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Stay off this year’s OIG hit list

By David H. Glusman, CPA

As in the past, the Office of the Inspector General of the Department of Health and Human Services (OIG) has issued a Work Plan of their most likely targets for fraud investigations. The OIG issues this “hit list” in advance each year. By reading the hit list, health care providers can determine which areas are most likely to receive scrutiny in the upcoming year. While the OIG and the US Attorney’s Office are always looking for health care fraud, and they react to any information that comes their way with regard to allegations of fraud, these are the areas where they are most likely to begin investigations on their own.

The Table of Contents of the Work Plan reads like a Who’s Who of things that can go wrong in health care billing and operations. The areas covered include hospital operations, home health care, nursing homes, physicians and other health professionals, durable medical equipment, pharmaceutical items and other Medicare services.

Among the items that are of most interest to physicians and institutions with physician practices are the emphasis on the modifier “-25” and the coding of evaluation and management services. The modifier “-25” “significant, separately identifiable evaluation and management services by the same physician on the same day of the procedure or other service” is one which has been used inconsistently throughout the medical profession. Partially because of the inconsistency and partially because of the view on behalf of the OIG and the Centers for Medicare and Medicaid Services (CMMS), the use of the modifier “-25” is deemed to be problematic.

The background of the modifier “-25” makes it clear that a physician should not be billing evaluation and management codes on the same day as the procedure or other service has been performed, unless the E&M services are unrelated to the original procedure or service. According to statistics published by CMMS, over seven percent of all E&M coding in fiscal 2001 (the last year for which data has been fully compiled) was for E&M services billed with the modifier “-25.”

Physicians and other providers utilizing the modifier “-25” need to be particularly cognizant of the requirements for use of the modifier “-25,” as well as the likelihood of an increased level of routine investigation by the Medicare intermediaries. There is also the likelihood of a full-fledged Medicare investigation for those providers with significant utilization of the “-25” modifier. For example, a gastroenterologist who performs a colonoscopy on an in-patient on Monday should not be billing for an E&M code for checking in on the patient several hours later to make sure that there are no unwarranted complications from the colonoscopy. Only if the patient has symptoms unrelated to the original procedure, such as a need for an evaluation of GERD, which would almost certainly be unrelated to the colonoscopy should the modifier “-25” be utilized. Similar examples can be found in almost every specialty where procedures are performed.

CMMS also has a continuing concern with regard to the overall coding of E&M services. The 2004 Work Plan for CMMS includes the attempt to identify physicians with “aberrant coding patterns” and it is clear that CMMS is going to be using statistical analysis to attempt to identify physicians who have disproportionately high volumes of higher-level evaluation and management coding than that in the general population of physicians. It is unclear whether the initial statistical evaluation will be done on a specialty by specialty basis, and it is also unclear whether Medicare will initially attempt to segregate true tertiary care physicians.

Certainly, any physician who receives any written information from CMMS or the Medicare intermediary indicating that their practice pattern is above the “normal” range for their specialty should both look into their billing practices as well as consider responding to the notice if there a clear reasons for the billing pattern. While it is unclear whether CMMS will actually respond to any written notification, prior experience indicates the possibility that audits that were planned will be cancelled (all without the physician actually being aware of the original plan or the cancellation) if CMMS becomes aware of the likelihood of a “no change” result upon audit.

In general, it continues to be important for physician practices to adequately and accurately code E&M services. Many practices continually re-educate their staff (physicians and physician extenders, as well as billing personnel) with regard to the requirements for the level of history being taken, the level of the examination and the relative complexity of the medical decision making in order to properly code the E&M services. The necessity of having the chart fully document the level of E&M coding will continue to be important, as the fiscal year 2004 OIG Work Plan makes clear.

OIG has also indicated that they believe that there are significant errors being made with regard to the “place of service” designation. Because there is a different level of payment for physician services based upon the locale where the services are performed, OIG will look for errors with regard to billing for services alleged to have been performed in physician offices when they were in fact performed in ambulatory surgical centers or hospital outpatient departments. Both physicians and billing staff need to be particularly cognizant of physicians who perform services in multiple locations to make certain that the location of the service is properly designated on the form.

For certain specialties, billing for diagnostic tests performed by the prescribing physician may also be reviewed more intensely in 2004. Because Medicare covers a range of diagnostic tests (HHS includes the example of nerve conduction studies by neurologists and physiatrists), HHS may be focusing on these areas, especially being aware of differences in practice patterns between physicians who are performing these services in their own facilities as opposed to those referring them out. Because of an increase in these studies (nerve conduction studies increased by over 37 percent between 2000 and 2001) medical necessity on diagnostic tests has now become a major focus of CMMS.

The durable medical equipment industry will also come under increased scrutiny for the use and maintenance of certificates of medical necessity for durable medical equipment (DME) as well as the necessity for ordered items. The issuance and the maintenance of the certificates of medical necessity, as well as the underlying medical records of the physician, are all subject to review by CMMS, and because of the increase in the expenditure in this area, this has been focused as an additional area for 2004.

For independent diagnostic testing facilities CMMS will be verifying whether “(1) individual facilities provided services for which they had prior approval, (2) the designated level of physician supervision was provided, and (3) the non-physician personnel who performed the diagnostic tests were properly licensed.” For these reasons it is important for independent diagnostic facilities to review their licensing, the licenses of any and all individuals who are employed, as well as the medical necessity for the tests themselves.

While the OIG and related organizations constitute the majority of the items that most physician practices deal with, there are other areas of fraud that are constantly being looked at and reviewed. Among those that are of the greatest interest to the government include those relating to insurance fraud. Physicians have been involved, sometimes intentionally and sometimes inadvertently, in insurance fraud. Both the various State Insurance Commissioners as well as the State Attorneys General have been focusing greater attention on insurance fraud in several areas. One that receives significant attention is automobile accidents and similar “personal injury” cases. Physicians may become inadvertently involved in this type of fraud by seeing and treating patients when no actual underlying accident existed. It may be difficult for a physician and their office to ascertain that a patient is faking injuries and/or symptoms and never had a true accident. Nonetheless, it is important for physicians, physician extenders and office administrative personnel to be cognizant of the fact that these cases exist.

Some years ago there was a joint raid between the Federal, State and City law enforcement organizations on at least three medical offices and a law firm simultaneously. The underlying issue related to fraudulent filing of automobile accident claims. Two of the physician offices had seen a particular patient only once each and each of the physician offices had sent a “Dear Doctor” letter to the original referring physician indicating that they had no finding of any particular injury to be treated, and that the patient, in their opinion, required no further follow-up.

Nonetheless, the amount of disruption to these two physician offices was extraordinary. For a period of approximately four hours both offices were completely shut down, and both were threatened with the seizure of significant quantities of billing records, patient charts and appointment books (both past and future). It was only through rapid and effective work by their legal counsel that the seizure was avoided, photocopies of pertinent records were given to the State and Federal agencies, and they were ultimately convinced of the innocence of the two physicians involved. (Parenthetically, the third physician’s office was closed down. That physician was ultimately convicted of insurance fraud and lost his license, as did the attorney whose secretary was the “fake” patient.)

The lessons that can be learned from this are two-fold. In the event that there is any type of inquiry from a governmental organization for any mass quantity of records, whether by subpoena, by search warrant or other legal methodology, the immediate contacting of competent, experienced health care counsel is of paramount importance. This is the type of circumstance where the caller does not leave a message, but rather makes certain that some member of the law firm is made available immediately for consultation and action.

If there is any doubt with regard to the veracity of a patient with regard to an accident or other legally oriented matter, it is important for all concerned in the physician’s office to make note of the fact, to confidentially alert the physician and potentially to discuss this with outside legal counsel before a “Dear Doctor” letter is sent – and certainly before any follow-up appointments or diagnostic tests are performed or scheduled. In addition, it is important to note patterns of referrals of apparently “well” patients with stories that regard personal injury experiences that do not seem to be supported by the physical and clinical findings. While many patients may experience physical injury and not show specific clinical symptoms, a pattern of referrals from one particular physician and/or attorney may indicate a concern that should be noted.

Similar circumstances can arise with regard to disability insurance, which has become an additional area of potential fraud concern as there has been an increase in claims under disability policies in the past 10 years compared with prior insurance industry history. While it is unclear what percentage of the cases currently being litigated by insurance companies are in fact fraudulent, it is important for physicians and their office staff to be objective in the reporting of physical and clinical findings on behalf of patients seeking disability benefits. The vast majority of those seeking to collect on their disability policies are legitimate, the physicians fully understand the issues, and there is very little concern to be raised. Nonetheless, the risk of a disability claim being fraudulent has now become just high enough to warrant additional attention and thought process by the attending physician.

In these more litigious times, it certainly is important for the physician and their staff to continue to be vigilant, make certain that they don’t inadvertently get involved in fraudulent matters, and to contemplate the correct action with legal counsel if there is any suspicion that a patient is involved in fraudulent activity with regard to the medical services being provided.

While many other areas are covered in the fiscal year 2004 Work Plan, these will comprise the major areas that impact physicians in 2004.

David H. Glusman, CPA, DABFA, CFS, Cr.FA is a principal of Margolis & Company P.C., a regional certified public accounting and business consulting firm located in Bala Cynwyd, PA.

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