Life Science Compliance Update

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November 09, 2012

HHS and Attorney General Concerned with Upcoding

Over the last three years, the Health Care Fraud Prevention and Enforcement Action Team (HEAT) has recovered over $10.2 billion in healthcare fraud settlements, many involving pharmaceutical companies charged with the “off-label promotion” of drugs to healthcare providers.   

In addition to this type of fraud, the Department of Health and Human Services (HHS) and the Attorney General recently announced efforts to fight healthcare fraud regarding the improper use of medical coding—particularly in the fast growing adoption of electronic health records (EHRs).  An article in the New York Times analyzed certain Medicare data by the American Hospital Directory and found that “hospitals received $1 billion more in Medicare reimbursements in 2010 than they had in 2006, at least in part by changing the billing codes they assign to patients in emergency rooms.” 

Specifically, HHS Secretary Kathleen Sebelius and U.S. Attorney General Eric Holder recently sent a letter to five provider associations--the American Hospital Association (AHA), Federation of American Hospitals (FAH), National Association of Public Hospitals and Health Systems, Association of American Medical Colleges, and Association of Academic Health Centers (AAHC)—warning that the administration would not tolerate healthcare fraud fostered by electronic medical records.

Sebelius and Holder pointed to “troubling indications” that providers are gaming the system by falsely documenting and upcoding the intensity of care or severity of a patient’s condition for higher reimbursements, reported FierceHealthcare. The letter cited potential “cloning” of medical records in order to inflate what providers get paid.  They emphasized that information “cannot be cut and pasted from a different record of the patient,” which risks medical errors as well as overpayments.   

The Times noted that “Similar abuses appear to be occurring in how doctors charge Medicare for office visits, according to regulators and a parallel investigation by the Center for Public Integrity, a nonprofit investigative news organization.”  One cause for such upcoding, however, may be that doctors in the past underbilled and “now find it easier to meet billing and reporting requirements thanks to electronic records.” 

The Centers for Medicare & Medicaid Services (CMS) recently has boosted efforts to review improper billing and coding for evaluation and management (E/M) services, especially with new authority under the Affordable Care Act (ACA) to halt payments for suspicious activity.  “We will continue to escalate our efforts to prevent fraud and pursue it aggressively when it has occurred,” HHS and the Attorney General said.

AHA responded, saying although the hospital trade group supports HHS’ hard-nose stance again EHR cloning and upcoding, “more documentation and coding does not necessarily equate with fraud.”  Unfortunately, however, the Times found evidence “of sales pitches by software vendors telling doctors they could increase their incomes with the help of electronic records, [and ] huge error rates detected by contractors handling Medicare claims in Texas and Oklahoma.”

With more than half (55 percent) of hospitals qualifying for incentive payments under Meaningful Use, according to HHS, “using EHRs could put hospitals and other providers in a sticky situation to more accurately code, yet they may run the risk of auditors interpreting increased coding and higher payments as fraud,” reported the article.

“One of the biggest selling points of EHRs is that this wonderful new electronic tool automatically captures additional data providers may have missed when manually coding, enabling providers to bill more accurately for their services.”

FAH similarly noted in its response, “EHRs increase the ability to capture meaningful data about each patient encounter.  We believe that any changes in coding reflect the fact that EHRs are enabling the development of more compete data sets regarding patient care and that these changes generally do not represent instances of inappropriate coding.”

AHA and AAHC—the trade group that represents 100 academic health centers—cited a lack of clear, useful guidance about E/M coding from CMS—a request that AHA has asked for 11 times.  While AAHC expressed its full support CMS to conduct audits to identify instances of improper billing, both intentional and inadvertent, their “membership has expressed some concerns regarding the system of incentives for and oversight of Medicare Recovery Audit Contractors (RACs).”  AHA responded to the Times article in an editorial and noted a survey, which “found that denials were appealed at a 75 percent success rate.” 

In addition to a lack of national E/M guidelines, AHA also noted that rules for Medicare and Medicaid payments are only getting even more complex.  According to AHA’s latest RACTrac survey, out of the 40 percent of denials that hospital appeal, more than three-quarters are overturned successfully. 

Ultimately, with the increased resources, funding and staffing the Obama administration has poured into healthcare fraud, it is clear that law enforcement, including DOJ, HHS, and the FBI, will be leading a new and increased effort to fight upcoding and related improper activities

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