How Fraud and Abuse Cases Arise in a Medical Practice

It is no secret many doctors work very long days.  Some days are worse and some are better than others.  As a compliance lawyer, my job is to attempt to prevent doctors from having Terrible, Horrible, No Good, Very Bad Days.  In my experience, this type of day happens when the Office of Inspector General shows up at your door asking for all sorts of information about your billing practices.  Sometimes, the OIG appears based on analysis of statistics that indicate anomalies in your practices.  One anomaly, which I describe more below, results from analysis indicating you have been working Very Very Impossibly Long Days.  The Terrible, Horrible, No Good, Very Bad part comes later, when you are investigated for billing fraud.

Individuals who are involved in billing and coding know very well how difficult and subtle the process is.  Coding must reflect what has been recorded in the medical record.  Some areas of coding are very nuanced.  In some practices, the difference between a correct and a fraudulent billing can be as subtle as how deep the skin was penetrated when removing a lesion.

I’ve read recent articles that seem to indicate the biggest worry facing medical practices is a review by a Recovery Audit Contractor and a return of an identified overpayment.  This may have been the case several years ago, but enforcement practices have changed over the years and the volume of cases impacting physicians has greatly increased in recent years.  Even if criminal standards are not present, civil cases can be nearly as devastating to a physician personally and financially.

When I talk about an increase in fraud and abuse prosecutions, I do not mean to imply the target of prosecution is a criminal.  In my experience that is rarely the case.  In the Fraud and Abuse area there is “fraud,” meaning a deliberate attempt to overbill or inflate reimbursement, and there is “abuse,” which can occur without the physician having actual knowledge anything wrong has occurred.  In fact, some cases of “abuse” are based on imputing knowledge of a circumstance that a government enforcement agency believes a provider “should know” through the diligent operation of an effective compliance program.

I certainly have had people come to me to assist them in situations that could be fraudulent.  The more typical case involves a much more subtle oversight, failure to diligently conduct proactive auditing, inadequacy in documenting the medical file, or the failure to take prompt action after initially discovering an error.  These types of things fall more in the category of “stuff that happens” rather than deliberate fraud.  Even though not fraudulent, these types of occurrences can be viewed as “abusive” and can result in investigation and penalties if not handled properly.  Most of these things can be prevented by engaging in a proactive compliance program, but that is another story.

So, what type of thing triggers the Federal government to really start digging into your business; and not with a happy face?  There can be a variety of circumstances that commence “special” treatment by government enforcement.  An example of this type of situation involves what I refer to as the “very, very long and impossibly difficult day.”  This type of day occurs when your coding would indicate you worked more hours than exist in a day.  An example of when this can occur involves coding for procedures that involve cumulative time components that add up to indicate that you worked an impossible number of hours.

You can also catch the eye of government enforcers when you perform more of certain types of procedures than norms would indicate.  In other-words, if you show statistics that are outliers from the usual practice, it is very possible you will be asked to explain these deviations at some point in your career.  You might be able to explain the situation, but this is how you get the attention of the Federal government.

Another typical case involves a billing problem you discover and self-disclose.  Federal law requires a known overpayment be repaid within 60 days after it is discovered.  Failure to meet this time limitation subjects the overpayment to imposition of additional penalties under the False Claims Act.  The application of the FCA effectively triples the amount of overpayment and adds between $11,000 and $22,000 per claim to the price tag.  A simple overpayment can easily become a false claim if repayment (or self-disclosure) is not made within 60 days of when you gained knowledge.

Recent legal changes make it much more likely this will occur at some point.  Increases in False Claims Act penalties and other available sanctions has made health care fraud prosecution a profitable business for the Federal government.  Reports indicate that Federal enforcement agencies receive an 8 time return on every dollar they spend on pursuing health care fraud.  This was before the recent increases in federal penalties.  Federal enforcement agencies do not tend to wait for proof that they can convince a jury of your guilt before pursuing a case.  Instead, they use civil enforcement to leverage a settlement instead of requiring criminal burden of proof.  If you are facing potential False Claims Act penalties, you are strongly motivated to settle with the Office of Inspector General.

When the types of problems that cause you to have a Terrible, Horrible, No Good, Very Bad Day occur or are discovered, it is critical they be handled properly starting at the moment of discovery.  The situation is not going to go away on its own.  The only solution is to proactively handle the situation with the hope you will avoid exposure to more damages than the simple overpayment amount.  This all needs to be done on an immediate timeframe.  There is little time to waste. 

In reviewing these situations, I sometimes find there is an ambiguity in the rules or an incorrect application of the rules that resulted in a perceived problem.  The first step is confirmation that proper procedures were used to determine the overpayment.  Once confirmed, a decision must be made whether to self-disclose to the government or whether a repayment can be made without formal self-disclosure.  This decision is often complicated and may require development of additional facts through investigation.  It is critical the investigation be performed properly to avoid further potential risk exposure.

Source: Blue Ink Blog