The government’s health care fraud prevention and enforcement efforts recovered a record $4.2 billion in taxpayer dollars in Fiscal Year (FY) 2012, up from nearly $4.1 billion in FY 2011. Over the last four years, the administration’s enforcement efforts have recovered $14.9 billion, up from $6.7 billion over the prior four-year period.  During 2012, the Department of Justice (“DOJ”) opened 885 new civil health fraud investigations with 1,023 civil fraud matters pending at the end of the year.  The DOJ also reported a record 647 whistleblower lawsuits and recovered $3.3 billion from lawsuits filed by whistleblowers. On the criminal side, the DOJ opened 1,121 new criminal healthcare fraud investigations with 2,032 healthcare fraud criminal investigations pending at the end of FY 2012.  The DOJ filed criminal charges in 452 cases involving 892 defendants during that time. On the civil side, The Office of Inspector General for the U.S. Department of Health and Human Services (“OIG”) excluded 3,131 individuals and entities from participation in the Medicare and Medicaid programs during FY 2012. As the pursuit of health fraud becomes increasingly profitable reportedly returning $7.90 for every $1 spent, providers should expect to see a continued focus and devotion of resources by the federal government to combat healthcare fraud and abuse.  Likewise, the floodgates appear to be opening for healthcare false claims cases as whistleblower suits are predicted to gain popularity as their success breeds volume increases.

With ever increasing federal and state focus on healthcare fraud, the OIG’s Work Plan for FY 2013 provides important insight into areas and practices that may be subject to government investigation and review.  For physicians, the Work Plan designates a few new areas of review, but maintains ongoing review in areas previously designated.  These areas are described in the following.

I.          NONCOMPLIANCE WITH ASSIGNMENT RULES AND EXCESSIVE BILLING OF BENEFICIARIES

The OIG has renewed its investigation of physician compliance with assignment rules and the determination of whether beneficiaries are inappropriately billed in excess of amounts allowed by Medicare. Physicians participating in Medicare agree to accept payment on “assignment” for all items and services furnished to individuals enrolled in Medicare.^[1]  CMS defines “assignment” as a written agreement between beneficiaries, their physicians or other suppliers, and Medicare. The beneficiary agrees to allow the physician to request direct payment from Medicare for covered Part B services, equipment, and supplies by assigning the claim to the physician or supplier. The physician or other supplier in return agrees to accept the Medicare-allowed amount as the full charge for the items or services provided.

II.         ERROR RATE FOR INCIDENT-TO SERVICES PERFORMED BY NONPHYSICIANS

The OIG has announced a new area of review for physicians and will investigate billing for “incident-to” services focusing on whether payment for these services had a higher error rate than that for non-incident-to services. Medicare Part B pays for certain services billed by physicians that are performed by non-physicians incident to a physician office visit. A 2009 OIG review found that when Medicare followed physicians’ billings for more than 24 hours of services in a day, half of the services were not performed by a physician – often by unqualified personnel.  The review found that unqualified non-physicians are a “program vulnerability” in that they do not appear in claims data and can be identified only by reviewing the medical record.  The OIG asserts that this billing practice creates opportunities for overutilization and exposes beneficiaries to care that does not meet professional standards of quality.

III.        PLACE-OF-SERVICE CODING ERRORS

The OIG will continue its review of physicians’ coding on Medicare Part B claims for services performed in ambulatory surgical centers and hospital outpatient departments to determine whether the claims properly coded the places of service. Federal regulations provide for different levels of payments to physicians depending on where services are performed.^[2]  Medicare pays a physician a higher amount when a service is performed in a nonfacility setting, such as a physician’s office, than it does when the service is performed in a hospital outpatient department or, with certain exceptions, in an ambulatory surgical center.

IV.       EVALUATION AND MANAGEMENT SERVICES — POTENTIALLY INAPPROPRIATE PAYMENTS IN 2010

 The OIG continues to look at potentially inappropriate payments for E/M services in 2010.  The OIG is reviewing multiple E/M services for the providers and beneficiaries to identify electronic health records (EHR) documentation practices that are associated with potentially improper payments. Medicare contractors have noted an increased frequency of medical records with identical documentation across services.  Medicare requires providers to select the code for the service on the basis of the content of the service and maintain documentation to support the level of service reported.

V.        EVALUATION AND MANAGEMENT SERVICES—USE OF MODIFIERS DURING THE GLOBAL SURGERY PERIOD

A new area of review is the appropriateness of the use of modifier codes during global surgery to determine whether payments for claims with modifiers were consistent with Medicare requirements. Prior OIG work found that improper use of modifiers during the global surgery period resulted in inappropriate payments. The global surgery payment includes a surgical service as well as related preoperative and postoperative E/M services provided during the global surgery period.

IV.       CONCLUSION

Other areas of OIG review that impact physicians include rural health clinics’ compliance with location requirements; Part B imaging services (“IDTF”); incentive payments for electronic health records; physician owned distributors and high utilization of orthopedic implant devices used in spinal fusion, payments for personally performed anesthesia services; and ophthalmological services that have questionable billing and reported geographic location.

Because physicians as well as all healthcare providers are increasingly subject to review, physician practices should incorporate the areas identified for investigation by the OIG’s 2013 Work Plan into their compliance efforts as a dose of preventive medicine.