The Center for Public Integrity

For this series, the Center for Public Integrity and Palantir Technologies analyzed Medicare claims data obtained from the Centers for Medicare and Medicaid Services (CMS).

For privacy purposes and other reasons, the Center was limited to a 5 percent sample of national Medicare Part B data that contain claims for medical procedures, such as doctor office visits and emergency room procedures, and used mainly by researchers and consultants. Over and above the limitations of sampling, the data have only the quarter in which a procedure was performed, not actual dates. And a permanent federal injunction against the Department of Health and Human Services prevents data users from naming individual doctors who received payment for the claims. Some physicians subsequently contacted by the Center agreed to discuss their billing practices.

For the upcoding analysis, the Center and Palantir used a subset of the data submitted by physicians, hospitals and clinics from 1999 to 2008, the last year available at the time the data were acquired. The year 2002 was not included in the data, and any results for that year are imputed based on averaging 2001 and 2003 data. In addition, the Center and Palantir used CMS formulas for facility fees and co-payments, as CMS publishes formulas and modifier values to determine reimbursement amounts. Finally, Medicare Utilization reports published by CMS were used to look at specific billing codes for 2009 and 2010.

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.