Proper Coding: Stay Abreast of the Lawby Scott Einiger, Esq.
Proper Coding: Failure to Stay Abreast of the Law and Current Coding Practices Can Result in Civil Liability and Criminal Prosecution.
Since the inception of the Current Procedural Terminology (“CPT”) coding system and the Healthcare Common Procedure Coding System (“HCPCS”), physicians have been attempting to ensure proper coding and record keeping practices for medical care rendered. Now, the playing field has become even more challenging. As you may know, the Obama administration has given its campaign promise to crack down on health care fraud some teeth. While the Omnibus Appropriations Act of 2009 provided $198 million for joint United States Department of Health and Human Services (“HHS”) and Department of Justice (“DOJ”) health care anti-fraud programs, with $19 million of that amount designated specifically for the DOJ , the Obama Administration’s fiscal year 2010 budget requests an additional $311 million in two year funding, $29.8 million of which is designated for the DOJ health care anti-fraud programs. 
In May 2009, United States Attorney General Eric Holder, standing alongside HHS Secretary Kathleen Sebelius, announced the creation of the Health Care Fraud Prevention and Enforcement Action Team. This team is in addition to the already established Medicare Strike Force Teams presently operating in several major U.S. cities. To support these and other anti-fraud programs, the administration has authorized a dramatic personnel increase in the fraud section of the Justice Department’s criminal division, with a direct eye towards combating Medicaid and Medicare fraud. “Health care fraud, in particular, is one of the [DOJ’s] top enforcement priorities…”.  In 2008 alone, the DOJ opened 957 new investigations and had 1,600 pending investigations by the end of the fiscal year.  According to Director Robert Mueller, as of June 2009, the Federal Bureau of Investigations had 2,400 pending health care fraud investigations. 
Moreover, according to the DOJ, as part of its effort to recover fraudulently obtained funds and discourage future abuses, the DOJ’s Civil Division, utilizing the Federal False Claims Act , “has played an enormous role in the Department’s efforts to recoup improperly obtained funds.” Providers should take note that, in 2008, 3,129 providers were excluded from the Medicare and Medicaid programs by the Office of the Inspector General.  With a roughly 50% increase to the budgets of HSS and the DOJ, the volume of investigations and prosecutions opened and pursued with these additional resources over the next few years could be staggering.
While the initial high profile investigations, prosecutions and convictions by HSS and the DOJ have involved suppliers of durable medical equipment, hospitals, nursing homes, and long term care facilities, smaller physician practices will not be exempt from scrutiny and investigations involved in this crackdown.  Moreover, the health care fraud “crackdown” has not been limited to activities of the Federal government. Not only has the Federal government actively involved the states’ Attorney Generals offices in its programs, but state governments have also, on their own, been employing programs and policies to counteract fraud and recoup improperly obtained funds. For example, in New York State, the NYS Office of the Comptroller has, over the past few years, taken a stern look at waiver of co-pay and co-insurance payments and, in conjunction with the New York State Insurance Department, has labeled such activity as fraudulent.  Further, according to the New York State Attorney General’s office, in 2008, the state’s Medicaid Fraud Control Unit obtained nearly 150 convictions and recouped payment of $263.5 million in civil damages and criminal restitution, surpassing the $113.8 million recouped in 2007 and the $59.3 million recouped in 2006.  Indeed, it must be remembered that our own New York Attorney General’s Office has already taken the insurance carriers to task for their non-participating provider reimbursement rates, labeling their practices as fraudulent. 
The greater concern for the vast majority of providers, who provide a high quality of care to their patients and attempt to bill properly, is that commercial insurance carriers (who have already been using third party administrators such as Ingenix to recover Medicare and Medicaid “overpayments”) will use the government’s mandate of stamping out healthcare fraud as an excuse to ramp up their aggressive auditing activities, and use the threat of a referral to the Justice Department as a sword to cow health care providers into complying with improper and unfounded repayment demands. Inasmuch as the DOJ readily admits that it actively involves and utilizes the investigatory and data compilation resources of the commercial insurance carriers , there is the real potential for commercial insurance carriers to use the information gained from government investigations as justification for performing aggressive audits of health care providers, even in situations where the health care provider has been “exonerated” by federal and state entities from any wrongdoing. This concern is, of course, in addition to concerns regarding audits conducted through the government’s Medicare Recovery Audit Contractor (“RAC”) program, which is now fully operational.
Health care providers in New York should be aware that commercial insurance carriers attempting to recover federal funds in civil proceedings are not bound by New York’s “two year look back” statute. Thus, the commercial insurance carrier can perform an audit, and serve a repayment demand, for up to six years after payment of the claim without having to make a showing, or even an allegation, of fraud.
No provider wants to be the subject of a federal, state or commercial insurance carrier audit. All of these entities have vast economic resources and, in some instances, the government gets to keep the proceeds of the audit which is a huge incentive to increase these initiatives.  Being proactive and not waiting for an audit to occur will ensure proper billing and coding practices and will allow the provider to correct and eliminate any problems that are uncovered before the government or a commercial insurance carrier comes knocking at the door. Further, in the event of an audit, self-auditing can go a long way towards refuting any allegation of an intent to commit fraud.
Providers should undertake measures to lessen the likelihood of being investigated by the government or being audited by a commercial insurance carrier and to successfully defend themselves in case of such an audit. These measures, which many providers have heard before, warrant repetition.
First, make sure your staff, or contractors (if you are outsourcing your coding and billing), are experienced and knowledgeable in coding for procedures performed within your specialties. Undue reliance, without doing your homework, can have catastrophic consequences. To avoid this, it is strongly recommended that you, as the provider, know your service codes so that even if you cannot perform a daily analysis and review of billing, you can perform limited periodic spot auditing that will allow you to uncover potential problems or improprieties at their initial stages. Many medical societies provide seminars and courses on proper billing and coding for their members. Most importantly, these seminars are designed to be understood by the providers and their staff.
Make sure your staff, or outsourced billing company, keeps current on billing and coding requirements. The American Medical Association (“AMA”)and Centers for Medicare and Medicaid Services (“CMS”) frequently make multiple modifications each year to its billing and coding guidelines based upon trends in health care and medical and technological advancement. Complacency, or a misplaced confidence level simply because a carrier has not picked up on a repetitive error, can be your worst enemy because an ongoing error can lead to an exponential increase in any refund demand.
Thus, it is imperative to make sure each year that the codes you are using have not been changed or modified by the AMA , CMS, or the commercial insurance carrier. Providers are obligated to stay up to date with current coding terminology. Changes in the coding requirements, even minor ones, and changes in approved and denied treatments, are subjects that are easily exploited by commercial carriers. Our experience with audits by commercial carriers makes it clear that changes in policy (i.e. covered treatments and services) happen frequently and without proper notice to the providers. Many carriers consider a simple modification to their on-line list of covered services as proper notice to the provider. Participating providers are therefore encouraged to ensure that their billers check the carriers’ website for policy changes to avoid audits and repayment demands for services that are “no longer covered.” Systemic billing errors, such as consistently using an improper billing code for treatment rendered, can give rise to an allegation of fraud by the commercial insurance carriers, as well as the state and federal authorities.
For providers that conduct their own coding and billing, we recommend considering having an independent outside analysis conducted by a medical coding expert. These independent analyses are highly cost-effective in comparison to the legal expenses incurred in defending an audit. Such proactive steps can go a long way towards preventing coding problems and assuaging a provider’s concerns and anxiety. In the event a problem is identified, it can be addressed and rectified quickly, thus avoiding potentially costly audits and significant repayment demands. Inasmuch as health care providers generally perform the same treatments and bill the same codes on a repetitive basis, a single coding error or misunderstanding can lead to an audit and extrapolation (which is a permissible tool used by commercial carriers in New York) that can be very costly, even in the absence of any fraudulent intent.
Finally …document, document, document, and do it legibly! The cardinal rule regarding documentation of treatment rendered to Medicare and Medicaid patients is that if the note is illegible the treatment did not occur. Commercial insurance carriers have adopted this rule as their policy. Proper documentation and the use of appropriate templates can be helpful in eliminating exposure in those areas frequently challenged by the carriers (i.e. E&M levels and medical necessity). This applies whether the note relates to past medical history, present complaints, examination or treatment. While legibility may be a somewhat subjective determination, it is far better to be clear and comprehensive in your approach than to allow an outside auditing company to question whether a treatment was rendered or medically necessary, thus causing the provider to defend his or her writing in a post payment review.
Moreover, rather than take the time to try and decipher a note, or give the provider the benefit of the doubt, it is much easier for a commercial insurance carrier to deny a service where the note is illegible and wait for the provider to refute the determination. Taking a few extra minutes to document clearly and legibly can be an exercise that reaps financial benefits in the event of an audit or investigation. Time and time again, upon our review of records audited by commercial carriers, we find that the carrier did not see or ignored a note due to claimed illegibility. A report or note that reflects the treatment rendered, or the medical propriety of the treatment rendered, can result in reducing necessary defensive measures.
Specifically, with regard to documentation, providers must keep in mind that if you are billing for a high level E&M, make sure the progress notes document all required elements for such a code. For consultations, make sure that your report clearly identifies that a health care provider has requested the opinion from a specialist in your field, detailing how the provider obtained knowledge of the request (e.g. patient arrived with a scrip, primary care physician’s office called, patient’s assertion). Don’t identify a consultation as a referral, as the two terms are not synonymous when it comes to coding. Further, make sure you send the consulting report (letter) back to the referring physician. Carriers are not above demanding the patient chart from the referring physician to determine if the consulting report is in the patient chart. Finally, if you are referring the patient for a test which you, or someone in your group, will be performing, make sure that the medical necessity for the test is documented or can clearly be inferred in the progress note.
Admittedly, it can be difficult, frustrating, and time consuming to both practice medicine and run your business. However, neither the commercial carriers nor the governmental entities will be overly sympathetic to the practical realities of today’s health care provider. Remember, the health care provider is the one ultimately responsible for the office’s billing practices. The provider is the one signing off on the submission and the provider is the captain of the ship. It is the provider’s medical license under scrutiny if your billing practices are questioned and it is the provider who will receive and pay the refund demand.
When our office gets involved with a retrospective audit, we work concurrently and collaboratively with providers, ensuring the office prospectively changes any practices identified as areas of concern. You should not wait for an audit to review your coding practices. We recommend that our clients, on an annual basis, comprehensively review their billing practices to ensure compliance and appropriate documentation. For larger practices, group practices, and any provider that has uncovered systemic billing errors in one or more areas, we consistently recommend a prophylactic review of their billing and record keeping practices. These reviews, performed collaboratively by our legal staff and expert coding consultants, are economical and, in the long run, can save the provider time, grief, and money. Whether your practice or facility is the subject of an investigation or audit, or whether you are considering having a review of your billing and record keeping practices, we recommend that any coding expert be retained by your legal counsel to ensure confidentiality, thereby preventing the disclosure of any information exchanged between the provider and the consultant if litigation regarding the provider’s billing practices occur.
For any questions or concerns you may have concerning insurance carrier audits or repayment demands, large or small, please feel free to contact our Health Care Law Department for an analysis and assessment regarding your situation.
(The information presented in this article is intended for educational purposes only and does not constitute legal advice. In cases of specific legal questions, always contact an attorney.)
About the Authors:
Scott Einiger is a senior partner and Director of the New York City Health Law Department at Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Einiger, LLP, special counsel to the New York County Medical Society, General Counsel to the American Academy of Psychoanalysis and counsel to the New York Society for Gastrointestinal Endoscopy
David Verschell is the Director of the Insurance and Audit Division of the New York City Health Law Department at Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara & Einiger, LLP, and is a senior trial associate in the firm’s Medical Malpractice Defense Department.
 Lanny A. Breuer, Assistant Attorney General – Criminal Division, Department of Justice, Statement Before the United States Senate Committee on the Judiciary, Subcommittee on Crime and Drugs, Presented May 20, 2009.
 News Release, U.S. Department of Health & Human Services, May 20, 2009;
 Breuer, supra note 1.
 U.S. Pursues Crackdown on Healthcare Fraud, Reuters, June 24, 2009.
 31 U.S.C. § 3729-3733.
 Breuer, supra note 1.
 Department of Health and Human Services Office of Inspector General, State Medicaid Fraud Control Units Annual Report- Fiscal Year 2008.
 Breuer, supra note 1, at pg. 3; “[t]he department is committed to prosecuting all who commit health care fraud…”.
 see State of New York Insurance Department opinion letter
 New York State Medicaid Fraud Control Unit, 2008 Annual Report
 After an industry wide investigation conducted by the New York State Attorney General’s office concluded that there was a scheme to defraud consumers by manipulating the reimbursement rates for treatment rendered by “out of network” physicians, the Attorney General obtained agreements from multiple major insurance carriers to discontinue its relationship with Ingenix, the wholly owned subsidiary of United Health Care which was at the center of the scheme. See generally, Health Care Report – The Consumer Reimbursement System is Code Blue, State of New York-Office of the Attorney General, January 13, 2009.
 Breuer, supra note 1.
 Since 1997, $1.2 billion in recovered funds have gone directly to the United States Treasury. See Breuer, supra note