Initiatives at the executive and legislative levels of government are gaining political momentum, and physicians may soon find their billing practices increasingly dissected. In the early stages, efforts have been focused at the institutional level, but the focus could shift to include individual practitioners.

“Not that hospitals are out there committing fraud, but I think that’s probably where the administration is going to put its primary focus,” Cherie McNett, American Academy of Ophthalmology director of health policy, said. “But I don’t think physicians should think that they’re not under the microscope, though, either.”

The impetus to question costs in all sectors of medicine may be rooted in large dollar amounts already recovered. Following the dollars, in a sense, may be politically expedient because it tends to attract popular support. Arguing against initiatives aimed at recouping taxpayer money, even if they may be ineffective or insufficient, is a tough sell.

Jonathan C. Javitt, MD, MPH, said stringent Medicare and Medicaid enforcement may unduly harm physicians acting in good faith. Image: Blanken B, Freed Photography

According to the 2009 annual report of the Health Care Fraud and Abuse Control (HCFAC) program, which targets just one component of overpayments in the Medicare and Medicaid system, anti-fraud programs netted $2.51 billion in fiscal year 2009 for the Medicare Trust Fund, an increase of $569 million (39%) over fiscal year 2008. In addition, the federal government won or negotiated about $1.63 billion in judgments and settlements.

The HCFAC program also recovered $441 million for Medicaid, a 28% increase from 2008. Since its inception in 1997, the HCFAC program has returned more than $15.6 billion to the Medicare Trust Fund, the report said.

Whether dollars recovered from anti-fraud activity, as well as funds from more innocuous examples of overpayment, will resolve the budget deficits recognized by the Medicare program is debatable amid an environment of spiraling costs. However, according to Jonathan C. Javitt, MD, MPH, a former Medicare consultant and chair of the President’s Information Technology Advisory Committee that proposed the current federal focus on electronic medical records, what is clear is that the increased scrutiny may unduly harm physicians acting in good faith.

“The sad reality is that Medicare and Medicaid fraud has a corrosive effect in undermining the viability of our health care system,” Dr. Javitt said. “We’re not talking about the honest practitioner who forgets to document a review of systems in the course of billing for a level 5 office visit. We are talking about the medical equipment supplier who consistently bills for goods that were never shipped or were shipped to dead people.”

According to Dr. Javitt, cases of true fraud in ophthalmology are rare, but there have been convictions of practitioners who have billed for procedures that were never performed or manipulated examination findings as false justification for surgery.

“As Medicare and Medicaid get more aggressive in looking for patterns of fraud, there’s increased risk that people who are practicing good medicine are going to get caught up either in government-sponsored investigations or those sponsored by contractors who are modern-day bounty hunters,” he said.

Federal pressure

Over the past year, the federal government has put concerted effort into reducing fraud, abuse and illegal activity. For instance, in May 2009, President Barack Obama announced the formation of the Health Care Fraud Prevention and Enforcement Action Team (Project HEAT). The collaborative effort between the Department of Justice, Department of Health and Human Services and law enforcement agencies brought the effort to combat fraud and abuses to a Cabinet-level priority for the first time.

Among other things, Project HEAT spurred the creation of Medicare Fraud Strike Force units, teams of agents from the Federal Bureau of Investigation, Office of the Inspector General, Attorney General and Department of Justice that operate in seven cities. These teams audit local Medicare billing for potentially dubious activity and investigate when signals are raised.

While these efforts are focused on criminal behavior, and physicians who practice good medicine are at little to no risk of investigation, the increased activity and heightened scrutiny of physician behavior is indicative of redoubled efforts to uncover overpayments and return lost dollars to the system.

“No question, this speaks to the ramped-up activity across the board, both on the civil and criminal side,” Alan E. Reider, JD, OSN Regulatory/Legislative Section Editor, explained.

Alan E. Reider

The federal government, he said, has pledged $350 million over the next 10 years in order to fund more investigators, prosecutors and activity overall in the anti-fraud and overpayment recoupment sector.

“People have got to start to realize that no longer are they going to be safe in the safety of numbers,” Mr. Reider said. “There is going to be more activity than ever before, and the activity will range from the benign, which is simply having more aggressive data mining, audits and resulting recoupment, to the much more aggressive enforcement, either through civil sanctions or, the most significant, the criminal prosecutions.”

One component of these newly formed efforts is to reduce improper payments in Medicare and Medicaid, as measured by the Comprehensive Error Rate Testing (CERT) program. According to a June letter from Attorney General Eric H. Holder Jr. and Secretary of Health and Human Services Kathleen Sebelius to state attorneys general, HHS has been charged with reducing the improper payment rate by half by 2012.

According to data available from the CMS website, the federal government made $54 billion in improper payments through Medicare and Medicaid during fiscal year 2009, which constituted more than half of all improper payments ($98 billion, according to the Office of Management and Budget) made by the federal government during the fiscal period. Due to a more sensitive accounting mechanism, CMS reported improper Medicare payments of $24.1 billion, representing a rate of 7.8% of payments, up from 3.6% in fiscal year 2008. The corresponding error rate for Medicare Advantage (Part C) was $12 billion, or 15.4%.

What has resulted is a new political will to fight fraud and lower overpayment in the health care system. Although anti-fraud programs have recouped significant sums of money for the U.S. Treasury, they do not make an appreciable dent in the Medicare budget, William L. Rich III, MD, AAO medical director of health policy, said.

“The thing we object to is not the presence of these things,” Dr. Rich said. “I don’t think anybody likes to see the system victimized by fraud and abuse, but the misleading impression is given that this is going to make a substantial difference in the financial health of Medicare and Medicaid.”

RAC expansion

Although anti-fraud efforts may not yield a cure for budget woes, this new era of increased scrutiny is nonetheless a reality. Several relevant changes to the way regulators are doing business will invariably affect health care providers.

Prominent among the changes, according to Mr. Reider, is the expansion of the Recovery Audit Contractor (RAC) program. Under the RAC program, independent and nonaffiliated contractors can audit Medicare claims for hospital inpatient and outpatient care, skilled nursing care, physician services, ambulance and laboratory services, and durable medical equipment.

A pilot version of the program was launched in 2005 in California, Florida and New York, and the program was expanded in 2007 to Massachusetts, South Carolina and Arizona. In 2009, congressional action extended the program to all 50 states.

Dubbed “bounty hunters” by some, RACs will employ statistical methods to root out anomalies in reimbursements in pre-designated target areas. Under the rules of the program, RAC operatives must gain clearance from CMS for the target areas they investigate and must make that information publicly available.

“The good news is that all they’re going after is money, but the bad news is that they are going after it very aggressively,” Mr. Reider said. “They get paid a percentage of the dollars they bring in. I find that to be a very troublesome model, but the government, at the end of the day, is dealing with spiraling costs, and the Congress and the administration are looking for any way to save money, and these guys bring in the bucks.”

Dr. Rich noted that the RAC program is designed to pinpoint discrepancies in reimbursement to providers — both overpayments and underpayments. About 96% of improper payments pinpointed by RACs in 2007 were overpayments to health care providers, while 4% were identified as underpayments.

William L. Rich

“When someone makes an inquiry, whether it’s the individual Medicare carriers or a RAC auditor, you are actually given the opportunity to make your case,” Dr. Rich said. “Occasionally, you come back getting paid more money. Obviously, it doesn’t work that way very often or [RACs] wouldn’t be so successful in their return on investment.”

Providers who disregard information requests do so at their own peril, Dr. Rich said.

“When you get into trouble is when you ignore those requests for data and explanation,” he said.

According to Dr. Javitt, who has served as a defense witness in several high-profile fraud cases and has worked with members of Medicare’s Office of the Inspector General, certain billing practices in ophthalmology may attract the scrutiny of RACs and other contractors. High-volume practices and statistical outliers may draw further investigation, even if all services rendered are legitimate.

“An example of a statistical finding that is likely to draw scrutiny is a very high percentage of patients within the practice who get cataract surgery on the same day or within a week or two of being seen for the first time,” Dr. Javitt said. “Now, that’s not to say that there aren’t some extraordinarily good ophthalmologists out there who only do cataract surgery by referral and operate on patients nearly immediately. The reality, however, is that same-day or nearly same-day surgery tends to attract interest. Similarly, an unusually high rate of ancillary procedures at the time of cataract, such as muscle procedures, trabeculectomy, etc., might well attract interest from auditors and, at the very least, result in a request for documentation of clinical necessity.”

So far, RACs have not made significant inroads into ophthalmic practice, but that possibility exists. As a result, Ms. McNett said, physicians would be wise to meticulously handle coding and Medicare claims and be prepared to justify them if called upon.

“I don’t know of any ophthalmologists that have gotten any contacts regarding RAC audits, but it’s something that everybody has to be aware of,” she said.

Codes and practices unique to ophthalmology may prove to be a source of confusion. For instance, Ms. McNett said, ophthalmology has distinct office visit and evaluation or management codes that may not be well understood.

“For us, the problem is going to be that people aren’t familiar with ophthalmology coding,” Ms. McNett said. “Even though the RACs have a medical director, I know for a fact that none of them are ophthalmologists. I think most of the clinical reviewers that they’ve hired are mostly general nurses or maybe even medical assistants who have some coding and bare minimum clinical background. So, that’s our fear with the RACs.”

The possibility exists, as well, that ophthalmology as a practice may become victim of a numbers game. The fact that the subspecialty generates upward of 65% of its revenue from Medicare may attract attention to providers and institutions, especially to those that provide high-volume Medicare-billed services.

“The high-volume and outlier physicians out there need to be sensitive to the fact that they are likely to be targets, and they need to be very, very careful,” Mr. Reider said.

Prevailing trends

Developing trends within health care and refinements to existing laws passed by Congress have further added to the mechanisms regulators may use to seek recovery of funds. For instance, as part of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, CMS was directed to use competitive measures to replace Medicare fiscal intermediaries and carriers with Medicare administrative contractors. That program has now been expanded with the creation of Zone Program Integrity Contractors (ZPIC), who operate within seven zones throughout the U.S.

ZPICs are charged with performing integrity functions for Medicare Plans A, B, C and D; durable medical equipment; home health services; hospice care; and the Medicare-Medicaid data match program, or Medi-Medi, which is designed to detect fraud and abuse in Medicare.

Other changes to existing laws have created additional recovery mechanisms or have cleared hurdles to make it easier to prosecute criminal activity. For instance, updated language in existing law makes a violation of the anti-kickback statute a false claim. Other changes turn failure to refund a known overpayment within 60 days into a false claim.

Another measure recently enacted to law enables the Secretary of Health and Human Services to suspend payments to a Medicare provider when fraudulent or abusive activity is suspected, with funds held in escrow until an investigation is completed. In addition, payments can be suspended not just for the overpayment in question, but for any and all Medicare-related compensation.

“You can essentially starve a practice, and it’s devastating. They can’t operate anymore. And to think, ophthalmology is so heavily dependent on Medicare,” Mr. Reider said.

For physicians, the sum of these changes will be stricter compliance requirements, starting with new protocols required for physicians who see patients covered by government-run health care.

Starting in 2013, compliance measures will also require industry to disclose financial relationships with physicians to the Department of Health and Human Services, who must make the information available to the public.

The measure is indicative of the heightened scrutiny that such relationships now face in the public sphere. While some critics maintain that physician-industry relationships threaten the integrity of physician decision-making, industry has countered that these kinds of partnerships are necessary to drive science and innovation forward. Mindful of the need to root out unnecessary and/or abusive relationships, industry advocacy groups such as PhRMA and AdvaMed have established voluntary codes of conduct as guidelines for appropriate exchange between physicians and industry.

While attempting to obviate the need for statutory requirements, these self-policing efforts, according to Mr. Reider, have not addressed this issue, which Congress believes is fundamental to achieving transparency in the relationship between industry and physicians.

“These are voluntary guidelines and not enforceable, but what they do is provide the government with a tool to support the government’s theory that certain conduct is improper and, therefore, violates statutory provisions,” Mr. Reider said.

Another trend in medicine, the movement toward electronic medical records, may be beneficial for providers. Although data mining is a new point of emphasis for government regulators, and EMRs may facilitate a simplified review process, EMRs may prove useful in helping physicians comply with coding requirements, Dr. Javitt said.

“An EMR in many cases makes it much easier to establish proper documentation and much easier to identify areas where documentation needs to be improved in order to comply with the payment [regulations],” he said.

EMR systems that link billing and medical records can also alert users to errors.

“For instance, if you’re doing an evaluation/management visit, some EMRs have features designed to help you code that visit accurately,” Dr. Javitt said. “If you try to code it as a level 4 or level 5 visit and you’re missing certain areas of documentation, the EMR will alert you to either supply that documentation or change the coded level of service. That’s not put in to prevent people from committing fraud; it’s put in to help people maintain billing integrity.”

Asked whether installing an EMR might expose ophthalmologists to increased scrutiny of RACs or other Medicare contractors, Dr. Javitt said that Medicare contractors are more likely to gain access and mine data upstream from the physician practice, at the carrier level.

“Proper use of EMRs, on the other hand, has the potential to assist conscientious ophthalmologists in clearly documenting medical necessity and level of service provided, the essential elements of any defense against an allegation of fraud,” he said.

Does this new era of regulation put an undue burden on medical providers or does it truly serve the best interest of patients?

Reference:

• The Department of Health and Human Services and the Department of Justice. Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2009. http://www.justice.gov/dag/pubdoc/hcfacreport2009.pdf.

• Jonathan C. Javitt, MD, MPH, can be reached at 1700 Pennsylvania Ave., Suite 400, Washington, DC 20006; e-mail: jjavitt@healthdirections.net.
• Cherie McNett can be reached at American Academy of Ophthalmology Governmental Affairs Division, 1101 Vermont Ave. NW, Suite 700, Washington, DC 20005; 202-737-6662; fax: 202-737-7061; e-mail: cmcnett@aaodc.org.
• Alan E. Reider, JD, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-6496; e-mail: alan.reider@aporter.com.
• William L. Rich III, MD, can be reached at American Academy of Ophthalmology, Governmental Affairs Division, 1101 Vermont Ave. NW, Suite 700, Washington, DC 20005; 202-737-6662; fax: 212-737-7061; e-mail: hyasxa@aol.com.

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