Risk Management

Fraud and Abuse Coverage Options

By Kimberly Wittchow, JD

[Digest, Fall 2000]

For several years, the government has unwaveringly pursued physicians for alleged Medicare and Medicaid fraud and abuse. New emphases arise, from intra-practice consultations to dispensing services, but the outcomes seem to be the same. The government almost invariably finds the physician at fault in some way and assesses a reimbursement with little supporting explanation for remediation by the perplexed provider.

Many times when these issues arise, the physician will argue that “the carrier said I could bill this way.” The unfortunate truth is that, unless you have carrier guidance in writing, federal law enforcement agencies will refuse to listen to your supposed defense. Health care law attorney William A. Sarraille (see Lessons from the Fraud and Abuse Wars) advises writing to the carrier to confirm the advice given, specifying the date and time that you spoke to the carrier representative. Tell the carrier that you will act in reliance on the information provided unless it informs you in writing within 14 days that this information is not correct. Send the letter by certified mail (otherwise the carrier may deny receiving it) and keep a copy in a central binder so you can retrieve it if it is ever needed.

The federal government has at least proffered a little more general guidance. HCFA recently published its long-awaited voluntary compliance plan for individual and small physician practices, available online at www.dhhs.gov/oig/new.html.

Meanwhile, huge settlements still are being drafted and the government continues to bar doctors from billing the government for services rendered to elderly and poor patients. New studies show that in response doctors may be downcoding their billing to ensure that they are not targets of investigation. While most reports of such intentional downcoding are anecdotal, statistics show that physician coding for all levels of evaluation and management services declined in 1998 after a shift toward higher level codes between 1993 and 1997.

Expense, Fines & Penalties

To address this ongoing problem, OMIC now offers two types of insurance coverage for billing errors: Fraud & Abuse Legal Expense Reimbursement and Comprehensive Fraud & Abuse(including fines & penalties) coverage. Coverage under both policies pays for attorneys’ fees and associated expenses rendered in the defense of a covered proceeding.

The Legal Expense policy is available at three limits: $25,000, $50,000 and $100,000. The Comprehensive coverage is available at limits of $250,000, $500,000 and $1,000,000. In addition to attorneys’ fees, this coverage provides reimbursement for audit expenses and for fines or penalties assessed resulting from alleged billing errors. The actual overpayment by the payor, however, must be reimbursed to the payor by the insured.

Third Party Payors and Whistleblowers

In addition, OMIC has enhanced coverage under both forms to cover not only civil governmental proceedings alleging Medicare or Medicaid Fraud and Abuse, but also third party payor actions; in other words, claims made by commercial health insurance companies alleging billing errors.

The policy language also has been broadened to include qui tam, or whistleblower, actions. These are lawsuits filed by witnesses to the alleged wrongful practices brought on behalf of the government alleging Medicare or Medicaid fraud and abuse.

OMIC provides coverage at the basic Legal Expense limit of $25,000 per insured free of charge to its medical professional liability insureds ($50,000 effective January 1, 2011). Members of the American Academy of Ophthalmology may purchase these various billing error coverages for themselves, their employed optometrists, and business entities. Premiums vary depending on the coverage and limits selected. Discounted rates for groups may be available for practices comprising ten or more physicians.

For more information on OMIC’s Fraud & Abuse insurance, please contact Kim Wittchow at (800) 562-6642, ext. 653 or kwittchow@omic.com.

OMIC Fraud & Abuse Coverage

• Pays attorney’s fees and associated expenses
• Covers civil proceedings and third party payor or whistleblower actions.
• Optional comprehensive coverage for audits, fines & penalties.
• Limits of $25,000, $50,000 and $100,000 for Legal Expense coverage only.
• Limits of $250,000, $500,000 and $1,000,000 for Comprehensive Fraud & Abuse coverage.