400 FBI Agents Are Helping the Government Collect Money From People Like You
By: DAVID M. GLASER
Winter 1995
The number of FBI agents devoted exclusively to examining health care fraud has more than doubled in the last year or two because of the end of the cold war. Agents who had been following suspected Soviet agents and performing other counterintelligence are now attempting to detect billing fraud.
The government has two potent weapons to address fraud. First, a provider may face criminal penalties, including jail time, for any willful disregard of the Medicare billing rules. While the criminal penalties are certainly quite disturbing, the government's ability to seek civil penalties is equally frightening. Remember, while criminal penalties apply only if you consciously attempt to defraud the program, civil penalties may apply to mere billing errors. Extraordinary penalties may be applied to even minor billing mistakes. One improper claim can draw penalties of up to $5,000 or $10,000 in addition to three times the size of the improper payment! These rules provide the government with a strong financial incentive to scrutinize your bills.
We have noticed that many of our clients who are currently involved in major Medicare investigations may have had early warning signs that they were being scrutinized. First, the providers usually received a letter stating that an overpayment had been made. The amounts were often extremely small, involving only a few thousand dollars or less. Amounts so small that you might be inclined to pay them, rather than try to fight the issue or contact a lawyer. A year or two after the overpayment was assessed the carrier audited the provider, focusing on the issue addressed in the overpayment letter. If the audit revealed any similar problems, the carrier would note that the provider had been placed on notice of the problem by the earlier letter and indicate that it was referring the case to the U.S. attorney for possible criminal investigation or civil monetary penalties.
Based on these experiences, here are a few practical tips:
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If you receive a Medicare overpayment letter, even a very small overpayment letter, contact your lawyer. You may feel that the amount involved is too small to justify a legal expense, but almost all clients involved in a major investigation wish they had called their lawyers a little earlier in the process. Depending on the circumstances the call may be very short, but you should fully consider the implications of the letter. At the very least, you should confirm that your understanding of the billing rules is correct. You may also want to determine whether fighting the overpayment may nip any potential problem in the bud.
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Look for patterns in rejected claims. Ask your billing personnel what types of claims are most commonly rejected. Even before you receive an overpayment letter, you may be able to detect a potential problem if you know what types of your claims are often rejected or sent back for additional documentation. At the very least, billing personnel should do an informal survey of which types of claims are rejected and should attempt to determine whether any particular procedures or practitioners are more likely to have claims rejected. A monthly meeting to discuss claim rejections may be worthwhile.
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Don't get a false sense of security if an audit only finds three or four improper claims. One of our clients challenged an overpayment involving about a dozen patients. The hearing officer ruled that the vast majority of the bills were correct, and only three contained errors. Understandably, the provider viewed this hearing as a victory: it won on 75 percent of the disputed claims. But the carrier would disagree. The carrier concluded that if it audited enough claims, it was likely to detect several more incorrect claims. Remember, with penalties of $5,000 per claim, if the carrier can find 10 claims the penalties can be $50,000. While the government is usually extremely reasonable in selecting which cases to prosecute, it may choose to pursue a case involving only a handful of claims.
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Use outside consultants to conduct billing audits annually. While it is expensive to have a consultant perform an audit, the cost of a few improper claims will dwarf the audit expenses. The routine audit also provides evidence that proves your good faith. Prosecutors recognize that the billing rules are complex. If you are making a good faith effort to comply, you may receive the benefit of the doubt.
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Develop a compliance program. Compliance programs can help detect trouble and reduce the penalties in the event the government detects billing problems. The goal of a compliance program is to make certain that employees completely understand the billing rules and feel comfortable raising questions if they think any billing problems exist. It is wise to encourage billing personnel to ask lots of questions.
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Don't assume that common sense will prevail. Many billing rules are extremely counter-intuitive. For example, many services provided by non-physician personnel are billed using the physician's number because the service is considered "incident to" a physician's service. Many of our clients have been surprised to discover that the services did not meet the very strict rules governing "incident to" services. (If you are unfamiliar with the rules governing "incident to" services, you should contact your health care lawyer.) For example, one of the rules is that only services rendered by an employee can be considered "incident to" a physician's services. Services rendered by a nurse, physician assistant, physical therapist or other non-physician who is an independent contractor cannot be billed under the physician's provider number. In these situations, the carrier may attempt to collect an overpayment from you even though you provided legitimate, useful services to the patient. While common sense might lead you to believe that the carrier will not try to collect a refund when you have provided medically necessary services, most carriers believe their contract requires them to apply the billing rules, not common sense.
In short, during the next few years you can expect to see a dramatic increase in the number of audits and investigations into health care entities. Now is the time to try to reduce the chance that you will be a target.