False Claims Act Wrong Diagnosis and Procedure Codes

video

One of the most common kinds of health care fraud committed by major institutions and small groups alike involves using the wrong diagnosis and procedure codes to describe the service provided. According to the latest U.S. Government Accountability Office report, Medicare alone will process more than one billion individual claims per year. Medicaid will process many millions more claims for treatment. All those claims have to be funneled through the Center for Medicare and Medicaid Services (CMS), which reviews claims for Medicare health services. How those claims are actually presented can create an additional area of fraud committed against the government.

FCA, Billing Codes and Medical Procedures

When a provider presents a claim under Medicare or Medicaid, they must identify the specific diagnoses and procedures they performed, each of which have a corresponding numerical code. Medicare and Medicaid require billing to be made using these codes on billing forms, which indicate what services were provided to the patient. This is the technical mechanism used to make a claim for money to a government program. CMS can then look at the code and determine how much to pay the health care provider for the service provided. This way the government can pay for the service, but the patient’s actual care remains the province of the health care provider.

However, a claim containing incorrect diagnosis or procedure codes is a claim for services that the provider did not actually provide. As such, if a provider knowingly presents a claim that contains incorrect codes, they have made a material false statement and presented a false claim.

Filing claims with incorrect codes can create explicit liability under the federal and state False Claims Acts. Such a situation means that service providers become liable for triple damages and civil claims for each such submission.

False Claims Act and Upcoding

Cases filed under the act have exposed many situations when providers have knowingly used the wrong codes. Medicare and Medicaid only cover procedures that are “medically necessary.” For example, a doctor who performs a procedure — which is not deemed medically necessary — might submit a code for a similar procedure that is covered. Similarly, a provider might use a code for a more complex procedure that results in higher charges to the government than the procedure that was actually performed. This particular type of fraud is often called “upcoding.”

Unfortunately, the practice of routinely charging for more complex and expensive procedures simply by changing the code indicating what was provided is pretty common. After all, the patient may not recognize or understand the different codes, and the government is not privy to what actually happened during treatment. The temptation to use costlier codes on a routine basis, and thereby increase revenue, has created instances of major fraud against both Medicare and Medicaid. As a result, sizable False Claims Act cases have been brought to fight the practice of upcoding.

False Claims Act and Unbundling

Another situation where a provider may knowingly use incorrect codes is called “unbundling.” Many procedures include several related services that are “bundled” into a single code. For example, most codes for inpatient surgeries bundle together post-operation checkups and care. If a provider separately bills procedures that are supposed to be bundled together, he or she may have made similarly made a false certification of compliance with the Medicare regulations and presented a false claim. The government is supposed to be able to rely on the codes the provider uses to explain the actual service provided. When that provider, instead, uses the codes to increase the amount of money billed to the government it is an abuse of the system and can create a case under the False Claims Act. Again, that provider would be liable for civil fines and treble damages each time the government program was billed this way.