August 2001 Bulletin

GAO, IG warn some consultant advice illegal

Physician-clients could be in jeopardy of violating criminal statutes, fines, penalties

Some consultants may be giving physicians unlawful advice on ways to increase revenue, warns the General Accounting Office (GAO). The advice could cost the consultants and their physician-clients millions of dollars in fines and penalties, says the Inspector General of the Department of Health and Human Services.

Both the GAO and IG said only a small number of consultants promote abuses of the Medicare and Medicaid programs, but the IG observes that the axion still applies: "If it looks too good to be true, it probably is."

In a report to the Senate Committee on Finance, GAO said two undercover investigators—one a licensed physician—attended two workshops that advertised ways to enhance revenue and avoid audit. The workshops were "How to Run a More Profitable Practice," and "Creating a 7-Step Compliance Plan Audit/Audit Proof Your Practice." Both workshops were conducted by the same consulting firm that advertises its workshops have been attended by more than 50,000 physicians and 100,000 office managers and medical assistants.

Concerning "how to audit proof your practice" and avoid sending out "red flags," one consultant advised physicians not to report or refund overpayments they identify as the result of a self-audit. When asked the proper course of action, the consultant said providers are required to report and refund overpayments. "However, the consultant said that instead of refunding overpayments, physician practices generally fix problems in their billing systems that caused overpayments while ‘keeping their mouths shut’ and ‘getting on with life,’" the GAO said. This could result in violations of criminal statutes, the GAO warned.

A consultant at one workshop urged practitioners to enhance revenues by finding creative ways to justify bills for patient evaluation and management services at high code levels. The GAO said the consultant discussed the hypothetical case of a cardiologist who examines a patient in an emergency room where tests are performed and the patient is discharged after the cardiologist determines that the patient has a minor problem or no problem at all. To generate additional revenues, the GAO said, the "consultant suggested that the cardiologist tell the patient to come to his office for a complete work-up, even when the cardiologist knows that the patient does not have a problem.

"He advised that the work-up be performed during two separate office visits and the cardiologist not be involved in the first visit. Instead, a nurse is to perform tests, draw blood and take a medical history. During the second visit, the cardiologist is to consult with the patient to discuss the results of the tests and issues such as life style. The consultant indicated that the cardiologist could bill for a level 4 visit, indicating that a relatively complex medical problem was encountered at the time of the visit."

Another consultant engaged in "exercises" with participants designed to suggest that coding results are "arbitrary" determinations. In one exercise involving a generally healthy 14-year-old patient with a sore throat, the GAO said the "consultant suggested billing the visit as a level 4 encounter. He supported the code selection by documenting every aspect of the medical history and physical examination, and mechanically counting up the work documented to make the services performed appear more complicated that they actually were."

All the participants indicated they would have coded the visit at a lower level. The consultant explained that in the event of an audit, the documentation created would be the basis for making it appear that a bill at a high code was appropriate.

The GAO noted that a recent audit of Medicare claims at level 4, conducted by the HHS Inspector General, showed that in the last five years, providers on average incorrectly coded at level 4 in more than 41 percent of the cases the IG reviewed.

Lewis Morris, assistant IG, told the Senate Financial Committee about a billing consultant who contracted with physicians to code, bill and collect for emergency department services. An investigation found that the consultant’s employees were routinely billing Medicare and Medicaid for higher levels of treatment than were provided or supported by medical record documentation. The consultant was found liable under the False Claims Act and agreed to pay $15.5 million to resolve his civil and administrative monetary liabilities. The government is investigating the physicians who benefited from the fraudulent billing practices. To date, the consultant’s clients have paid $5.8 million to resolve civil liabilities stemming from the fraud.

‘Too good to be true’

The Inspector General of the Department of Health and Human Services warned that some consultants make claims that are "simply too good to be true." The IG said promises or guarantees that may be problematic could include:

A billing consultant representing that its advice will result in a specific dollar or percentage increase in Medicare reimbursements, regardless of the prospective client’s particular circumstances. The consultant’s fee is often based on a percentage of the increased reimbursement.

A reimbursement specialist suggesting that a client use inappropriate billing codes to elevate reimbursement and describing methods to avoid detection.

A reimbursement specialist suggesting that a client bill for an expensive item with a high reimbursement rate when a less expensive item with a lower reimbursement rate was actually provided to the patient.

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