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Stop Upcoding Your Procedures. It is Fraud!

Healthcare FraudWhistleblower lawsuits or qui tam lawsuits cover fraudulent activities that range from tax evasion to healthcare fraud involving Medicare and Medicaid. These are lawsuits where in citizen involvement is significant, and citizens help reveal cases of fraud against the government. Healthcare fraud committed by hospitals, clinical laboratories, pharmaceutical companies, and individual medical practitioners among other healthcare entities can be revealed through a robust medical claims review system. Upcoding is a type of serious fraud where healthcare providers submit wrong billing codes to payers to receive extra reimbursement. It involves assigning higher level codes for services that do not have the required level of complexity to indicate that the physicians provided treatments that were more complex, time-consuming, and costly than what they actually received. This is illegal because it is a violation of the False Claims Act (FCA), and defrauds government programs such as Medicare and Medicaid. The FCA provides an incentive for whistleblowers to stop fraud and help prevent abuse to government health programs. Typically, whistleblowers represented by attorneys can file claims on behalf of the government and receive a portion of the government’s recovery from a qui tam whistleblower lawsuit. Since 2009, the Department of Justice (DOJ) has recovered more than $13.4 billion in cases related to fraud against federal healthcare programs.

One such major whistleblower suit involving Carolinas Healthcare System was settled recently with the system agreeing to pay $6.5 million for their alleged upcoding fraud. This lawsuit was filed by a former Carolinas lab director who will share in the recovery under the provisions of the False Claims Act. The DOJ said that according to court documents, during the period 2011 to 2015, Carolinas conducted urine tests that should have been categorized as “moderate complexity” test. However, Carolinas upcoded the tests as “high complexity” tests to receive a higher payment. The government alleged that through this fraud, Carolinas and certain contracted facilities secured $80 more per test than they would have if the tests had been properly coded. The DOJ said that the whistleblower will receive an amount of $1,365,000.

Carolinas cooperated in the investigation but held that the “lawsuit is not about our patient safety, quality of care, or whether the urine drug screen tests were done correctly. It is about the interpretation and application of complex and constantly changing billing guidelines.” They decided to settle after almost two years of litigation. The $6.5 million figure partly make up the difference between what Carolinas was reimbursed for the tests and what Medicare and Medicaid alleged the system should have been paid had it used a different code.

It is difficult to detect upcoding since aspects such as the duration of office visits, medical diagnoses, and complexity of treatments are left to the discretion of healthcare providers. While it is difficult to identify even individual cases of fraud, consider the challenge involved in tracing such fraudulent activity in large institutions such as hospitals and laboratories where there are more procedural options and where Medicare billing is generally slipshod!
Healthcare Fraud

  • ERs are a common site of upcoding, and these settings are estimated to cost the U.S. government an extra $1 billion each year.
  • Use of EHRs could create further complications since these are error-prone and easier to modify than traditional paper records.
  • Electronic records create further distance between doctor and the coding process, placing medical coding more under the review and control of hospital administrators.

Excessive upcoding instances may lead to anomalies in billing that investigative agencies may notice. However, the best agencies for discovering widespread fraudulent activity are whistleblowers. Accountants, physicians, administrators, and medical institution executives are often those who take that very important step to report the crime.

As mentioned at the outset, a reliable and foolproof medical claims review system can surely help to address medical fraud, as well as ensure cost containment and long-term financial stability for health insurance organizations. In addition, such a claims review and reimbursement process is a major aspect when it comes to quality of care because it helps in early settlement of genuine claims, which in turn acts as an incentive for healthcare providers to provide continuous, quality care and service to the insured. Thirdly, it can also provide an overview of the pattern of care provided and help practitioners when making policy directives.

About Julie Clements

Julie Clements

With some background in the healthcare staffing arena; as well as 6 years as Director of Sales and Marketing at a 4 star resort; Julie joined MOS in March of 2008. Hired for sales and support, Julie has proven capable across multiple product lines and in early 2011 was promoted to supervise all solutions managers.