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OIG Reports Enforcement Statistics for 2017

OIG, in its semi-annual report to Congress indicated increased attention to delivering high-impact results while streamlining oversight during fiscal year (FY) 2017. The latest report, posted November 30, covers OIG activities from April 2017 through September 2017.
In the introductory message, Inspector General Daniel R. Levinson stated that “[b]y leveraging advanced analytic techniques to detect potential vulnerabilities and fraud trends, we are better able to target our resources at those areas and individuals most in need of oversight, leaving others free to provide care and services without unnecessary disruption,” According to the report, OIG reported expected investigative recoveries of $4.13 billion during FY 2017, which is down from $5.56 Billion in 2016. OIG also instigated criminal actions against 881 individuals or entities (up from 844 in 2016) and civil actions against 826 individuals or entities (up from 708 in 2016). In addition, 3,244 individuals and entities were excluded from federal health care programs during the report period (down from 3,365 in 2016).
The report also highlighted OIG activities over the period, most notably the massive July 2017 federal-state joint fraud takedown, which was the largest in history and netted more than 400 defendants in 41 federal districts who were charged with participating in fraud schemes involving about $1.3 billion in false billings to Medicare and Medicaid, OIG said. The report noted that addressing the opioid abuse epidemic is a top priority for OIG as it investigates opioid fraud and diversion cases and uses advanced data analytics and tools to detect suspected problems for further review. The report also noted that the July takedown included opioid-related charges against 120 individuals.

2017 OIG Work Plan: Part B Risk Areas

The Office of Inspector General (OIG) publishes annually a Work Plan describing new, ongoing, and revised areas within the U.S. Department of Health and Human Services (HHS) it will investigate throughout the year for potential fraud, waste, and abuse. It’s wise for providers to review this Work Plan and update their compliance plans accordingly. Here’s a summary of the areas within Medicare Part B on which the OIG plans to focus this year.

Time to give your physician office’s compliance plan an annual preventive exam.

Durable Medical Equipment (DME) and Supplies

NEW!Part B services during non-Part A nursing home stays – DME: In cases where a beneficiary continues to reside in a skilled nursing facility (SNF) after 100 days (non-Part A stay), Medicare Part B may provide coverage for certain therapy and supplies. A July 2009 OIG study found that Medicare Part B made $30 million in inappropriate DME Prosthetics, Orthotics, and Supplies (DMEPOS) payments. The OIG will evaluate the extent of inappropriate payments under Part B for DMEPOS provided to nursing home residents during non-Part A stays. The OIG also intends to determine if the Centers for Medicare & Medicaid Services (CMS) has a system in place to identify and recoup such overpayments from suppliers.

NEW!Medicare market share of mail-order diabetic testing strips (DTS): The OIG will develop a required report of the market share of DTS prior to each subsequent round of the competitive bidding program.

NEW!Positive airway pressure device supplies – supplier compliance with documentation requirements for frequency and medical necessity: Medicare paid approximately $953 million for continuous positive airway pressure or respiratory assist devices (PAP). Prior OIG analysis found evidence of automatic shipping of PAP supplies when no physician orders for refills were in effect. The importance of compliance cannot be understated. Orders of certificates of medical necessity must specify the type of supplies needed and the frequency of use, replacement, or consumption consistent with the Medicare Program Integrity Manual (publication 100-8, chapter 5, sections 5.2.3, 5.9). Automatic shipment of resupplies is not permitted. The documentation must show a request for resupply by the beneficiary or caregiver before supplies are dispensed, according to the Medicare Claims Processing Manual (publication 100-4, chapter 20, section 200).

Other areas of focus include:

Orthotic braces – Reasonableness of Medicare payments compared to amounts paid by other payers
Osteogenesis stimulators – Lump-sum purchase versus rental
Power mobility devices (PMDs) – Lump-sum purchase versus rental
Competitive bidding for medical equipment items and services – Mandatory review
Orthotic braces – Supplier compliance with payment requirements
Access to DME in competitive bidding areas
Other Providers and Suppliers

NEW!Monitoring Medicare payments for clinical diagnostic laboratory tests: Consistent with the requirements of section 216 of the Protecting Access to Medicare Act (PAMA) of 2014, OIG will analyze the market rates for the top 25 laboratory tests as a means of monitoring CMS’ implementation of the new payment system for these tests.

NEW!Medicare payments for transitional care management: Medicare-covered services, including chronic care management, end-stage renal disease, and prolonged services without direct patient contact cannot be billed during the same service period as transition care management (TCM). OIG will determine whether payments for TCM services were in accordance with Medicare coverage requirements.

NEW!Data brief on financial interests reported under the open payments program: Section 6002 of the Affordable Care Act, sometimes referred to as the Physician Payments Sunshine Act, requires manufacturers to disclose to CMS payments made to physicians and teaching hospitals. OIG intends to analyze the 2015 reporting data to determine the number and nature of financial interests, and will evaluate how much Medicare paid for drugs and DMEPOS ordered by physicians with financial relationships with the supplying entity. The OIG also continues to evaluate the accuracy of the data reported by manufacturers to the open payments system.

NEW!PMD equipment – Portfolio report on Medicare Part B payments: OIG previously identified inappropriate payments for PMDs that were unnecessary, not documented in accordance with Medicare requirements, cheaper to rent than purchase, or fraudulent. OIG will compile results of prior audits, evaluations, and investigations of PMD equipment paid by Medicare to identify trends in payment, compliance, and fraud vulnerabilities. OIG will make recommendations to CMS of any necessary actions.

REVISED!Ambulance services – Supplier compliance with payment requirements: The OIG found that Medicare made inappropriate payments for advanced life support (ALS) services, and based on prior work will determine whether ambulance services including basic life support (BLS), ALS, and specialty care transports were billed in compliance with Medicare requirements.

REVISED!Inpatient rehabilitation facility (IRF) payment system requirements: The OIG will determine whether IRFs nationwide have submitted claims in compliance with Medicare documentation and coverage requirements, based on prior reviews that identified substantial Medicare overpayments to IRFs.

REVISED!Histocompatibility laboratories – supplier compliance with payment requirements: From March 31, 2013, through Sept. 30, 2014, histocompatibility labs reported $131 million in reimbursable costs on their most recent cost reports. Because allowable costs must be related to the care of beneficiaries; be reasonable necessary and proper; and be an allowable cost under the regulations, the OIG will determine whether payments to histocompatibility labs were made in accordance with Medicare requirements.

Other areas the OIG is focusing on (and you should, too):

Ambulance services – Questionable billing, medical necessity, and level of transport
Payments for Medicare services, supplies, and DMEPOS referred or ordered by physicians – compliance
Anesthesia services – Non-covered services
Anesthesia services – Payments for personally performed services
Physician home visits – Reasonableness of services
Prolonged services – Reasonableness of services
Chiropractic services – Part B payments for non-covered services
Chiropractic services – Portfolio report on Medicare Part B payments
Selected independent clinical laboratory billing requirements
Physical therapists – High use of outpatient physical therapy services by independent therapists
Portable X-ray equipment – Supplier compliance with transportation and setup fee requirements
Sleep disorder clinics – High use of sleep testing procedures (CPT® codes 95810 and 95811)

Follow Through

This is a summary of the Part B portion of the 2017 Work Plan; you are encouraged to review the Work Plan in its entirety to ensure applicable risk areas are well understood. For each of your focus areas, be certain to review appropriate CMS interpretive guidance and local coverage determinations, as well as any referenced regulatory provisions cited in the OIG Work Plan to ensure you completely understand and comply with CMS’ expectations, particularly with respect to documentation content and coverage limitations.

Yearly Recovery Statistics

In addition to the 2017 Work Plan, the Office of Inspector General (OIG) separately published its semi-annual report to congress, in which it announced expected recoveries of $5.56 billion from its fraud and abuse efforts in 2016. This amount is up substantially from the $3.3 billion recoveries the OIG projected for 2015. OIG also reported the following statistics relative to its enforcement efforts:

—	2016	2015	2014
Criminal actions against individuals or entities	844	925	971
Civil actions against individuals or entities	708	682	533
Exclusions	3,635	4,112	4,017

Although criminal action and exclusion figures have fallen, civil actions — which include false claims or unjust enrichment lawsuits, civil monetary penalty settlements, and administrative recoveries relative to provider self-disclosure matters — have risen. The dramatic increase in expected recoveries suggests there is no slowdown in the government’s enforcement efforts, and the importance of compliance cannot be understated.

Source: OIG semi-annual report to Congress

Resources

2016 and 2017 OIG Work Plans: https://oig.hhs.gov/reports-and-publications/workplan/index.asp

Medicare Program Integrity Manual, pub 100-8, ch 5 – Items and Services Having Special DME Review Considerations, §§5.2.3, 5.9.

Medicare Claims Processing Manual, pub 100-4, ch 20 – Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS), §200.

HHS ANNOUNCES FRAUD RECOVERY STATISTICS

The American Health Lawyers association reported the following in its weekly Fraud and Abuse update:

The government won or negotiated more than $2.5 billion in healthcare fraud judgments and settlements in fiscal year (FY) 2016, the Departments of Health and Human Services (HHS) and Justice (DOJ) said in their Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2016 released January 19.

The American Health Lawyers association reported the following in its weekly Fraud and Abuse update:

“In its twentieth year of operation, the Program’s continued success confirms the soundness of a collaborative approach to identify and prosecute the most egregious instances of health care fraud, to prevent future fraud and abuse, and to protect program beneficiaries,” the agencies said.

According to the report, as a result of 2016 and prior years’ efforts, over $3.3 billion was returned to the federal government or paid to private persons. The Medicare Trust Funds received transfers of approximately $1.7 billion, and $235.2 million in federal Medicaid funds was transferred to the Treasury in FY 2016, the report said.

The return on investment from 2014 to 2016 for the Health Care Fraud and Abuse Control Program (HCFAC)—which was established by the Health Insurance Portability and Accountability Act of 1996—is $5 returned for every $1 expended, the agencies said.
In FY 2016, DOJ opened 975 new criminal healthcare fraud investigations and filed criminal charges in 480 cases involving 802 defendants. A total of 658 defendants were convicted of healthcare fraud-related crimes during the year, the report said.
DOJ opened 930 new civil healthcare fraud investigations in FY 2016, with 1,422 civil health care fraud matters pending at the end of the fiscal year.
HHS Office of Inspector General (OIG) investigations resulted in 765 criminal actions in FY 2016 against individuals or entities.

OIG investigations also led to 690 civil actions, which include false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalties settlements, and administrative recoveries related to provider self-disclosure matters, according to the report. OIG also excluded 3,635 individuals and entities in FY 2016.

BILLERS CONVICTED IN FRAUD SCHEMES

U.S. Attorney for the District of Maryland, Rod J. Rosenstein announced December 20 that Elma Myles pled guilty to defrauding Medicaid and other health benefit programs by conspiring to have durable medical equipment provider RX Resources and Solutions (RXRS) bill for supplies that were never provided or were medically unnecessary, and to overcharge for materials that were actually delivered.

Myles, who worked for RXRS as a biller, admitted to conspiring with the company’s President and Chief Executive Officer, co-defendant Harry Crawford, and others in connection with the scheme, a press release said. An analysis of RXRS billing revealed that from 2007 through 2014, Medicaid lost roughly $1.2 million just for incontinence supplies, the release said.

Raciel Leon, 42, of Miami, was convicted after a two-week jury trial of one count of conspiracy to commit health care fraud and wire fraud and one count of conspiracy to defraud the United States and pay and receive health care bribes and kickbacks.

According to evidence presented at trial, between approximately October 2014 and June 2015, Leon was the manager of Mercy Home Care Inc. (Mercy) and a billing employee for D&D&D Home Health Care Inc. (DDD), both of which were home health agencies in Miami-Dade County, Florida. The evidence showed that Leon and his co-conspirators used the companies to submit false claims to Medicare that were based on services that were not medically necessary, not actually provided and for patients that were procured through the payment of illegal kickbacks to doctors and patient recruiters. In an attempt to support the false claims, Leon’s co-conspirators forged prescriptions and other medical records, and Leon submitted claims to Medicare based on the falsified documentation.

As is evident, fraud liability attached to the billers in these cases because of their ACTIVE INVOLMENT as decision-makers and conspirators in the scheme to defraud.

INDUCEMENT THRESHOLD UPDATED BY OIG

The Department of Health and Human Services Office of Inspector General (OIG) issued a policy statement December 7 increasing what constitutes a gift of “nominal value” to Medicare and Medicaid beneficiaries for purposes of avoiding civil monetary penalties.

Under Section 1128A(a)(5) of the Social Security Act, enacted as part of HIPAA:
A person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of Medicare or Medicaid payable items or services may be liable for civil monetary penalties (CMPs) of up to $10,000 for each wrongful act.

Under Section 1128A(a)(5) of the Social Security Act, enacted as part of HIPAA:

A person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of Medicare or Medicaid payable items or services may be liable for civil monetary penalties (CMPs) of up to $10,000 for each wrongful act.

In 2000, OIG interpreted the terms “inexpensive” or “nominal value” to mean a retail value of no more than $10 per item, or $50 in the aggregate per patient, on an annual basis. As of December 7, “nominal value” has be re-defined as having a retail value of no more than $15 per item or $75 in the aggregate per patient, on an annual basis. Such remuneration cannot include cash or items similar to cash, such as gift cards.

UNDERCODING IS NOT AN APPROPRIATE AUDIT AVOIDANCE STRATEGY

It’s a compliance risk, and it deprives your physicians of proper payment.

“Overcoding,” or reporting procedures and services not supported by the actual work performed (as described in provider documentation), is improper coding, and it’s a compliance risk. “Undercoding” — or failing to report the full extent of provided procedures or services — is an equally unsound practice.

It’s a compliance risk, and it deprives your physicians of proper payment.

“Defensive” Undercoding Is Indefensible

Some providers and staff have taken to undercoding as a defensive strategy, in hopes of warding off denials, audits, or accusations of fraud. The thinking is, “If I under-report the amount of work performed, I can’t be accused of trying to receive payments in bad faith.”

For example, many payers examine billing patterns for evaluation and management (E/M) codes to identify providers who bill a greater-than-average number of high-level E/M services. Providers who undercode do so because they either are unsure of the correct code or hope that, by doing so, they can “fly under the radar.” What providers may not understand is that undercoding can make a provider an outlier, just as easily as overcoding.

Undercoding creates substantial patient care, compliance, and financial liabilities. Novitas, a Medicare contractor in Delaware, Maryland, New Jersey, Pennsylvania, and Washington, D.C., noted on its website (“Over coding? Under coding? RIGHT coding”) an increased trend of undercoding, and enumerated its problems:

Undercoding leaves money on the table, driving down provider reimbursement:

… under coding impacts your practice revenue. You are not being appropriately paid for the level of service you provide to your patients. Correcting under coded claims can mean costly appeals.

Undercoding increases the number of improperly paid claims:

The goal of CMS and Novitas is to pay claims that meet Medicare’s requirements and pay them at the proper level of service. When there is an underpayment due to under coding, we did not pay the claim correctly and it is counted as an improper payment error…. Under coding errors can statistically impact calculated error rates in the tens of millions of dollars [emphasis in the original].

Undercoding impacts patients negatively, and skews the data that Medicare and other payers use to calculate payments, going forward:

Under coding misrepresents the true level [of] care that is provided to Medicare beneficiaries. These statistics are used to calculate future Medicare payments and track trends in healthcare delivery.

Undercoding may increase your risk of an audit:

Patterns of under coding may be viewed as aberrant and open your practice up to audits and reviews.

In short, Novitas says, “It’s important to code the level service that is supported by your documentation.”

Undercoding Is Improper Coding (or Worse)

Here’s something else: Undercoding — just like overcoding — can create false claims liability.

There are two types of undercoding that can create liability for the provider:

Failing to report services performed at the encounter; and
Under-reporting the level of service provided.

A Centers for Medicare & Medicaid Services (CMS) Medicare Learning Network article, entitled “Medicare Fraud and Abuse: Prevention, Detection, and Reporting,” defines fraud:

In general … as making false statements or representations of material facts to obtain some benefit or payment for which no entitlement would otherwise exist. These acts may be committed either for the person’s own benefit or for the benefit of some other party. In other words, fraud includes the obtaining of something of value through misrepresentation or concealment of material facts.

Undercoding Type 1: Failing to Report Performed Services

Deliberately undercoding by not reporting components of the performed service (i.e., services that do not fall under applicable bundling reimbursement rules) is “making a false statement” about the provided services, and is a “misrepresentation” of the facts. When the unreported code(s) affect the payer’s decision to pay the claim (or the decision whether to conduct additional review), the omission is a material misrepresentation that can lead to potential False Claims allegations.

Example: Assume a provider sees a patient and performs three services: A, B, and C. Assume also that the applicable bundling rule establishes that service C is a component of service B, and that service B is a component of service A. Assume no exclusionary modifiers are appropriate or justified. If all three services were reported, only Service A would be paid. Knowing this, the provider omits the billing for Service B. The provider, therefore, reports Service A and Service C. Not knowing that Service B was provided, the payer allows payment for both services.

In this example, the omission was the misrepresentation that induced the payer to approve the additional (but not entitled) reimbursement. If the payer had been apprised of all the facts, they would have paid less money. This is the type of misrepresentation that can create false claims liability. At a minimum, misrepresentation by omission certainly fits within the CMS definition of abuse, which is simply “misusing codes on a claim.”

Under the False Claims Act, a physician may be held liable for “submit[ing] claims to Medicare for medical services he or she knows were not provided.” Undercoding by omission is the inverse of this type of false claim. With omissions, it’s not that the provider is billing for work that he or she didn’t do; it’s that the provider is not billing for all of the work performed in an attempt to gain disallowed reimbursement. For example, getting paid for an E/M associated with a cosmetic procedure that isn’t covered. By not billing a cosmetic procedure, the payer will likely pay the E/M where they otherwise wouldn’t. False claims liability potentially arises as a result of such an omission where a complete and accurate representation of the service would have resulted in a different (and lower) payment amount, or would have negatively influenced the carrier’s determination to pay the claim, at all. In essence, the omission (by undercoding) is the material misrepresentation that creates potential false claims liability.

When a payer can also substantiate that the omission represented a “deliberate ignorance or reckless disregard of the truth related to the claim,” both the materiality and intent elements necessary to prove fraudulent conduct are satisfied.

There’s also the Criminal Health Care Fraud Statute, which makes it a crime “to obtain (by means of false or fraudulent pretenses, representations, or promises) any of the money or property owned by, or under the custody or control of, any health care benefit program.” Here again, undercoding by omitting information that might influence the payment determination may be perceived as “false or fraudulent representations” of the services provided.

Undercoding Type 2: Under-reporting Level of Service

The more obvious form of undercoding is reporting a lower level of service than was provided and represented. This commonly occurs with E/M services, as well as other procedures. In such cases, providers must consider the anti-kickback statute to the extent that undercoding diminishes the patient’s obligation for payment, and such a reduction is considered “remuneration” that is intended to influence the patient’s decision to receive the service.

Example: An established patient whose deductible is not met presents to the physician for an E/M service. Assume that the work and associated documentation demonstrate the physician performed a level 4 service. Concerned about the cost to the patient, the provider reports a level 2 service, instead. The value of the “discount” is remuneration to the patient. Since it can be shown that one purpose of the remuneration was to influence the patient’s selection of the provider or decision to receive the healthcare service, the anti-kickback statute would be implicated.

These examples show that undercoding isn’t a recommended defensive strategy; it’s a misrepresentation of services. Undercoding establishes inaccurate utilization patterns, which may, at a minimum, flag a physician as an outlier and make him or her a target for an audit.

Fight Undercoding with Internal Audits

Periodic, internal audits of your coding, billing, and documentation is the best way to detect and eliminate improper coding, whether it’s due to upcoding, downcoding, or other compliance risks. The goal of an audit is to ensure documentation is a correct reflection of the work done and the necessity for that work. An internal audit should evaluate compliance with payer reimbursement guidelines compared to your documentation content to ensure all procedures, services, supplies, and diagnoses are identified, appropriately billed, and supported at the level they are billed. Medical documentation should be clear (to the auditor) and legible.

Internal audit results must be shared with providers and the coding and billing staff. Be sure appropriate education is completed and compliance policies and procedures are updated to prevent future errors. Providers should consider using an external auditor, periodically, to validate the effectiveness of the internal audit program.

Providers should strive to report all work performed (while following bundling rules), the necessity for that work, and (when relevant) the correct level of service. Doing so is what Novitas calls “right coding.” Right coding should always result in the right payment, and when providers receive the right payment, there is no compliance risk. As Novitas rightly concludes, “When you practice right coding, coding the level of service supported by your documentation, we all win — you, your patients and the Medicare program.”

Resources

Novitas, “Over coding? Under coding? RIGHT coding!” (www.novitas-solutions.com/)

Medicare Learning Network, “Medicare Fraud & Abuse: Prevention, Detection, and Reporting.”

IS SEPARATE CODING OF SERVICES UNBUNDLING OR CORRECT CODING?

If appropriate rules and system edits are in place, exclusionary modifiers are the link to unbundling liability.

Unbundling is a commonly asserted but often misunderstood fraud theory, even by coding experts. When evaluating potential unbundling as a fraud theory, it’s important to differentiate when separate reporting of services is simply correct coding and when it becomes a scheme to defraud.

If appropriate rules and system edits are in place, exclusionary modifiers are the link to unbundling liability.

The Office of Inspector General (OIG) has defined unbundling as occurring when a “billing entity uses separate billing codes for services that have an aggregate billing code” (65 F.R. No. 243, 70138, 70142). The OIG has also defined unbundling as “billing for eachcomponent of the service instead of billing or using an all-inclusive code” (65 F.R. No. 194, 59434, 59439). Unfortunately, these definitions are too simplistic. Knowing when unbundling is potentially problematic requires an understanding of the differences between the rules pertaining to coding, billing, and reimbursement.

First Comes Coding

“Medical coding,” according to AAPC, “is the transformation of healthcare diagnosis, procedures, medical services, and equipment into universal medical alphanumeric codes.” CPT® and HCPCS Level II codes are the required code set for reporting physician services and supplies to Medicare (45 C.F.R. §162.1002). Each aspect of a physician encounter that can be described using either a CPT® or HCPCS Level II code can, and should, be coded, so all physician work performed can be understood.

Next Comes Billing

Medical billing is the work necessary to translate a properly coded healthcare service into a claim. It is the process by which services are reported to either the patient or to a third-party payer for payment either on a CMS-1500 claim form or electronically using the 5010-transaction standard.

The responsibility of a medical biller in a healthcare facility is to follow the claims to ensure the practice receives appropriate reimbursement for the work the providers perform. A knowledgeable biller can optimize revenue performance for the practice.

Billing a service should not be confused with whether a service is “billable,” which suggests analyzing whether a service is reimbursable. Semantics aside, all services that are performed and correctly coded are billable. Whether a provider or entity chooses to report or “bill” a particular service in circumstances where they don’t think the service is compensable often depends on the objectives of the provider or entity. When the objective is an efficient claims process, the provider or entity may elect not to bill a non-compensable service. Alternatively, when the objective is to classify completely the work performed, or it’s mandated by the payer, the provider or entity includes the CPT® or HCPCS Level II codes associated with the non-compensable components of the service on the claim (bill). In some cases, this is done just to demonstrate to the patient that the service is, in fact, not covered so the patient can understand their payment obligation.

Then Comes Reimbursement, Maybe

In third-party payer cases, such as Medicare, before a coverage and reimbursement determination is made, the physician must:

Perform a service(s) on behalf of a patient;
Identify and assign the appropriate CPT® and/or HCPCS Level II code(s) to completely represent each component of the overall service provided; and
Report that information (as well as other necessary information) to the payer through submission of a claim.

The payer evaluates the claim and makes a coverage determination based on the terms of the patient’s benefit contract or the cost containment provisions of the statutory reimbursement scheme found under programs like Medicare, Medicaid, workers’ compensation, or automobile first-party benefit programs. For covered services, the payer makes a payment determination based on the applicable fee schedule and other reimbursement rules.

Because coverage and reimbursement rules vary from payer to payer (and even plan to plan), the ultimate payment result can vary for the exact same service(s) among payers and plans. It is these “other reimbursement rules” where the concept of unbundling becomes a potential issue.

Unbundling Scenario

In this scenario, a provider is submitting claims to an automobile carrier. Medicare reimbursement rules are applicable and the provider is not permitted under the reimbursement regulations to “fragment or unbundle claims except as consistent with Medicare.” The provider performs decompressive neuroplasty, which involves:

An injection of lidocaine (62311 Injection(s), of diagnostic or therapeutic substance(s) (including anesthetic, antispasmodic, opioid, steroid, other solution), not including neurolytic substances, including needle or catheter placement, includes contrast for localization when performed, epidural or subarachnoid; lumbar or sacral (caudal));
A myelogram without dural puncture of the L5 nerve root with contrast, which necessarily involves the injection procedure for myelography (62284 Injection procedure for myelography and/or computed tomography, spinal (other than C1-C2 and posterior fossa)) and the actual myelogram (72265 Myelography, lumbosacral, radiological supervision and interpretation);
A percutaneous neuroplasty involving the injection of saline (62282 Injection/infusion of neurolytic substance (eg, alcohol, phenol, iced saline solutions), with or without other therapeutic substance; epidural, lumbar, sacral (caudal)); and
Fluoroscopic guidance for each of the various procedures (77003 Fluoroscopic guidance and localization of needle or catheter tip for spine or paraspinous diagnostic or therapeutic injection procedures (epidural or subarachnoid)).

Because Medicare reimbursement rules are applicable, Medicare’s fee schedule is relevant, as are National Correct Coding Initiative (NCCI) edits. In analyzing the NCCI edits relative to all of the above codes, only the myelogram (72265) is payable. The other procedures, either directly or indirectly, are considered components of the myelogram.

In this circumstance, is it improper for a provider to separately report each service — and if he or she did, does it constitute impermissible unbundling?

To answer this, first understand that NCCI is a reimbursement rule. For services reported to Medicare, the Medicare administrative contractor (MAC) would apply the NCCI edits and deny payment for all services except the myelogram (72265). Separate reporting of bundled services is not impermissible unbundling when separate reporting was not intended to, and does not reasonably lead to, improper reimbursement. In this scenario, separate reporting was simply the correct and complete reporting of the entire service. Such reporting methods are performed for cost tracking, provider compensation tracking (where providers are in part compensated based on worked relative value units (RVUs)), or other reasons. In fact, Medicare Outpatient Prospective Payment System rules require separate reporting of each service and supply provided in an outpatient hospital or ambulatory surgical center (ASC) so Medicare can track outlier and transitional corridor payments.

According to the Medicare Claims Processing Manual, Pub. 100-4, Chapter 4, Section 10.4: “[I]t is extremely important that hospitals [and ASCs] report all HCPCS codes consistent with their descriptors; CPT and/or CMS instructions and correct coding principles, and all charges for all services they furnish, whether payment for the services is made separately paid [sic] or is packaged.”

When Separate Reporting Becomes Unbundling and Potentially Fraudulent

Separately reporting services using exclusionary modifiers to bypass the automatic bundling of the payment is problematic. The potential fraud theory is not in separately reporting the various procedures, but in the misrepresentation associated with reporting the modifier. Modifiers in these situations make a more important representation regarding the payer’s reimbursement obligation than the procedure code. For potential fraud liability to exist, the misrepresentation must be “material” and “knowing.”

A material misrepresentation impacts the payer’s obligation to pay the claim at all, or the amount of payment that the payer is obligated to make. When a modifier, such as modifier 59 Distinct procedural service, is used without justification and results in an unentitled payment, the separate reporting becomes unbundling, which is actionable.

Heed Relevant Reimbursement Rules

Although NCCI bundling rules are used in the above scenario, don’t assume NCCI is always a relevant reimbursement rule. CPT® Editorial Panel code guidance has its own set of bundling rules relative to what services are included or excluded. As these instructions are beyond the scope of the national standard code set, it’s important to determine whether such instructions are relevant.

The terms of cost containment regulations pertaining to automobile first-party or workers’ compensation claims vary from state to state. They may incorporate NCCI or CPT® Editorial Panel guidance relative to reimbursement. In a worst-case scenario, both are incorporated, leading to the likelihood of conflict between the rules.

For commercial indemnity insurers, the same problems can exist. In many cases, there are no reimbursement rules pertaining to bundling. In others, the carrier may incorporate NCCI, CPT® Editorial Panel guidance, or its own bundling rules. It does so either expressly in the provider agreement or indirectly through incorporated medical or reimbursement policies. As a result, you must identify that a relevant and binding reimbursement rule supports your unbundling theory. Even when such rules are identified, you must delineate whether the provider simply reported the services performed, or inappropriately unbundled services. If exclusionary modifiers are not used, without an expressed and binding instruction to not report certain services separately, unbundling as a fraud theory is a difficult case to make.

Accurate Coding Is Never Fraud

Although inappropriate unbundling can result in significant overpayments, many unbundling cases are defeated because the provider simply reported each service that was done using accurate CPT® and/or HCPCS Level II codes. When services are separately reported without instruction to the contrary, and without additional modifiers (which cause separate payment where it may not be entitled), such reporting simply notifies the payer of all the procedures for the entire service. It’s up to the payer to then determine what components of the service are compensable under the applicable reimbursement rules. The absence of such rules precludes the viability of unbundling as a fraud theory. If there are appropriate rules and system edits in place, and a provider misuses exclusionary modifiers to bypass those payment edits to receive unentitled reimbursement, then an allegation of unbundling by the provider as a fraud theory is potentially sustainable.

Resources

OIG Compliance Guidance for Third Party Medical Billing Companies, 65 F.R. No. 243, 70138, 70142 (Dec. 18, 1998): https://oig.hhs.gov/fraud/docs/complianceguidance/thirdparty.pdf

OIG Compliance Guidance for Individual and Small Group Practices, 65 F.R. No. 194, 59434, 59439 (Oct. 5, 2000): https://oig.hhs.gov/authorities/docs/physician.pdf

AAPC, What Is Medical Coding?

AAPC, What Is Medical Billing?

Medicare Claims Processing Manual, IOM Pub. 100-4, Ch. 4, §10.4

REMEMBER HIPAA? – HHS OFFICE OF CIVIL RIGHTS RECORDED NEARLY $15 MILLION IN COMPLIANCE RELATED SETTLEMENTS THIS YEAR THROUGH JULY

According to an article posted in the National Law Review, the Health and Human Services Office for Civil Rights recorded close to $15 million in compliance related settlement payments through July of this year. The report notes that these settlements demonstrate OCR’s more aggressive posture in enforcing HIPAA regulations.

The basis for the settlements addressed in the involved consent agreements varied from stolen laptops that were unencrypted despite the findings of multiple risk assessments by the entity determining that this posed a critical risk to incomplete risk analysis, and failure to take timely action on findings. A failure to obtain business associate agreements with business associates who had the need to access PHI was also the basis for one consent agreement.

OCR is making it very clear that it is serious about its enforcement role.