Medicare and Medicaid billing mistakes can result in fraud investigations with serious, long-lasting consequences. Providers may be required to pay back up to three times the amount they were paid for improperly billed services. In addition, if the government finds that the improper billing was intentional, providers can face criminal charges, the loss of professional licenses, and exclusion from participation in Medicare and Medicaid.

First, it is important to understand what triggers a government investigation into a provider’s billing practices. The government routinely audits Medicare and Medicaid payments to detect and correct improper payments. As a part of this process, a provider may be flagged as an “outlier.”

The FBI has identified the following as the most common sources of billing fraud committed by medical providers:¹

(1) Double Billing – submitting multiple claims for the same service. Double billing can take multiple forms, including billing both government programs and private insurance for the same services or supplies, billing twice for the same service by using both an individual code and a bundled code that includes the individual service or supply, and two providers billing for the same service when only one actually provided the service to the patient.

(2) “Phantom” Billing – billing for services or supplies that were never provided to the patient. Examples include providers submitting a claim for reimbursement for services or procedures they did not perform, or for higher-priced products or services than those actually provided to the patient.

(3) Unbundling – billing for multiple codes for a group of procedures that are covered in a single global billing code. Unbundling can also include claiming that services provided during a single office visit were provided on different dates in order to obtain a higher reimbursement rate.

(4) Upcoding – billing for a more expensive service than the patient actually received. Upcoding occurs when providers report higher-level procedures or services than those indicated by documentation, a supporting medical diagnosis, or other facts. Upcoding is particularly obvious to the government with respect to Evaluation & Management codes. Examples of upcoding include billing a 99215 E/M code for every patient regardless of complexity, or regularly billing a 99214 E/M code for 30 patients in a single day. Other examples include billing a simple X-ray as a more complex X-ray, or billing sedation as more complex anesthesia. Upcoding could also come in the form of billing for a procedure performed by an assistant or nurse as if it were performed by a physician.

While these are not the only billing practices that may catch the eye of the government, they are the most common.

Medicare recently published guidance placing the possible types of improper payments on a spectrum:

• Mistakes – Resulting in Errors: Incorrect coding that is not widespread;
• Inefficiencies – Resulting in Waste: Ordering excessive diagnostic tests;
• Bending the Rules – Resulting in Abuse: Improper billing practices (like upcoding); and
• Intentional Deceptions – Resulting in Fraud: Billing for services or supplies that were not provided.²

There are a number of steps providers can take to avoid ever catching the attention of the federal government in the first place. Most importantly, providers should maintain accurate and complete medical records and documentation of services provided, and document as if the federal government is reading over their shoulders. Thorough documentation helps address any subsequent challenges raised about the integrity of claims.

Establishing a compliance program is key to avoid fraudulent activities and ensuring that the claims being submitted to the government are accurate. The following components provide a solid basis for a physician practice compliance program:

(1) Conduct internal monitoring and auditing;

(2) Implement compliance and practice standards;

(3) Designate a compliance officer;

(4) Conduct appropriate training and education;

(5) Respond appropriately to detected offenses and develop corrective action;

(6) Develop open lines of communication with employees and staff; and

(7) Enforce disciplinary standards through well-publicized guidelines.

If you need assistance establishing a compliance program, or find yourself or your practice on the government’s radar, we invite you to contact us.

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¹ See https://www.fbi.gov/scams-and-safety/common-scams-and-crimes/health-care-fraud.
² ICN MLN4649244, Medicare Fraud and Abuse: Prevent, Detect, Report (January 2021).