Legal Alerts

Common Billing Patterns Resulting in a False Claims Act Investigation & Litigation

(November 25, 2019) - Government investigators utilize many different tools to identify targets for investigation and prosecution. One of their most effective tools is data mining. In the context of healthcare providers, data mining allows government investigators to review years of billing submission for statistical trends. Data mining allows government investigators to review a healthcare provider over time and relative to healthcare providers across the local, state, and regional levels. Though not necessarily indicative of fraud, a healthcare provider whose billing practice suggests one of the following trends is very likely to be investigated.

1. Unbundling: The government sometimes places service limits on billing submissions that can be billed together. A service limit may prohibit a provider from billing for more than a certain number of diagnostic imaging studies on a single date of service. To avoid service limits, a provider may submit some billing claims for imaging studies on the date of service that the patient presented for treatment and then may submit claims for the remaining studies while associating it with a date of service different from the actual date upon which the studies were taken.

Example of Unbundling: A new patient presents to establish care with a dentist on March 1. During the visit, the dentist orders four bitewing and five periapical imaging studies. However, the service limit prevents a provider from billing for more than six imaging studies on a single date of service. To receive payment for all nine, the provider submits claims for four bitewings and two periodical studies with a date of service of March 1. Then, the provider submits claims for three more periapical studies with a date of service of March 2. 

Practical Considerations: Because government investigators use years of data to evaluate trends, a provider can be a target for suspected unbundling as a result of numerous billing errors. For example, if the billing submission staff do not routinely review claims prior to submission, simple typographic errors when entering dates of service can result in billing patterns similar to unbundling. Additionally, errors resulting in an apparent trend of unbundling can occur when claims are submitted over a series of days. Often, electronic claim submission programs pre-populate dates of service for entries. If a staff member fails to log out of a billing submission program, the claims submitted the next day may associate with the prior day’s date if staff do not notice the error; alternatively, if a staff member submits claims towards the close of business but fails to finish a claim submission before the office closes, the claim could be submitted with the next date of service rather than the actual date upon which the services were rendered. These mistakes are simple but unchecked, they could result in six or seven figures in liability to government.

2. Up-Coding: Billing codes can break down services based on the time or complication of the service provided. Up-coding occurs when a provider performs a shorter or simpler service but bills for the longer or more complicated service. By up-coding, the provider performs the shorter or simpler service, but bills for the more expensive related billing code.

Example of Up-Coding: A patient presents to a dentist for a routine prophylaxis visit. During the evaluation, the provider determines an erupted molar is infected and needs to be surgically removed. The tooth is extracted with a simple surgical extraction. However, when the services are billed, the government receives a claim for an emergency evaluation and a surgical extraction for surgical extraction of an impacted tooth.

Practical Considerations: Up-Coding can easily occur in a practice without consistent application of internal procedures and processes. For example, government programs may not allow providers to utilize every evaluation code in existence. Their service limits may only allow for the submission of select codes. If a provider or staff do not become familiar with the government’s interpretation of the evaluation codes in the context of their service limits, a provider may bill for a higher level evaluation code than what the government would otherwise allow.

3. Ghosts: The adage is that if it was not documented it was not done. "Ghosts" refer to billing entries for patients that were never present or for services with equipment that were not in the office.

Example of Ghosts: (1) A patient presented to establish care a year ago, but failed to present for an annual evaluation. Although the patient did not present for care, the practice still bills for an evaluation, diagnostic imaging studies, or other clinical procedures. (2) A provider bills for analgesic but never purchased analgesic supplies.

Practical Considerations: A ghosting trend can be the result of simple human errors. For example, a patient may actually present for an evaluation, but the provider failed to document the evaluation or, in the context of EMRs, the encounter note was either not saved or was deleted. As a result, a subsequent records audit would support the conclusion that the patient had never actually presented for treatment and that the claim had been submitted fraudulently.

Understanding the Size of the Problem

In 2019, Medicaid reported that 65.7 million patients in the United States are enrolled as Medicaid and 6.6 million patients are enrolled CHIP beneficiaries. This number includes 2 million North Carolinians; 11.7 million Californians; 4.2 million Texans; 6.5 million New Yorkers; and 4.1 million Floridians. Looking at Medicare enrollments, CMS’ July 2019 report showed that these population numbers have steadily increased over the past few years.

In 2017, Medicare and Medicaid spent $705.9 billion and $581.9 billion, respectively, and constituted 20% and 17%, respectively, of healthcare expenditures across the country. The current estimates for FY 2019 (as of May 2, 2019), along with government estimates for 2020-2029, show that these expenditures will only continue to increase.

With expenses so high, it should come as no surprise to healthcare providers that the government has prioritized monitoring healthcare expenses for fraud and abuse. In January 2019, the Department of Justice announced that it had recovered $2.8 billion in false claims cases in 2018. In Medicare cases alone, the government has initiated 2,117 criminal actions, obtained 2,754 indictments, and obtained $3.3 billion in investigative receivables. More information on Medicaid prosecution numbers organized by state, including prosecutions, cases, and recovery amounts, here and here.

For more information on this topic, contact the authors of this alert, or visit our Healthcare Law Practice page to find an attorney in your area. 

You can also read our previous related alerts Why Every Healthcare Provider Should Be Concerned About Potential Healthcare Fraud Allegations and The False Claims Act & Why It Matters to Healthcare Providers.


Justin May

Carrie E. Meigs

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