The False Claims Act and Accurate Documentation

The False Claims Act (“FCA”) was enacted in order to protect the Federal Government from being overcharged or sold substandard goods or services.¹ When a patient is being treated and the bill is being paid by Medicare or Medicaid, CMS and the Department of Justice view this transaction as providing services to the government because it is a service that is provided in connection with a government program.

The three components under the FCA about which a hospital needs to be concerned when billing for services are straightforward in theory, but often more difficult to assess in practice. They are:

1. Fraud which includes obtaining a benefit through intentional misrepresentation or concealment of material facts

2. Waste which includes incurring unnecessary costs as a result of deficient management, practices, or controls

3. Abuse which includes excessively or improperly using government resources

The Fraud Enforcement and Recovery Act of 2009 greatly expanded the application of FCA to health care providers.² Under the statute, the FCA now prohibits knowingly:

1. Submitting for payment or reimbursement a claim known to be false or fraudulent
2. Making or using a false record or statement material to a false or fraudulent claim or to an ‘obligation’ to pay money to the government
3. Engaging in a conspiracy to defraud by the improper submission of a false claim and concealing, improperly avoiding or decreasing an ‘obligation’ to pay money to the government

Consequently if the physician documentation of that service fails to accurately describe the actual treatment of the patient, the billing will be inaccurate and a False Claim may arise. The question then becomes what is meant by the requirement that the act was committed “knowingly.”

In 2005 the Office of Inspector General issued supplemental guidance on this topic that went directly to the point:

A. Submission of Accurate Claims and Information

Perhaps the single biggest risk area for hospitals is the preparation and submission of claims or other requests for payment from federal health care programs. It is axiomatic that all claims and requests for reimbursement from federal health care programs and all documentation supporting such claims or requests must be complete and accurate and must reflect

reasonable and necessary services ordered by an appropriately licensed medical professional who is a participating provider in the health care program from which the individual or entity is seeking reimbursement.³

Since this guidance was given, hospitals have seen the creation of the Recovery Audit Contractor (“RAC”) program, in which the government has outsourced the auditing of hospital programs to what some liken to bounty hunters who are paid based upon the inaccurate billings that they identify. Yet, despite the clear guidance from the government and the threat posed by RACs, the majority of hospitals have failed to address the root cause of inaccurate billings, namely physician documentation inaccuracies.

The reasons for this failure are multifaceted, ranging from internal compliance teams who do not believe that there are such errors, individuals within the hospital administration who are afraid discovering inaccuracies may jeopardize their jobs, as well as the natural tendency of physicians to not like being told that they are doing something wrong, especially if they do not really understand the nature of the mistake. There is also a tendency to hire consulting firms who, under the banner of “Revenue Cycle Management,” offer what appears on the surface to be documentation improvement, but which unfortunately focus on coding and billing errors.

While a full review of the implications of these components is beyond the scope of this article, it is easy to see how a failure of a hospital system to implement a proper compliance and education system for physicians can lead to both civil and criminal issues under all three areas of the FCA.⁴

So the penultimate question for hospital administrators is: if there are inaccuracies in billing, when do they rise to the level of having been made “knowingly” and thus incur potential exposure under the FCA?

While the answer to this question depends on each individual case, it is not hard to reach some simple conclusions. Obviously a program intentionally designed to increase reimbursement while ignoring documentation accuracy will be easy to uncover. However, what about a less devious scenario in which a hospital simply fails assure that its staff is accurately trained to properly document the medical record? Given the clear and unequivocal guidance of the OIG, a case can be made that omission constitutes knowingly ignoring the requirements of the statute and thus renders the hospital open to the full force of the FCA.

The FCA imposes civil liability on any person who knowingly submits, or causes to be submitted, a false or fraudulent claim to the Federal Government The “knowing” standard includes acting in deliberate ignorance or reckless disregard of the truth related to the claim. Civil penalties for violating the FCA may include fines and up to 3 times the amount of damages sustained by the Government as a result of the violation.⁵

Despite political challenges and the hurdles of changing the way business is done in a hospital, there can be no ignoring the serious need to ensure that all of the documentation performed by hospital physicians accurately reflects the clinical experience.

Aside from the implications of an inaccurate and incomplete medical record, the practical business reality is that hospitals cannot afford to allow poor documentation practices to continue.

For your free evaluation of your the physician documentation at your hospital, please call 1-866-670-0767 or fill out our online form here.

1. 31 U.S.C. 3729 et seq

2.  The Fraud Enforcement and Recovery Act of 2009 (FERA) expanded the scope of liability under the FCA by redefining a claim

3.  https://oig.hhs.gov/fraud/docs/complianceguidance/012705HospSupplementalGuidance.pdf

4. The FCA has both civil and criminal liability that can be potentially attached to violations.

5. 31 USC § 3729(a)(1)(A) and (B)

Posted on:          under: Clinical Documentation Program

Nurse-Based vs. BCE Physician-Directed CDI Programs

^{The superiority of physician led and physician coaching peer-to-peer programs has never been disputed as the preferred method of educating colleagues in documentation and compliance. There is certainly more listening by attending physicians when they are queried by their colleagues than when they are queried by nurses or coders.}

^{The BCE program involves both CPT and MS-DRG coding and how they relate, whereas competitors nurse-based programs involve MS DRGs only. In order to attract the attention of physicians, there must be some incentive to “bring them to the table.” BCE’s program focuses on the power of the progress note so that physicians can better document and be in compliance in their offices. When they learn the basics of how to document a good progress note, it also translates to the hospital progress notes, which in turn helps case management, quality management, compliance, and the HIM staff.}

^{The BCE program not only involves itself in concurrent review as do most nurse-based programs, but also aids in retrospective review to help the coders gain more efficiency from their post-discharge querying of physician.}

^{It has certainly been proven (if not intuitive) that physicians are more efficient in chart review than nurses. In BCE’s documentation program, physician coaches can review five charts per hour, whereas it has been shown that in nurse-based programs 10 charts per day is the norm.}

^{After a one and a half day training program, BCE’s program is implemented in client hospitals. This compares with a months-long process of training full-time nurses to do a similar job less efficiently. BCE’s physician coaches work by the hour as part-time 1099 employees, without fringe benefits, whereas other nurse-based programs involve the hiring of full-time nurses at $70,000 or more per year plus fringe benefits.}

^{Finally, BCE’s customized reports drill down to deficiencies by attending by subject matter. In this way, the documentation deficiencies of individual attending physicians can be addressed directly by their peers. The older more inefficient method of coder querying after discharge becomes virtually eliminated.  Call 1-866-670-0767 today or fill out our contact form here to get an analysis of your hospital's documentation today.}

Posted on:          under: Clinical Documentation Program

RAC Recovery: What a Difference a Fiscal Year Makes

Recently, the Centers for Medicare and Medicaid Services (CMS) released FY 2011 numbers for the Recovery Audit Contractor (RAC) collections. Total corrections amounted to $939.4 million with $797.4 million in overpayments and $141.9 million in underpayments. (American Health Lawyers Association, Medicare RACs Recover $797 Million in Overpayments in FY 2011, CMS Reports (Dec. 2, 2011)).

Compared to FY 2010, $939.4 is staggering. In FY 2010, combined over and under payments amounted to $92.3 million. In October 2009, all four regional RACs began reviewing claims. (http://www.cms.gov/Recovery-Audit-Program/Downloads/FY2010ReportCongress.pdf). These numbers will only increase as RAC expands to Medicaid in January 2012.

Therefore, providers should assess their clinical documentation. And, consider implementing a physician-to-physician clinical documentation improvement program to ensure that physicians are educated on appropriate documentation, and appreciate the liability associated with RAC audits.

Posted on:          under: Uncategorized

The Reality of Medicaid and Medicare Cuts Sets In

Hospitals nationwide "are bracing for an automatic two percent cut in Medicare reimbursements if a joint committee of Congress fails to agree on at least $1.2 trillion in deficit cuts over 10 years." (Getahn Ward, Medicaid Cuts in Texas Hurt Local Hospital Chains, The Tennessean (Nov. 19, 2011)). One Nashville-based health system, Vanguard Health, is preparing for the reductions in Medicare and Medicaid reimbursement by downsizing its corporate and regional health system workforce.

Vanguard’s five-hospital Baptist Health System in San Antonio is reducing its workforce by 118 employees in the wake of the uncertainty surrounding government reimbursement and the economy. In Texas, Medicaid cuts of about $2 billion over two years were implemented September 1, 2011. (Kelley Shannon, Texas Braces for Medicaid Cuts (Oct. 7, 2011)). This, coupled with the federal cuts, will have a significant impact on providers.

According to Frank Morgan, an analyst with RBC Capital Markets, “It’s an unfortunate by-product of a very difficult reimbursement environment for government payers – both Medicare and Medicaid.” (Ward (Nov. 19, 2011)). HCA, Community Health Systems and Essent also expressed concern over the reductions.

In light of cuts to reimbursement, providers are constantly forced to do more with less. This atmosphere only highlights the need for clinical documentation improvement programs in order to mitigate an even greater adverse impact on the revenue cycle.

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HIPAA Alert: increased fines, audits and criminal indictments

With the transition to electronic health records, a great deal of attention is being placed on privacy breaches. One criminal case, which reflects more aggressive efforts by the government, may amplify legal risks for doctors and other “covered entities” for employee violations.

In the Eastern District of Arkansas, a former Northeast Arkansas Clinic employee recently plead guilty to “wrongfully disclosing a patient’s protected health information and using malicious intent.” (Amy Lynn Sorrel, Criminal HIPAA case targets employee, not clinic for breach, amednews.com). A U.S. Attorney, Jane W. Duke indicated, “[w]hat every HIPAA-covered entity needs to realize and reinforce to its employees is that the privacy provisions of HIPAA are serious and have significant consequences if they are violated.” Ibid. This extends to physicians, hospitals, insurers and employees.

Along similar lines, in a civil action, the federal government recently “assessed a multi-million dollar civil monetary penalty and entered into multiple resolution agreements with several covered entities for alleged HIPAA violations.” (HIPAA Enforcement Heats Up: Fines, Audits, Indictments and More Regulations (Nov. 15, 2011)). As set forth in the HITECH Act, the penalties now range from “$50,000 per day of violation and a $1.5 million annual cap for the same violation.”  Ibid.

For providers, this means educating everyone on the legal and monetary ramifications of breaching HIPAA privacy standards and accessing medical records.  The Health and Human Services -Office for Civil Rights is stepping up enforcement of HIPAA compliance and the penalties are significant. Therefore, entities need to review their compliance programs and integrity of medical records.

Posted on:          under: Uncategorized

Fraud Enforcement Cases Highlight the Importance of Accurate Documentation

It is common knowledge that a major focus of The Department of Health and Human Services (HHS) is to prevent and enforce current anti-fraud laws around the country. (www.hhs.gov/news/press (Jan. 24, 2011)). There are many programs that assist with this effort and include: the Health Care Fraud Prevention & Enforcement Action Team (HEAT), Recovery Audit Contracts (RACs), Zone Program Integrity Contractors (ZPICs) and qui tam or whistle blower law suits.  The common thread is that they all rely on the documentation to substantiate their claims.

Last month, the Justice Department accused Kernan Hospital of fraud, “alleging in a civil complaint that it falsely labeled patients as kwashiorkor victims to inflate bills paid by government health programs and insurance companies.” (Jay Hancock, Malnutrition Diagnoses at Kernan Were Fraud, Feds Say, Baltimore Sun (Nov. 7, 2011). Kwashiorkor is common in Africa and other developing nations and is usually seen in children. Labeling “patients as simultaneously suffering from kwashiorkor or other malnutrition increased the amount Kernan was able to bill.” Ibid. While there are many instances where malnutrition may be appropriate, this was not one of them and there was nothing in the medical record to substantiate this condition.

In Houston, a physician was sentenced in Federal Court to 135 months in federal prison for “health care fraud conspiracy that federal officials charged resulted in false billings to Medicare and Texas Medicaid programs for $45,039,230 over a 2 ½ year period.” (SLP Health Care Risk Management & Operations Group News, Houston Doctor Gets 135 Month Health Care Fraud Sentence).

Likewise, in NY, a family-practice physician was indicted by a federal grand jury for allegedly submitting more than $13 million of false claims to Medicare. (John Carreyrou, Doctor Is Indicted in Medicare Case, Wall Street Journal (Nov. 5, 2011)).

In light of this recent activity, providers should assess their clinical documentation improvement and compliance programs. Reviewing documentation for accuracy, specificity and proper code assignment can assist in rebutting a claim for fraud.

Posted on:          under: Uncategorized