Q: I am opening my own practice soon and am concerned about fraud and abuse issues. What do I need to look out for?

A: These are the major (but not the only) risk areas for small practices.

1. Upcoding the level of service provided. “Upcoding” means that you are billing for a more expensive service than the one you actually provided. Some practices do this because they claim that insurers habitually downcode their services, and that by upcoding they can level the playing field. This is a big mistake.

If you believe that the insurance company is improperly downcoding your bills, bring action against the insurance company. Engaging in fraudulent billing is not excusable.

A Minnesota transportation company billed Medicare/Medicaid and a private health insurer for basic life-support transportation, when in fact it had only provided special wheelchair transportation.

The company and its owners were convicted of theft and ordered to make restitution of more than $750,000 to Medicare/Medicaid and the private health insurer.

2. Clustering the services provided. “Clustering” is the practice of exclusively

coding and charging for one or two middle levels of service codes under the philosophy that some will be higher, some will be lower, and the charges will average out over an extended period. See “upcoding” above.

3. Billing for items or services not rendered or not provided as claimed. A New York radiologist billed Medicaid for thousands of medically unnecessary, duplicate, forged, and unreadable sonogram tests. His

Medicaid billings went from $8,200 to more than $2.2 million in two years in a scheme that involved kickbacks to more than 50 “salesmen.” He was excluded from Medicare and state healthcare programs for 10 years and sentenced to one to three years in prison.

A Florida chiropractor who owned several clinics required his employee doctors to order X-rays, diagnostic tests, and other therapies regardless of patient need. He also billed for tests never given and submitted duplicate claims for the same services. He was sentenced to five years in prison and ordered to pay $1.6 million for defrauding Medicare, the Railroad Retirement Board, and private insurers.

4. Submitting claims for equipment, medical supplies, and services that are not reasonable and necessary. A chiropractor and his wife, operators of several vascular diagnostic centers in Florida, submitted billings for vascular testing ordered by an MD when they were actually ordered by the chiropractor himself. They also practiced deceptive advertising, backdated diagnostic prescriptions, used unauthorized signatures of various MDs, altered patient medical records, and obstructed a criminal investigation.

They were found guilty of defrauding Medicare and private insurance carriers. The chiropractor was sentenced to 51 months in prison, and his wife was sentenced to 37 months. In addition, the pair was ordered to make restitution of more than $630,000.

5. Double billing resulting in duplicate payment. See the examples in number four above.

6. Billing for non-covered services as if covered. This should be self-explanatory: You cannot bill for non- covered services.

7. Failure to properly use coding modifiers. A modifier is the means by which a provider indicates a service or procedure that has been performed or altered by some specific circumstance, but not changed in its definition or code.

For example: Where two doctors perform a single procedure, a modifier code for “two doctors” should be used rather than billing for two separate procedures.

8. Knowing misuse of provider identification numbers that results in improper billing. Some doctors permit their associates to use the doctor’s name and ID number when the doctor is out of the office. If this is done in order to receive reimbursement from a particular insurance company that has not yet credentialed the associate doctor, it is false billing. This should never be done.

9. Unbundling (also known as “fragmentation”). Some insurance companies have special reimbursement rates that group certain procedures commonly done

together. Some doctors seeking to increase profits will “unbundle” these tests and bill separately for each component of the group. Such individual billing will total more than the special reimbursement rate.

Your best defense

If, despite heeding all these warnings, you find yourself the object of an investigation, all is not lost. Extenuating factors can be considered.

1. Do you have documented proof that you were relying on advice provided by carriers and intermediaries? Whenever your office deals with an insurance carrier, make sure that the name of the patient; the name of the insurance company employee; and the date, time, and substance of the conversation is written down and placed in the patient’s file.

You should probably create a notepad or have such a form created on your computer so that it is always available. Nothing is more frustrating than knowing that a conversation was had that authorized a certain service for a patient, then having that service later denied, and being unable to remember the name of the insurance company representative who authorized the service.

2. Did you attempt to conceal fraudulent activity or destroy, hide, or alter records? Of course you should never do this. The truth will eventually surface — either through paperwork you missed, a computer record you failed to delete, or by a disgruntled employee. You can be sure that the end result will be far worse than the original transgression.

If you have to make a change to records, do not alter the originals. Make a note to the file explaining the change and the reason for it.

3. Did you rely in good faith on advice provided by attorneys, accountants, or compliance professionals? Always keep written copies of information provided to you by professionals. Make sure you understand what you are being told.

All professionals tend to use their own jargon. If you don’t understand something, don’t be embarrassed to ask for an explanation until you absolutely get it.

If you claim that you were relying on professional advice, be sure you can demonstrate that the person who advised you is indeed a credible expert in the appropriate field.

4. Do experts dispute the medical necessity of charged procedures? Keep abreast of the changes in medical necessity in your community. Collect written opinions you find in professional magazines and on the Web, and maintain them in a file. It can’t hurt and could come in handy.

5. Is the conduct in question the result of mistakes by lower-level employees? This excuse (which is certainly a popular one), will only go so far. Remember that you are responsible for everything that happens in your office.

You can’t defend against a complaint of upcoding by saying that the “staff in the back office did it,” or that you “have no idea what they do.” You are required to know whether your staff has sufficient training to properly bill for your services.

You may be the world’s greatest chiropractor, but if you are required to return the money you earned (plus interest and penalties) because you billed incorrectly, you will not be practicing very long.

6. What is the amount of the alleged fraud relative to the amount of legitimate billings in your office? The less the amount compared to legitimate billings, the more leniency you will likely be shown.

7. Did you, upon discovering that you had overcharged or been overpaid, voluntarily refund the appropriate amounts to the affected programs or beneficiaries? This is similar to finding a wallet with both money and the owner’s ID. You could pocket the money, but doing so will probably keep you up at night with a bad feeling.

Fraud and abuse can lead to severe penalties. Avoid them at all costs to maintain a strong and secure practice.

Deborah Green, Esq., practices law in New York and Florida. If you have any questions concerning the above or any other legal healthcare issues, email her at deborahgreen@thegreenlawfirm.net.

DISCLAIMER: This column is provided for educational purposes only. The information presented is not as legal advice and no attorney-client relationship is hereby established.