Risk Management

Lessons from the Fraud and Abuse Wars

By William A. Sarraille, JD

Mr. Sarraille is a partner at the Washington, DC, and New York, NY, law firm of Arent, Fox, Kintner, Plotkin & Kahn. He serves as regulatory counsel to OMIC and represents ophthalmologists across the country in regulatory, transactional, and litigation matters.

Digest, Fall, 2000

Seven years after declaring war on health care fraud and abuse, the federal government’s offensive shows no sign of slowing its incredible pace any time soon. Last year, the government reported more than 5,000 pending health care fraud and abuse investigations – a 532% increase since 1993 – and this did not include the many “routine” audits undertaken by Medicare carriers.

If future budgets are any indication of future activities (and they usually are), the Department of Justice, the Federal Bureau of Investigation, and the Office of the Inspector General for the Department of Health and Human Services promise an ever-increasing risk of enforcement action. Under the Health Insurance Portability and Accountability Act of 1996, the fraud and abuse control budget is set to increase at a rate of 15% a year through 2003. If these increases are appropriated as envisioned by the statute, the health care fraud and abuse budget will jump from $110 million in 1997 to $345 million in 2003. Because these planned appropriations will be funded by the fines, penalties, and forfeitures collected by federal law enforcement agents from health care providers, the fear is that those agencies will have a self-interest in the outcome of their investigations and that one investigation will inevitably breed another.

Overutilization continues to be the focus of many fraud and abuse investigations targeting ophthalmologists. Medicare carriers tend to use various utilization screens to identify outliers for audits and other action. Cataract screens sometimes apply a 4% rule, whereby Medicare expects four cataract procedures for every 100 patient visits. YAG procedures, another area of intense overutilization focus by Medicare carriers, carry with them an expectation that there will be a YAG within one year for every four cataract procedures. Although Medicare’s “expectation” for YAGs, then, is 25% of the incidence of cataract procedures, actual claims data shows an average frequency of about 33%.

Unfortunately, many ophthalmology practices forget that Medicare carriers typically require documentation of a patient’s subjective complaint, in addition to objective findings, in order to establish the medical necessity of a surgical service. Defects in recording subjective complaints are one of the most common deficiencies found in compliance reviews of ophthalmic practices. Even when subjective complaints are obtained, they may not be recorded in the medical record as required. The best practice is to use a patient complaint check-off form so the patient personally records the subjective complaint. When such a form is used, it is more difficult for auditors and investigators to challenge the fact that a subjective complaint supported the medical necessity of the service.

Perhaps the single most common and dangerous deficiency in surgical ophthalmic practices is the failure to separately determine and record the objective and subjective criteria establishing the medical necessity of fellow eye procedures. Many practices that do a good job of recording objective and subjective criteria for the first operative eye completely fail to separately assess fellow eyes under these same criteria. This puts the practice at risk, as the government will take the position that there was no medical necessity for the fellow eye procedure.

Physician Profiling

Another important compliance issue is Medicare’s use of eye code and evaluation and management codes to identify practices and physicians for audits and other actions. If your distribution of codes looks substantially different from those in the utilization tables shown here (and you can’t explain why your practice would be different from the “norm”), review a sampling of your office services to determine if the problem lies with how you are assigning these codes.

Don’t assume a problem necessarily exists because your profile does not fit the norm, but use these norms to help identify potential compliance problems that might require further attention. However you come out in relation to Medicare’s “normal” percentages, you should bill for the level of service that was (1) medically necessary, (2) actually provided, and (3) appropriately documented. This is what “correct coding” means in a nutshell.

A number of persistent and avoidable problems seem to subject many ophthalmologists to evaluation and management problems and eye code audits each year, sometimes leading to allegations that the physician violated the Federal False Claims Act. For instance, many practitioners’ office codes are subject to downcoding on audit because they fail to note negatives and to specify or explain abnormal findings. Ophthalmologists who use only eye codes sometimes find themselves inadvertently upcoding simple services like a basic glaucoma check.

Lack of necessary history information is another recurrent problem. Medicare auditors are generally obligated to give credit for information contained in patient-completed questionnaires so long as the questionnaire is incorporated by reference in the chart note for the encounter and the questionnaire was completed or updated within one year of the encounter. This can be an easy way to ensure that necessary history information is recorded.

The government is skeptical of superbills (charge sheets) that list only higher level evaluation and management eye codes or diagnosis codes supporting Medicare reimbursement. It is helpful to state the following on each superbill:

It is the policy of this practice to provide only accurate and complete billing and coding, regardless of the impact on reimbursement. All encounter, procedure, and diagnosis coding must be accurate and complete, including all modifiers selected.

Ancillary Testing Services

Ancillary services are another major source of compliance problems for ophthalmologists who, like other physicians, fall into the “inference trap.” Although Medicare rules require auditors to make reasonable inferences from encounter documentation regarding why an ancillary service was ordered, the reality is that the inferences made by an ophthalmologist and a Medicare auditor may be vastly different since the auditor may very well have no clinical training. When in doubt, note in a concise way why an ancillary service has been ordered.

Special testing services offered by ophthalmologists (including endothelial cell counts, visual fields, fluorescein angiographies, and fundus photography) require an interpretation and report, according to CPT descriptors. Although neither the American Medical Association nor the Health Care Financing Administration has defined what that means, Medicare auditors have been increasing audits in this area and demanding the return of payments for special testing services because there is no interpretation and report in the record. One retina group practice was hit with a demand for almost $1 million on this theory, although the demand was reduced to a few hundred dollars after we challenged the audit.

To reduce exposure in this area, ophthalmology practices are advised to develop a policy for special testing services requiring documentation of the following three items: (1) test results, (2) test findings and implications on the status of the illness, and (3) the impact of this information on the plan of care. A form to prompt documentation of these items is available by calling OMIC’s Risk Management Department at (800) 562-6642, ext. 4 or by visiting OMIC’s web site at www.omic.com.

Medical necessity is as much an issue with ancillary services as documentation. Allegations of excessive orders of visual fields, endothelial cell counts, and other ancillary services have prompted audits, False Claims Act cases, and even criminal investigations. The test to determine if an ancillary service is medically necessary is an easy one. Just ask yourself this basic question: Is this test likely to affect the diagnosis I make or my plan of care? If you can’t answer yes to that question (perhaps because you are ordering the service as an act of defensive medicine or for some other reason), the service is not medically necessary. Don’t charge Medicare for a service that is not medically necessary.

The Chief Complaint

There are still more issues being pursued by Medicare. Billing of routine screening eye examinations as though they were “sick” services is a priority for the government. Often, the problem is a technician or screener who is unable to elicit a complaint from a patient too frightened or anxious to voice the complaint. Although practitioners should not put words into the mouths of their patients, they should be careful to determine the real reason why a reticent patient has presented. Another problem is coding patients who return for follow-up of established problems, such as glaucoma, as presenting for an “annual examination,” a phrase that suggests a non-covered preventive health service to a Medicare auditor.

Remember that the chief complaint is the single most important piece of documentation for an encounter. If you get nothing else right, get this entry correct. The chief complaint either establishes or fails to establish the medical necessity of the encounter. The practical reality is that a Medicare auditor will apply the documentation guidelines more flexibly if convinced that the service was medically necessary.

A couple of final suggestions might be helpful. Invest some time and resources to make your practice more compliant, preferably in the form of an organized compliance program. Make fraud and abuse risk avoidance an ongoing part of your practice. When you have managed the risks as best you can given your resources and other limitations, put this stuff out of your mind and concentrate on the practice of medicine. After all, that’s why you became a physician in the first place.

See Policy Issues for information on OMIC’s Fraud & Abuse insurance for ophthalmologists.


OMIC and the author would like to thank the healthcare consulting firm of Rose & Associates for the design of the documentation aids for special testing services. This data was furnished by Kevin Corcoran of Corcoran Consulting Group and was derived from Medicare utilization data for 1998. Certain eye code and evaluation and management services have been combined for purposes of these tables.

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