Is Health Care Fraud Inflated?

Health care fraud costs Americans between $68 and $220 billion per year, according to a new report from the School of Public Health and Health Services at the George Washington University.

The large gap in the estimation of fraud costs exists, in my opinion, because of the imprecise definition of fraud. Black’s Law Dictionary defines fraud as...

“a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his or her detriment.”

Improper payment, the report goes on, is different from fraud. Improper payment is loosely defined as...

• errors in documentation
• errors in coding
• errors in reporting
• errors in verification
• ...and other technical matters related to administration

Fraud Exposed

The current administration and a new CBS segment on '60 minutes' claim that $60 billion in healthcare 'fraud' can be eliminated and that these savings can be used to pay for health care reform.

Unfortunately, most 'fraud' is not like that perpetrated by the barely literate 'Tony' in the new CBS video The $60 Billion Fraud (14 minutes) and it may not even be fraud - witness the $992.7 billion recovered under the Recovery Audit Contractors (RAC) Demonstration project from March 2005 to March 2008 in six states (New York, California, Florida initially and Massachusetts, South Carolina, and Arizona added summer 2007)

About 85% of the recovered overpayments came from inpatient hospitals ($828.3 million). Most of these overpayments fit the description of 'incorrect payments' - not fraud.

Inpatient hospital administrators are hardly the type featured by CBS in their inflammatory video. Incorrect payments arise the complexity of billing and coding rather than 'a knowing misrepresentation'.

The RAC Permanent audits are already showing, in their first year (2009), a 3x higher rate of overturned appeals than the standard Medicare audits. This implies that RACs are incorrectly interpreting Medicare regulations and denying too many claims.

Another implication is that the rate of incorrect payments (at least under RACs) is inflated.

Do academics and the media have an agenda?

I wonder if the media (like CBS) inflates the rate of healthcare fraud for its own purposes?

The George Washington report goes on to say that:

"...80% of healthcare fraud is committed by medical providers..."

Yet the same report lists the results of a legal search engine query from 2000-2009 based on the type of company: provider, insurer or pharmaceutical. The fraud was both public (Medicare) and private.

Humana Inc. is categorized with the insurers even though it is described as a 'major hospital corporation-affiliated private insurer'.

Industry	Recovery (millions)	Per Cent
Provider	$2,122.25	38.9%
Insurer	$890	16.3%
Pharmaceutical	$2,459.75	44.9%
data from Rosenbaum et al. Health Insurance Fraud: An Overview. June 2009; George Washington University, School of Public Health

It is worth noting that the Insurer group is made up of 4-5 major American companies (UnitedHealth Group, Humana, AmeriGroup, HealthNet, et al) and the Pharmaceutical group is made of just over 15 major, international companies (TAP, McKesson, Merck, Serono Group, Wyeth, AstraZeneca et al).

The Provider group, however, is made up of over 5,500 American hospitals, large and small, and innumerable private practices, group practices and billing entities with differing levels of compliance sophistication.

These data hardly support the "80% of health care fraud is from providers" assertion.

It also strains credulity to think that the $6 billion or so over the last 9 years could somehow morph into the expected $60 billion annual savings required to pay for health reform.

Medicare recognizes that PT documentation errors are not fraud

In a somewhat refreshing tone the Government Accounting Office issued a report that showed the US government made $18.6 billion in erroneous payments to Medicaid providers in 2008 but admitted that most of these payments are due to 'procedural glitches' and not fraud.

Deborah Taylor, acting director and chief financial officer of the Centers for Medicare & Medicaid Services at HHS told a panel of the Senate Homeland Security and Governmental Affairs Committee on April 22...

"Most of the improper payments... are generally not due to willful fraud... Rather, most of these errors are the result of documentation and processing mistakes.

Some physical therapists may not understand the money flow involved when Medicare pays a claim for PT services, in any setting...

"The law requires Medicare to pay claims within 14 days of receiving them,"

...explained Peter Ashkenaz, deputy director of media affairs for the Centers for Medicare and Medicaid Services to CNSnews.com.

"Given so little time to verify the services of the doctor or hospital performed before paying for them, Medicare often makes the payments first.

After the fact, they look for possible problems."

90% of the improper payments are due to 'inadequate documentation'. Of the $72 billion in estimated improper payments in 2008, Medicare and Medicaid Services accounted for 50% of the total.

Get the full report here (pdf).

What can physical therapists do to help?

Recognize that Medicare and the federal government are in a pinch: they need to provide mandated benefits and needed services to American citizens and others who qualify but they don't want to get ripped off.

Physical therapists and physicians are in the audit cross hairs not because PTs and MDs are fraudulent or dishonest but because costs are climbing uncontrollably.

How can you protect yourself?

Some of the tips I use in my own Medicare compliance plan (may be different for you) include the following:

• Get a baseline measurement


1. Self-report measures such as the OPTIMAL scale (self-report measures may be more reliable than performance measures and other, so-called, 'objective' tests.)


2. Performance measures - such as the Functional Reach Test to gain predictive information on falls.


3. Impairment measures - 'old school' measures like Straight Leg Raise and ankle dorsiflexion ROM, that still have predictive value.


4. Classification measures - powerful, predictive tools that summarize and assign patients to special treatment groups.


• Use a disablement model - physical therapists should avoid treatment decisions based on pathology. Instead, base your decisions on the ICF model to help you help your patients more.


• Use a compliance template - the Office of the Inspector General (OIG) has shown small practices how to incrementally implement a compliance template with breaking your bank.

There are more points to mention - many of which I discuss in my Bulletproof PT Tutorial you can get for free by signing up below with your first name and e-mail.

Physical Therapists in Florida included in the RAC Rollout

Physical therapists in Florida are in the first round of states receiving provider education beginning October 1, 2008 according to an article in the September 11 AHA News.

The Medicare RAC Program is designed to augment exiting Medicare audit capacity and, in the words of former CMS Administrator Mark McClellan, M.D., Ph.D...

“There are two parts to making certain that Medicare dollars go to their intended purposes,” said CMS Administrator Mark McClellan, M.D., Ph.D. “First, we need clear and straightforward rules to assure that fair payments are made for services to Medicare beneficiaries and second we need effective mechanisms in place to detect and respond to inappropriate billing. In conjunction with new steps to ensure Medicare’s billing rules are clear, this demonstration will let us test a new approach to ensure that payments made to providers are accurate.”

This RAC expansion map shows the states affected on October 11.

My experience in Medicare Part B outpatient physical therapy is that the RAC audits affected PT's in Florida very little..

We had less than $100 in post-pay audits in the four-year scope of the three-year demonstration project.

Overall, Physician Groups had about $19 million seized as part of the RAC demonstration project.

Most of the money came from inpatient hospitals.

Get the full RAC demonstration report here.

Medicare Auditors Get Spanked

Health care providers can expect this one to flow downhill like you-know-what.

All across the blogosphere, reports of the draft report from the HHS Office of the Inspector General are streaming in...

Miami Herald Aug. 21

ProPublica Aug. 22

Tampa Tribune Aug. 21

Judicial Watch Aug. 22

Looking for the Outliers Aug. 23

Who Will Audit the Auditors? Aug. 22

Medicare claims $700 million in fraudulent savings to the federal health care program for elderly and disabled persons.

The New York Times (Aug. 20) claims the amount should be over 4 times that amount - almost $3.2 billion - that may have been swindled by unscrupulous medical device providers like wheelchairs and motorized carts.

Medicare failed to follow its own internal accounting controls in estimating the amount of fraud.

Congress and Senator Charles Grassley
are mad.

"I want to know what happened, who's responsible, who will be held accountable and what the [Human Services] secretary will do about it," said the senator, who was briefed on the draft report. "If people cooked the books, manipulated the methodology or told the contractor to ignore the rules, those individuals need to take the heat."

If Congress spanks Medicare you can expect Medicare to spank providers with tougher audits.

All providers will suffer for the actions of a few - and for the actions of a watchdog agency that tried to cut a few corners.

Medicare Messed Up

Physical therapists should pay attention to this new Office of the Inspector General (OIG) Report that claims the Centers for Medicare and Medicaid Services (CMS) under reported fraud in durable medical equipment (DME).

"The report found that in fiscal year 2006, CMS failed to detect that more than one-third of spending on DME was fraudulent."

More than one blog picked up the story from the New York Times today based on a draft report obtained by the Times.

The full report should be out this week or next.

Medicare fraud was under reported by CMs when they claimed the false claims error rate for DME was 7.5% for 2006 when actually, according to the OIG, the true error rate was 31.5%.

“This is outrageous,” said Senator Charles E. Grassley of Iowa, the top-ranking Republican on the Senate Finance Committee, who has repeatedly credited the Centers for Medicare and Medicaid Services with reducing improper expenditures. “If heads don’t roll, you can’t change the culture of this organization,” he added." (source - NYT)

Honest, hardworking physical therapists may now have to put up with increasingly burdensome audit and regulatory measures.

Physical Therapists Watch out for auditors in U-haul trailers at your office!

Did you work all day treating patients?

Tired?

Ready to relax?

But wait, don't you have to update your Medicare compliance plan?

Remember the one sitting on the shelf? Or, the one you've been meaning to work on?

Well, take heart...

I've assembled some resources that will help get you started or further along to completion.

The first is this recent article...

Altering Medical Records: What Not To Do When Being Audited By Medicare : Physician Law

The article is published on the blog of attorney Todd Rodriguez, who specializes in Medicare fraud.

This next resource is a recent post from the Physical Therapy Manager (PT Manager) list-serve at Yahoo Groups. You may be required to join the group.

The list is moderated but most physical therapists, administrators and some medical doctors and chiropractors have managed to get on.

Look for Victoria Cavitt's post from July 30, 2008 (she is replying to Jim Hall, CPA) and she talks about 'U-haul trailers with copiers' - here is a sample...

"They show up at your practice with U-haul trucks that house their own
copiers and OIG agents serve you a subpoena to access ALL your medical
records.

Medicaid and OIG employees randomly pull patient charts off your shelf, copy
these charts in their U-haul trailers, and look for patterns of inaccurate
billing and insufficient documentation. They don't give you advance notice of their arrival..."

That post got my attention - I kept thinking about those U-haul trailer all day at work! And I have a great Medicare compliance plan that meets all of Victoria's criteria.

I got my plan from the source documents - I'll tell you where to get those in just a minute - but first you should take a look at the basis for any Medicare compliance plan.

The DEPARTMENT OF HEALTH AND HUMAN SERVICES Office of Inspector General Compliance Program for Individual and Small Group Physician Practices is the authorizing document for any small practice tying to 'do-it-yourself' when it comes to compliance.

"We believe that the development and issuance of this voluntary compliance program guidance for individual and small group physician practices will serve as a positive step towards assisting providers in preventing the submission of erroneous claims or engaging in unlawful conduct involving the Federal health care programs."

Finally, I have this OIG document, the Medicare Manuals, an many more physical therapy specific resources all available for download at BulletproofPT.com.

You can get a free compliance tutorial that gives you 13 tips and strategies to 'bulletproof' your physical therapy practice.

Don't let the U-hauls get you.

Get Bulletproof PT today.

Frustrating Fraud in Medicare

Tannus Quatre, PT, MBA has done a nice job in his blog of articulating the feelings I think many PT's share in trying to stay compliant in a complex health care system.

South Florida: The nation’s capital for Medicare fraud tells the story of a Medicare provider with a prior drug conviction who ran a scam stealing millions of dollars from Medicare.

Meanwhile, hard-working health care providers struggle to stay compliant and to keep the dollars they have earned.

Thanks to Tannus - go check out his blog.