, or documented discussions.

Carriers are instructed to close out misunderstandings (e.g., beneficiary alleged no services furnished by radiologist, when in fact radiologist read x-rays with no beneficiary contact, i.e., beneficiary misunderstood billing codes). Carriers contact the provider if the issue is a billing error (e.g., wrong date of service, wrong patient or wrong service). In all instances where a complaint was caused by bill processing or clerical error, Carriers are instructed to close out the complaint and notify the complainant and also to prepare a brief rationale for each closure and insert it in the case file, since cases of this type are sampled and checked for accuracy of handling during the annual Carrier Performance Review. When the Carrier determines that the complaint/identified situation was not caused by error or misunderstanding, it will conduct an expanded investigation. Since there is potential for fraud in these instances, Carriers do not contact the provider or their office personnel. If the Carrier believes that provider contact is necessary, it first contacts OIG Field Office for advice. If the “suspect provider” hears that the Carrier is reviewing its billings or learns of the complaint and contacts the Carrier, the Carrier is instructed to report such contact immediately to the OIG Field Office.

After review of the provider's background, specialty and profile, Carriers decide whether the situation, although potentially fraudulent, is more accurately

categorized as abuse. For example, records indicate that a physician has billed, in some instances, both Medicare and the beneficiary for the same service. Upon review, the Carrier determines that, rather than attempting to be paid twice for the same service, an error was made on the part of the physician in his/her billing

methodology. Carriers are instructed not to categorize this as a fraudulent situation (duplicate billing), but to consider this an abusive situation (improper billing). The review, depending on the type of allegations, may consist of contacting a sample of beneficiaries that received the same type of services from the provider as are involved in the initial complaint. From a review of the practice profile, Carriers choose a minimum sample of 10 beneficiaries. Carriers are instructed to consider that a strong potential for fraud exists when the review results in 40 percent of those contacted during the review (including initial complainant), who are capable of reliably confirming or denying services, definitely denying having received the service billed by the provider.