Columbia/HCA probe sends a chill through the health care industry
Lack of knowledge of coding, reimbursement rules is no defense
It’s a story made for dramatic page-one coverage. The nation’s leader in for-profit health care, whose high profile chief executive had long boasted of single-handedly dragging American health care kicking and screaming into the modern capitalist era, is under investigation for building that empire on fraudulent practices.
When three of Columbia/HCA Corporation’s midlevel executives were indicted in July for falsifying cost reports used to determine Medicare reimbursement, federal prosecutors openly admitted that the civil charges were just the beginning, according to accounts published by Reuters and The Wall Street Journal.
And in August, federal prosecutors revealed that Columbia/HCA is the target of a criminal investigation to determine whether it inflated its reimbursable Medicare expenses, ordered unnecessary blood tests, and committed other fraudulent acts.
But it doesn’t stop there, experts caution. The probe of Columbia/ HCA’s Medicare billing practices will almost certainly be followed by a more widely cast net as federal investigators scramble to prove they’re serious about rooting out fraud and saving taxpayers millions of dollars in the process.
"This is just a political hot potato," says Scott Withrow, a partner in the law firm Withrow McQuade Olsen in Atlanta. "There is a tremendous pressure on the government side to provide health care while balancing the budget. There is tremendous political pressure on the government to continue to do what they’re doing. Columbia/HCA, I think it is the tip of the iceberg. Everybody has to take this seriously. They shouldn’t think Columbia is going to be the only one and [an investigation] isn’t going to happen to them."
While officials of the Chicago-based American Health Information Management Association (AHIMA) won’t comment specifically on the Columbia/HCA investigation, they did release a statement in May in which Margaret M. Steward, RRA, president-elect said, "Any health care provider or payer who knowingly violates the laws, regulations, or ethical principles governing coding should be punished to the fullest extent of the law." The statement urges health care organizations to implement stringent policies and procedures. (See related story on AHIMA guidelines for preventing coding fraud, p. 148.)
"The three indictments were about cost reporting issues," Withrow continues. But health care systems will be held accountable for other Medicare violations as well. "The broader focus is going to be coding issues where you’re now responsible to know or should know the appropriate coding that is required by the government."
When the Health Insurance Portability and Accountability Act, also known as the Kennedy-Kassebaum bill, was passed last year, an "objective knowledge" standard was written into the legislation, Withrow says. Essentially it says, "if [coders] know or should know how it should have been coded, then you can be culpable. That’s why it’s so important that [health care] providers get up to speed on what the [coding] requirements are. There needs to be a switch; we have to know this stuff cold," he adds.
Although the Columbia/HCA investigation targets a large, high-profile hospital chain, this in no way means that smaller health care providers will be left out of the investigative spotlight, experts concur.
"There is a general perception that if it’s unintentional, you’re going to have some sympathy from the government, but that’s not necessarily the case anymore," Withrow cautions. "The legal standard has been raised. Unintentional conduct is not necessarily a defense anymore."
Evidence of a widening investigative net has been mounting steadily since the first indictments. More charges are anticipated as federal investigators reveal they have been using the testimony of Columbia/HCA whistle-blowing employees to investigate fraud allegations. More than a dozen Columbia/HCA employee whistle-blower lawsuits are pending. (See Hospital Payment & Information Management, July 1997, pp. 97-99, for a story on federal whistle-blower legislation.)
Those lawsuits are said to contain accusations that Columbia/HCA hospitals and home care agencies inflated expenses to receive higher Medicare reimbursement, ordered unnecessary blood tests such as complete blood counts, and that some hospitals offered doctors financial incentives for referring patients to them, as well as receiving payment for nonreimbursable expenses.
Federal officials will not comment on the Columbia/HCA charges because they are part of an ongoing investigation. But it is estimated that Columbia/HCA’s fine could reach the $1 billion mark.
On its own initiative, Columbia/HCA has announced several key policy changes, including adoption of a comprehensive compliance program, increased disclosures in its Medicare cost reports, and increased reviews of Medicare coding. For codes identified as susceptible to inaccuracies, a new two-step review process will be used, which will add a second review to the coding process.
Meanwhile, as Columbia/HCA reels under each new allegation, hospital coders across the country also are giving more than a passing glance to their own Medicare billing and reimbursement practices.
"I know hospitals are taking precautions to make sure from a coding standpoint the proper processes are in place. They’re asking whether coders are all on the same wavelength in terms of accurately coding, that they know coding guidelines, and they’re aware of what practices are acceptable," says Lela McFerrin, RRA, director of health information management at Baptist Memorial Hospital in Memphis, TN.
Amid the closer scrutiny many hospitals are giving to their policies and procedures, there is hope that the Office of the Inspector General (OIG) of the Department of Health and Human Services (HHS) will issue the long awaited guidelines for hospital billing practices.
The guidelines are in the works, acknowledges Judy Holz, a spokeswoman for the OIG’s Office of Compliance and Enforcement, which earlier this year issued guidelines for laboratory billing, the Model Compliance Plan for Clinical Laboratories. "They are working on something in the billing area, but really it’s in the design stage, and there is no time frame for how soon" it will be published, she tells HPIM.
In the meantime, there’s a lot that health information managers can do to ensure compliance with Medicare coding and billing regulations. Start with a close look at the following areas; this is where federal investigators are known to cast a suspicious eye, says Withrow.
1. Billing for services not rendered.
2. Misrepresenting the service or product actually provided.
"It’s kind of like this upcoding notion," Withrow says. "The service wasn’t provided at the level it was coded."
3. Unbundling.
"Separately charging for services apparently is seen in surgery a lot, Withrow says. "Regulators are enforcing the 72-hours rule."
4. Medically unnecessary services.
This was added to the Social Security Act as part of the Kennedy-Kassebaum bill. "This is probably the least prosecuted area because of differences of opinions of what is medically necessary," Withrow says. "That may be a growing area" of investigation, he adds.
5. Duplicate billings.
"That’s a slam dunk. Intent is not necessarily going to defend you," Withrow warns. While unbundling refers most often to bills for test prior to surgery, duplicate billing can apply to any type of Medicare bill sent twice for a service performed only once.
6. False cost reporting.
Federal investigators allege that Columbia/ HCA made some claims on their cost report that they were entitled to deduct interest on indebtedness, which may prove to be false.
A more important issue in cost reporting, Withrow says, is that Columbia/HCA apparently had set up reserve accounts for its cost records not an uncommon practice in the hospital industry. Still, under intense scrutiny, it may not hold up, he speculates. "They had reserves set up in the event that the government denied some of their claims for reimbursements," Withrow says. That makes it appear that they were "considering the possibility that their full claim for reimbursement might not be upheld. This might be damaging to their position that they filed a true and correct cost report," he speculates.
Although many administrators say they hope federal sentencing guidelines for Medicare fraud reimbursement will never become an issue for their hospitals, Withrow points out the advantage of incorporating a compliance program.
"They will consider the existence of compliance programs in how vigorously they pursue people," he says. "Your penalties will be reduced if you have effective compliance programs in effect. These are both very large reasons to have compliance programs in effect."
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