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:
- Submitting for payment or reimbursement a claim known to be false or fraudulent
- 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
- 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
