Disaster lurks, and fraud monitoring may be your best protection
Big Brother has his eye on health care facilities
(Editor's note: This is the final part of a two-part series on how outpatient facilities may establish a squeaky-clean compliance program. Inside this month's issue is a story on how to conduct investigations and regular audits. The May issue featured a story on how to set up a compliance program.)
As the real El Niño wreaks havoc coast to coast, a government-made El Niño has ripped through the health care industry, creating an atmosphere of fear and, for some, devastation.
The provider's El Niño has been in the form of government subpoenas, allegations of fraud and abuse, and crippling fines.
Outpatient facilities, which so far have been on the outer edges of the storms, are beginning to start compliance programs in hopes these will offer some protection from the health care upheaval.
"We want to be prepared," says Cindi Peterson, ART, business manager of Rockford (IL) Ambulatory Surgery Center. The multispecialty surgery center has five billing and coding employees and did more than 4,000 patient procedures in 1997.
The Rockford center is taking precautionary measures, including establishing a compliance program based on the government's model compliance plans for laboratory and hospital settings, Peterson says.
Two of the most difficult parts of any outpatient facility's new compliance program will be deciding how to establish policies for auditing billing records and conducting investigations into potential fraud. (See story on monitoring and investigating fraud and abuse, p. 43.)
They are also the most important, say several compliance experts.
"The federal government has put tens of millions of dollars in the Balanced Budget Act of 1997 for new health care fraud investigations," says Jack Diamond, JD, shareholder and partner with Buckingham, Doolittle, and Burroughs law firm in Akron, OH. The firm with 158 attorneys has a major focus in the health care arena.
"The government also created a private bounty system where if any person believes their company is overbilling the government, then they can collect some of what is recovered," Diamond adds. "You can get up to 30% by just suspecting someone's doing it and turning them in."
If anyone reports fraud that leads to a recovery of claims exceeding $100, the whistle blower will receive a share of what is recovered.
Outpatient facilities may soon be targets
Although the focus thus far has been on large health systems, outpatient facilities are beginning to become targets of federal investigations as a result of the outpatient industry's rapid growth, Diamond says.
"The government believes the whole industry is overbilling and being too aggressive in billing, and there's nothing that separates the outpatient ambulatory side to make it safer, less aggressive, or less subject to being a target for audits and investigations," he explains.
The Office of Inspector General (OIG) and the U.S. Attorney's office have a big incentive for going after providers: last year they collected $1 billion in fines and settlements, says Sanjay Sharma, JD, MS, an attorney for Buckingham, Doolittle, and Burroughs. Sharma specializes in health care law.
These changes have created an atmosphere in which a subpoena by a federal agency can cause a wave of fear to wash over a health care facility. Many providers have become fearful that even innocent billing errors will be seen as criminal fraud, Diamond says. (For advice on how to handle a subpoena, see p. 44.)
"It's worse than anything I've seen from the IRS," Diamond says.
Republican Congressman Bill McCollum of Florida gave an example of the extent of providers' misery in a speech he made in March to the House of Representatives as he introduced the Health Care Claims Guidance Act, which was proposed to curb federal investigative excesses. As Outpatient Reimbursement Management was going to press, the bill had also been introduced in the Senate. The House version had 120 sponsors and was being reviewed by the Immigration and Claims subcommittee of the House Judiciary Committee.
McCollum related this anecdote: "Many hospitals and other health care providers have received demand letters from the offices of U.S. Attorneys asserting that the provider may be guilty of fraudulent billing and threatening the imposition of treble damages plus $5,000 to $10,000 per claim under the False Claims Act unless a quick settlement is reached. In some cases, demand letters have been sent based on alleged overbilling of less than $100. In one case, a demand letter was sent to a hospital for overbilling in the amount of $8.79 on a single claim over a one-year period."
Because of the enormous amount of time and money involved in defending these charges, most innocent providers will settle the cases, he said.
Diamond says, "There's no doubt there has been a shift in the pendulum. Ten years ago, if you went after nonprofit and religious provider operations, people would say, `You can't do that.' Now the federal government has already counted into legislation the amount of money they're going to take back from providers because they've already assumed the guilt and calculated the payback."
The change partly was brought about by the Health Insurance Portability and Accountability Act of 1996, signed Aug. 21, 1996, by President Clinton. The act did the following:
· established the Fraud and Abuse Control Program, which is charged with investigations, audits, evaluations, and inspections, and the Medicare Integrity Program, which strengthens intermediary and carrier program integrity;
· provided more funding to federal agencies that investigate Medicare fraud and abuse, including increasing funding to the OIG in Washington, DC, from about $60 million in 1997 to about $150 million in 2002;
· created a bounty system for investigators with fees and settlements collected from providers to pay for new fraud and abuse enforcement activities;
· created a program to assist providers in understanding fraud and abuse laws.
The act has helped to establish an atmosphere among some providers, who have had to pay fines as high as $30 million, Sharma says.
"Prosecutors and government agencies are hungry for money, and they'll search every nook and cranny to find it," Sharma adds.
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