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Judgment calls on billing make 'upcoding' prosecutions rare

Authorities typically settle, and doctors often continue treating Medicare patients

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There simply weren’t enough hours in the day to justify the fees Dr. Angel S. Martin collected from Medicare.

On fifty-three separate days, the Newton, Iowa, general surgeon billed the government health plan for the elderly and other insurers for medical services that would have taken him more than 24 hours to complete, according to federal prosecutors.

The hours made the case a slam dunk for prosecutors. But they weren’t Martin’s only problem. Many patients recalled the briefest of visits with the doctor, even though Martin routinely billed Medicare for long, complicated treatments.

Every year, Medicare pays doctors more than $30 billion for treating patients. For office visits, doctors must choose one of five escalating billing scales — called Evaluation and Management codes — that most closely reflect the complexity of the treatment and the time it takes. The fees range from about $20 to about $140.

Medical groups argue that most doctors take pains to bill accurately. If anything, doctors tend to pick codes that pay them less than they deserve out of concern that they might otherwise get audited and face financial penalties, these groups say.

But cases such as Martin’s reveal what can happen when doctors are tempted to game Medicare by “upcoding” — billing for more extensive care than actually delivered. Raising the code by a single level on two patients a day can increase a doctor’s income by more than $15,000 over the course of a year and is not likely to raise suspicions, experts said.

Upcoding “is a big problem,” said Charlene Frizzera, a consultant who spent three decades at the federal Centers for Medicare and Medicaid Services and served as its acting administrator in the early months of the Obama administration.

Indeed. A jury convicted Martin on 31 counts of health care fraud for manipulating the Medicare pay scales.

Martin, 64, spent six months in prison and was released in June. The doctor, who has surrendered his medical license, could not be reached for comment.

The Center for Public Integrity has documented widespread Medicare billing errors and abuses by doctors and hospitals that have cost taxpayers billions of dollars over the past decade. For instance, the investigation unmasked more than 7,500 doctors who were billing the top two highest codes for three out of four office visits in 2008. That’s a sharp rise from the start of the decade and significantly above the norms. Federal officials and fraud experts said the abnormally high billing patterns uncovered by the Center strongly suggest overcharges and possible upcoding.

“This has been one of the most common and garden variety fraud violations for years,” said William Mahon, a Virginia health care fraud expert. “This is the first time that anyone has quantified it.”

Yet unlike Martin, many doctors accused of inflating their bills don’t wind up in prison, according to a review of court filings.

Prosecutors argue that proving criminal fraud is difficult given the complexity and subjective nature of the codes — and the judgment calls doctors must routinely make in picking codes, or in hiring someone to do it for them.

The government often must hire coding experts who comb through reams of patient files to confirm the overbilling. And these experts can often disagree over which code to apply, potentially weakening a fraud prosecution.

As a result, authorities typically settle these cases — civil and criminal alike — with deals that keep the doctor out of jail and still entitled to treat Medicare patients. Some doctors agree to pay back suspected ill-gotten gains without admitting any wrongdoing or facing other serious consequences.

Cases such as Martin’s stand out because his alleged billing pattern appeared to be so extreme as to defy reasonable explanation.

At the doctor’s trial in late 2010, more than two dozen patients testified they had spent much less time at the doctor’s office than was reflected in their bills. Most recalled a “very short encounter” with the doctor, even though Martin had consistently billed for codes that reflected time-consuming and complex treatments, according to court filings.

Martin’s defense team argued that he had a “good faith belief that he was in fact applying the correct code,” according to court records.

Several other doctors accused of “upcoding” in criminal cases managed to avoid prison, according to court filings reviewed by the Center for Public Integrity.

Orthopedic surgeon Ezzat M. Soliman, for instance, almost always billed Medicare the maximum amount for patients treated at his clinic near Buffalo, N.Y., “without any regard to the level of service he actually provided,” prosecutors alleged.

Without admitting wrongdoing, Soliman agreed in December 2009 to repay the government $72,193.25 and complete a pretrial diversion program.

That ended the criminal case. He went on to practice at the Department of Veterans Affairs hospital in West Palm Beach, Fla., and retired last year, according to the hospital. He could not be reached for comment.

In some instances, highly-trained medical specialists may believe that because they treat people with serious illness any visit to the office justifies the highest fees.

“Specialists have a greater risk of over-coding because of the assumption that what they do is more complex,” said Lester Perling, a Florida lawyer who has represented doctors in payment disputes. “That couldn’t be further from the truth.”

Perling said that these risks may multiply as more doctors rely on electronic medical records and billing software to help them assign a billing code.

“Any practitioner that relies on software without a human verification is doing so at their own risk because I don’t think it’s that reliable yet,” Perling said.

Officials at CMS, the federal agency that oversees Medicare, said that the agency can take a number of steps short of prosecution, such as suspending payments to doctors it believes are ripping off the system. The agency also said it routinely refers cases of alleged fraud to law enforcement, but declined to give specifics.

Given the complexities of these cases, it’s no secret that prosecutors favor cases with a pile of highly incriminating evidence.

Jennifer Trussell, who directs investigations for the Department of Health and Human Services Office of Inspector General, discussed such a case at a Medicare Fraud Summit in Philadelphia in June 2011.

She told the audience (starting at 1:34) of discovering a psychiatrist who was billing for 12 hours of psychotherapy for 365 days a year. The prosecutor wouldn’t take the case until she could document the doctor billing for more than 24 hours in a single day. She did, and the case went to trial.

In another case, prosecutors allege that Arizona pain doctor Angelo Chirban overbilled for years before he came under scrutiny.

Authorities started investigating him in May 2008 when police found a suicide note near the body of a man who had worked for Chirban as a nurse practitioner.

In his suicide note, the man accused the doctor of running a dangerous pill mill. Chirban, he alleged, only saw a few patients a week, but billed as if he had seen hundreds of them, according to a search warrant application.

As the investigation proceeded, drug enforcement agents learned that ten of Chirban’s patients had died from overdoses between 2007 and 2009, the application stated. The doctor has not been charged in connection with any of these deaths.

However, Arizona health officials revoked his medical license last December, alleging “unprofessional conduct” in the care of a woman who fatally overdosed on drugs.

A federal grand jury indicted Chirban in December 2011 on 130 counts of submitting “false and fraudulent” bills to insurers, illegal prescribing of narcotics and money laundering. His case is set for trial in Phoenix in April of next year.

The indictment alleges that Chirban billed Medicare and Medicaid, the government health plan for the poor, for tens of thousands of patient visits, almost always using the two most lucrative billing codes.

The doctor billed more than 57,000 claims to Medicaid alone between September 2006 and April 2010. Prosecutors allege that most patients never saw the doctor.

One Medicare patient who said he had visited the clinic once a month for three years was unable to identify Chirban in a photo lineup. The man said he had always been treated by a female, even though Chirban had been paid more than $2,300 for the patient’s care from January 2007 to September 2009, according to the search warrant application.

Chirban’s lawyer, Ashley D. Adams of Scottsdale, said the doctor “was not involved in the coding aspect of the practice.”

Adams said that pain management “is a very difficult specialty area with very difficult clients,” and that the doctor “has helped many addicted patients get off of drugs, and has taken good care of countless others.”

She said Chirban “hopes to retire and move on with his life,” adding, “We are in the process of discussing resolution with the government."