Health Law Pointers - Volume XI, No. 3
Issues relating to health care
fraud have captured the attention of our media, and the imagination of our
screenwriters. No wonder! The numbers are staggering! The government
estimates that 2.26 trillion dollars were spent in 2007 on health care,
with over 4 billion health insurance claims processed. If we
conservatively adopt a 3% fraud percentage, the dollar value of all fraud is 687
billion each year! That is said to be more than the gross domestic
product of 120 different countries.
The scope of the problem has intensified
efforts to combat fraud. As a member of a professional practice, you should be
aware that health care fraud enforcers (government agencies, insurance carriers
and their agents) characterize the following billing practices as examples of
1. Billing for professional services that are never performed.
2. Misrepresenting the nature of the services or procedures actually performed to attain a greater reimbursement (upcoding).
3. Misrepresenting non-covered treatments as medically necessary.
4. Providing medically unnecessary care (over-utilization).
5. Inflating a patient’s diagnosis.
6. Billing different phases of an integrated procedure (unbundling).
7. Use of unlicensed staff.
8. Waiver of co-pays or deductibles without regard to the patient’s ability to pay.
9. Altering medical charts.
10. Misrepresentation of dates,
description of services on medical charts.
These same agencies and carriers encourage
patients to examine their bills carefully, and to report all suspected instances
of fraud, errors or concerns. Several agencies and reimbursement programs offer
rewards if provider suspicious activity turns out to be “fraud”.
The current enforcement environment makes it
more important than ever to monitor your billing practices, and take steps to
assure complete compliance with the rules.
We are frequently asked if HMOs
and other health insurance companies are limited in their ability to conduct a
post payment (retrospective) audit.
Third party payers continue to engage in
post-payment audits of medical records. As most audits today are performed
using statistical extrapolations from a limited number of the practice’s charts,
the demand letter typically will seek repayment of a substantial “overpayment”
taken from the audited sample. Many of these inquiries are aggressive, auditing
past, paid billings submitted several years before.
Notwithstanding State Insurance law provisions
that arguably prohibit overpayment recovery efforts more than 24 months after
payment is received by a health care provider, a major exception under the law
undermines this general rule, if there is a “reasonable belief” of fraud, other
intentional misconduct or abusive billing. Thus, HMOs and health insurance
companies regularly review records up to 6 years old when conducting a
routine post payment audit, on the theory that the audit is subject to a 6 year
cause of action. Further, under Regulation 95, found at 11 NYCRR 86.5, these
organizations are duty bound to report to the State Insurance Department Fraud
Bureau any instance where there appears to be a fraudulent or suspect insurance
transaction or purported insurance transactions.
Employee Disciplinary Action (Termination)
Established violations of an employee handbook
ordinarily give rise to disciplinary action, but if a valued employee commits an
act that arguably justifies termination of employment, must termination
automatically ensue? The answer may depend on some of the following
1. Is the person a long-time and valued employee of the practice?
2. Has past service been without incident? Is this incident an aberration?
3. Is the employment “at will” - in which case the person may be terminated as an employee, with or without cause, at any time - or is termination governed by the provisions of an employment contract?
4. Is the employee remorseful? Has an apology been tendered?
5. What assurances can be offered by
the employee that this conduct will not recur?
If a decision is made to subject the employee
to lesser disciplinary action, other than termination of employment, the
arrangements for continued employment, if any, should be documented in a writing
acknowledged and countersigned by the employee. The writing should also make
clear why the decision was made not to terminate employment and emphasize that
any further violations of the employee handbook, or inappropriate conduct, will
result in immediate discharge from employment, with or without cause.
For those practices participating in the State
Medicaid program that receive $500,000 or more in reimbursement annually from
the program, Chapter 442 of the Laws of 2006 (which established the New York
State Office of the Medicaid Inspector General) will require you to develop,
adopt and implement an effective compliance program that is certified by OMIG by
the December 31, 2009 deadline.
More information on the mandatory provider compliance program may be found at the OMIG website: www.omig.state.ny.us.