Investigations of Fraud and Abuse

Report of the Board of Trustees of the AMA Board of Trustees Report 27 (I-97) Subject: Federal Government Investigations of Fraud and Abuse in the Delivery of Health Care Services Presented by: Thomas R. Reardon, MD, Chair At the 1996 Interim Meeting, the House of Delegates adopted Resolution 222, calling for the AMA to "closely monitor the activities of all agencies engaged in investigating and prosecuting fraud cases." At the 1997 Annual Meeting, the House of Delegates adopted Resolution 8l0 which included a resolve asking the AMA to "develop a straightforward statement of physicians' rights in fraud and abuse investigations." These two resolutions were adopted in the aftermath of significant publicity on the scope of fraud in the health care community and resulting federal legislation to enhance the ability of the federal government to fight fraud in the health care sector. Both resolutions requested a report back to the House of Delegates at the 1997 Interim Meeting.

Background
Provisions of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law l04-191, enhance the ability of the federal government to recoup health care spending that may be categorized as inappropriate payments, including fraud. Among other provisions, this law: created the Medicare Integrity Program that allows the Department of Health and Human Services (HHS) to enter into contracts with private entities to review and audit activities where Medicare provides coverage; earmarked funding to virtually double the number of HHS 0ffice of the Inspector General (OIG) auditors and investigators in addition to an expansion of the Federal Bureau of Investigation's (FBI) ability to investigate health care fraud; and established a monetary reward program to encourage Medicare beneficiaries to report virtually anything they believe to be questionable behavior. Anyone submitting a claim for payment must be alert to the potential for liability stemming from an inappropriately submitted claim. In paying a claim, the federal government has the authority to investigate the claim' s propriety. Where an investigation finds fault with a claim, the government has the authority to impose either criminal or civil sanctions (monetary fines and exclusion from the Medicare and Medicaid programs) against the individual or entity claiming a right to payment, depending on the nature of the inappropriate conduct. Civil sanctions may be imposed when an individual "knowingly" submits a claim that he or she "knows or should know" will fall into a prohibited category. Civil sanctions may be imposed for each inappropriate claim submitted for payment. Civil sanctions may be as much as $10,000 for

every claim ($50,000 for an anti-kickback violation) plus an assessment of up to three times the amount improperly claimed. Criminal penalties may be imposed when an individual "knowingly and willfully" defrauds the Medicare, Medicaid, or other federal health care benefits program. If there is a determination that even a single claim was submitted fraudulently, sanctions may include: imprisonment for up to five years; a fine of up $250,000 per claim; and a five-year exclusion (lifetime exclusion for a third conviction) from participation in the Medicare and Medicaid programs.

Federal government activities to investigate and prosecute health care fraud

HIPAA authorized the creation of the Health Care Fraud and Abuse Control Account to increase government spending on fraud and abuse control. Annual authorizations for this fund grow from $104,000,000 in Fiscal year 1997 to $240,558,320 in Fiscal years 2004 and beyond. In addition, penalties and assessments from the prosecution of fraud and abuse activity will be added to the account. From the account, funding for the HHS OIG is authorized to grow from between $60,000,000 and $70,000,000 in Fiscal year 1997 to between $150,000,000 and $160,000,000 in Fiscal years 2003 and beyond. HIPAA also authorized funds for the FBI from general revenues to combat health care fraud and abuse. This funding is scheduled to grow from $47,000,000 in Fiscal year 1997 to $114,000,000 in Fiscal year 2003 and beyond. Beyond identifying significant increases in FBI and OIG personnel, it is too soon to identify exactly how these other account monies will be spent. Funds also were authorized (pursuant to HIPAA) from the Part A Trust Fund to the Health Care Fraud and Abuse Control Account for the Medicare Integrity Program. Under this program, HHS is authorized to contract with private organizations to reduce the incidence of Medicare fraud and abuse. Contracts will call for these organizations to: review health care professionals and entities providing services for which payment is received; audit cost reports; determine whether a Medicare payment should have been made and initiate recovery of Medicare payments that should not have been made; educate health care professionals and entities, beneficiaries, and other persons with respect to payment integrity and benefit quality assurance issues; and develop and periodically update a list of items of durable medical equipment subject to prior authorization. (Medicare carriers and fiscal intermediaries will no longer perform these activities as part of their expected functions.) This funding is scheduled to grow from between $430,000,000 and $440,000,000 in Fiscal year 1997 to between $710,000,000 and $720,000,000 in Fiscal year 2003 and beyond. Information is limited on how the Department of Justice (DOJ) and the FBI intend to utilize the increased funding to fight health care fraud and abuse. Press reports have indicated plans to hire 120 additional prosecutors to work in the US Attorneys' offices, with 90 of these new positions located in the field throughout the country and 30 coordinating fraud enforcement activities at DOJ headquarters in Washington, DC. This activity follows a recent history of significant expansion by the DOJ in investigating and prosecuting health care related fraud. The Department's Health Care Fraud Report for Fiscal years l995 and 1996, Health Care Fraud: Crisis of the Nineties, set out how their activity in this area of law enforcement already has expanded between 1992 and 1996:

DOJ actions Fiscal year 1992 FBI investigations 657 FBI agent work years 111.8 Criminal prosecutions 83 cases, 116 filed defendants Convictions 59 cases, 90 (pleas/verdicts) defendants Civil investigations 270 Civil cases filed 28 Civil 25 judgements/settlements Qui Tam (QT) cases filed 119 Health care QT cases filed 14

Fiscal year 1996 2,200 256 246 cases, 450 defendants 177 cases, 307 defendants 2,488 90 30 (81 in FY95) 361 200

With the influx of funds to the HHS OIG, plans have been established to virtually double the number of investigators/auditors. The OIG employed 960 investigators/auditors in 1996; this number is projected to grow to 1,152 in 1998 and to 1,920 in the year 2002. In the OIG's Fiscal year 1998 Work Plan, the following projects (investigations leading to possible enforcement actions and studies to identify potential areas for investigation) directly relating to physician services are identified as currently in process or scheduled to begin in Fiscal year 1998: Physicians at teaching hospitals- This initiative is designed to verify compliance with the Medicare rules governing payment for physician services provided in the teaching setting and to ensure that claims accurately reflect the level of service provided to the patient. Physician perspectives on Medicare HMOs - This study is to determine the experiences and perspectives of physicians who work with Medicare HMOs, and concerns with the impact of these HMOs on the access to and quality of health care for Medicare beneficiaries. Physician certification of durable medical equipment - This study is to assess how effectively physicians are meeting Medicare expectations that they act as controls against unnecessary use of non-physician services and supplies. Hospital ownership of physician practices - This initiative will assess Medicare billing practices and utilization where hospitals own physician practices. Aspects of this activity include inappropriate referrals in either direction between hospitals and physicians, excessive costs and billings, and overutilization when hospitals bill for owned physician practices. Accuracy of and carrier monitoring of physician visit coding - This initiative will assess whether physicians are correctly coding evaluation and management services in locations other than teaching hospitals and whether carriers are adequately monitoring physician coding. Use of surgical modifier - This study will examine whether physicians are improperly using modifier 25 ("Significant, Separately Identifiable Evaluation and Management Service on the Day of Surgery") on their Medicare claims to increase reimbursements. This investigation will focus on whether a separately identifiable service was provided.

Use of diagnosis codes - This review will compare claims against beneficiary medical records to determine the extent to which diagnosis codes on claims match the reason for ordering and providing various services. Physician credit balances - This initiative will determine whether physicians are reviewing their records for Medicare credit balances and issuing refunds to their carriers where there is an overpayment resulting from a duplicate payment. Multiple discharges - Discharge day management services can only be billed by the admitting physician, and this initiative will determine whether duplicate payments have been made for these services. Anesthesia services - This review will identify anesthesiologists who bill for personally performed services and determine if these services were in compliance with Medicare regulations. (The OIG notes that several instances have occurred where anesthesiologists were improperly billing for supervising residents in three or more operating rooms at the same time.) Critical care services - This initiative will focus on billing for critical care based on the location of the patient and not the actual services provided by the physician. (The OIG notes that critical care is that requiring the constant attention of the physician. While such care usually is provided in a critical care area, not all care provided in such an area meets the definition of critical care. Claims for services provided for patients in critical care units who are not critically ill are to be claimed as "subsequent care" hospital codes.) Billing for Physician Assistants (PA) services - Where the services of a PA do not fall under the "incident to" criteria, the physician must bill using a modifier that will result in lower Medicare payments. This study will determine where Medicare is overpaying physicians who improperly bill PA services as "incident to" rather than using the proper modifier. Billing service companies - Noting that past OIG studies have identified upcoding and/or unbundling codes by billing service companies to maximize Medicare payments to physicians, this review will determine whether: (1) claims prepared and submitted by a billing service are properly coded in accordance with the services actually provided; and (2) the agreement between the physician and the billing company complies with Medicare criteria. Improper billing of psychiatric services - This study will focus on three aspects of provider billing for psychiatric services: billing for individual psychotherapy rather than inpatient hospital care; billing for a psychological testing code on a per test basis rather than a per hour basis; and billing for group psychotherapy in cases that do not qualify for Medicare payment because either the group sessions do not involve actual psychotherapy services or the patients cannot benefit by group psychotherapy.

Rights of individuals in fraud and abuse investigations

Fraud and abuse investigations may result in criminal or civil sanctions. Both the criminal and civil processes have clearly defined due process procedures as cases move through the

administrative or judicial system, and there actually are more opportunities for appeal in situations where civil sanctions are sought by the OIG. In response to an action by the OIG to impose civil sanctions or to exclude a practitioner or entity from the Medicare or Medicaid programs, there is a right to present information to an OIG official, and to have an Administrative Law Judge (ALJ) review the case. If the ALJ issues a negative ruling, the individual has the right to request that the HHS Secretary modify, reverse, or remand the initial decision. If the Secretary affirms a negative ruling, the individual has the right to judicial review of penalties, assessments, or exclusion determinations based on issues raised to the Secretary. When a government agency initiates an investigation where the end result may be civil or criminal sanctions, those under investigation initially may be unaware of the proceedings. The courts have maintained that the investigating agency's responsibility to inform a person of his or her rights does not occur until the individual has been taken into custody or otherwise deprived of freedom by law enforcement officials. Pursuant to legislative action, the Internal Revenue Service (IRS) is required to provide taxpayers with information setting out their rights at the point in an investigation where the taxpayer is asked to provide specific information. Given the repercussions of even inadvertent billing errors and the fact that fraud and abuse enforcement activity is certain to become more prevalent, individuals who are the subject of an active investigation should be provided with a clear understanding of the implications of an investigation. The IRS "Declaration of Taxpayer Rights" is instructive and elements from this declaration should be applied in instances where a health care professional or provider is the subject of an active fraud and abuse investigation: Employees from the investigating agency should explain the rights of an individual under investigation throughout their contact with the individual. Meetings with investigators should take place at times and locations that are convenient to the involved parties and they should not disrupt patient care activities. Individuals who are under investigation have the right to be treated in a professional and courteous manner. The examination of billing records and other documentation does not suggest that the individual or entity under examination is dishonest. An initial inquiry or examination may or may not lead to an investigation, and the investigation process may be closed at any time. Individuals under investigation should be assured that the information on file and information received will not be disclosed, except as authorized by law. Where information is requested from an individual, that individual should have the right to know why the information is being sought, how the information may be used, and what may happen if the information is not provided. Individuals who are under investigation may represent themselves or, with proper authorization, have someone else represent them, they may be accompanied by counsel at an interview, and they may record any meetings with investigating personnel.

In all cases, physicians who are subject to a fraud and abuse investigation by any state or federal agency should retain competent legal counsel. Physicians can receive a referral to legal counsel by calling the AMA's office of the General Counsel.

Conclusion
With the continued pressure on the government to exhibit a "get tough" policy to eliminate fraud and abuse in the delivery of medical and health care services, and with the added funding for government enforcement agencies, it is just a matter of time before there is a significant increase in investigations that target physicians and physician practices. Physicians need to be aware of this fact and should continue to take steps, such as the implementation of a compliance plan, to ensure that the services they provide are adequately documented and that claims for payment reflect this documentation.