Risk Management

Fraud Busters – Who You Going to Call?

By Kimberly Wittchow, JD

Ms. Wittchow is an associate with OMIC’s insurance and group products department.

[Digest, Winter 1999]

It was a whistle-blower who triggered the 1996 criminal investigation of an ophthalmologist on charges that he faked laser surgery and defrauded Medicare. Shining a light into their eyes, the ophthalmologist told patients he was performing laser surgery. Without access to any of the instruments necessary to perform such procedures, he billed for 37 trabeculoplasties, 63 iridotomies/iridectomies, 12 photocoagulations, and 1 other retinal procedure. Between 1995 and 1997, he fraudulently billed Medicare and his patients nearly $118,000 for services that either were not necessary or not performed. Last year, he pleaded guilty to three criminal charges, including mail fraud and submitting false claims to Medicare. A related civil suit was settled for $700,000, $105,000 of which was rewarded to the whistle-blower. The ophthalmologist surrendered his state license to practice, was banned from all Medicare/ Medicaid and federal health care plans for five years, and had his hospital staff privileges revoked.

Flagrantly fraudulent reimbursement claims such as this one are the target of the federal government’s stepped-up Medicare/Medicaid fraud and abuse enforcement efforts. In the war against fraud and abuse, however, inadvertent billing errors are also being discovered and punished. Investigations typically begin when a third party payor detects an anomaly in billing patterns or when a competitor, patient or employee lodges a complaint. Some investigations are the result of random samplings. Both criminal and civil investigations may ensue, involving on-site visits, employee interviews, document reviews and accounting audits.

Even practitioners who comply with Medicare and Medicaid regulations to the best of their knowledge and ability are susceptible to devastating enforcement repercussions. In one case, an employee who was terminated by a physician retaliated by contacting the state department of insurance and local law enforcement agency regarding the physician’s alleged fraudulent billing practices. The ex-employee alleged that the physician was submitting false claims for nonexistent patients. The police took over the physician’s office, removed all of her files, and turned her patients away at the door. After much personal trauma and $20,000 in legal fees, the innocent physician was vindicated. However, she is still attempting to recover her confiscated medical files and repair the damage to her reputation and business.

Sometimes a clinical event may give rise to a complaint that becomes a compliance issue, and often there are parallels between the documentation required by the government for Medicare reimbursement and that which might be useful in malpractice risk management. In fact, CPT coding requirements can be a helpful reminder to the physician of the importance of thorough documentation, both to avoid potential liability suits and, ultimately, to benefit the patient.

Compliance Plans: Why have one?

Since the passage of the Health Insurance Portability and Accountability Act (HIPAA) in 1996, a plethora of new laws, fines, penalties and other sanctions have been added to the government’s stepped-up attack on health care fraud. No segment of health care is immune from these enforcement initiatives. Because of the escalating pace of legislative and administrative reform activities, virtually all providers are likely to be in technical violation of at least one law at any given time no matter how scrupulous and thorough their billing procedures.

An appropriate corporate compliance program, besides facilitating the prevention and detection of health care fraud and abuse in the first place, is invaluable if an organization nevertheless runs afoul of health care fraud and abuse laws. The compliance program must be in place at the time the violation occurs, however. Hastily instituting a program after notification of a violation will not help your case.

What are the benefits of having a compliance program in place during an investigation?

• It is the best means of convincing regulators not to exclude you from a federally funded program.
• It is the single most important factor in influencing a prosecutor not to proceed with a criminal prosecution when Medicare/Medicaid violations have occurred. (Prosecutors will have difficulty convincing a jury of fraudulent intent if a compliance plan is in place.)
• It may help you negotiate a less damaging civil settlement.

What is a Compliance Plan?

A compliance program is a bundle of policies and procedures used to identify legal and regulatory problems, correct identified deficiencies, prevent future violations and assure regulatory compliance. The Office of the Inspector General (OIG) has developed several model compliance programs for different types of providers (download at www. dhhs.gov/progorg/oig). The degree of formality required depends on the size and structure of the organization. The OIG emphasizes a strong organizational commitment to the detection, reporting and resolution of wrongful conduct. Additionally, the existence of benchmarks that demonstrate implementation and achievement are essential to any effective compliance program.

To be effective, a compliance plan must be legitimately implemented; otherwise, it is simply window dressing and worse than no plan at all. A practice may be required to present auditing logs and meeting minutes from compliance committee sessions to demonstrate implementation.

AMA 7-point System

The AMA Division of Health Law has developed the following 7-point system that serves as a skeleton for an effective compliance program:

1. Written compliance standards and procedures. The compliance program development team must create written standards and procedures that are reasonably capable of promoting the group’s commitment to compliance and that are to be followed by all employees and other agents.
2. Oversight responsibilities. It is no longer enough for doctors and hospitals to rely on internal billing clerks and bookkeepers to find mistakes. Specific, trustworthy individuals in high-level positions must be assigned overall responsibility for operating and monitoring the compliance program. A chief compliance officer and other appropriate oversight bodies should be designated.
3. Employee training and education. The compliance team must effectively communicate the compliance standards and procedures to all employees and agents. This will require the development and implementation of regular, effective education and training programs and materials for all affected employees and agents.
4. Monitoring and auditing claims. The compliance program must be reasonably designed to detect errors or criminal conduct by employees and other agents. Thus, claims development and submission must be monitored and evaluated by audit or other techniques.
5. Internal communications process. A reporting system, such as a confidential hotline, must be in place and publicized whereby employees and other agents can report criminal conduct by others without fear of retribution.
6. Investigation and enforcement. A system should be developed to respond to and investigate allegations of improper activities. Standards and procedures should be enforced through meaningful and consistent disciplinary mechanisms, including discipline of individuals responsible for failure to detect the offense.
7. Response and prevention. All reasonable steps must be undertaken to respond appropriately to the offense and to prevent similar offenses from occurring in the future. This includes necessary corrective action such as modifications to the compliance program.

If You Are Investigated

If you have fraud and abuse insurance, notify your carrier at once when a governmental proceeding is instituted against you or your entity. OMIC provides Medicare/ Medicaid Fraud and Abuse Legal Reimbursement Insurance coverage free of charge to all its professional liability insureds. (See Policy Issues.) OMIC will provide expert attorneys to assist insureds in responding to the government’s investigation or suit. Even if a governmental proceeding has not been instituted, OMIC will provide risk management services on other fraud and abuse liability questions or concerns. These services will include preliminary assessments of fraud and abuse liability issues by one of the leading health care law firms in the country. Please call (800) 562-6642, extension 652 to initiate these services.

Resources for Compliance Planning

American Academy of Ophthalmology’s Compliance Program Planner for the Ophthalmic Practice available from OMIC, (800) 562-6642.

Compliance Program for Physician Practices developed by Arent, Fox, Kintner, Plotkin & Kahn, PLLC law firm, available from the American Society of Ophthalmic Administrators, (800) 451-1339.

Medical Group Management Association’s Compliance Programs: A Resource Guide for the Small Group Practice available for $10 through the American Academy of Ophthalmology, (415) 561-8540.

Academy Web site, www.eyenet.org, provides coding information and resources to assist with coding compliance planning.

AMA Web site, www.ama-assn.org.

Medicare Web site on Fraud and Abuse, www.hcfa.gov.