Fred Schulte stories from The Center for Public Integrity

Feds 'listen' for sounds of Medicare billing abuse

Baltimore,Maryland,United States — 2013-05-03T10:28:43-04:00

When news broke last September that some doctors and hospitals could be using electronic health records to overbill Medicare, top government officials swung into action.

U.S. Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder fired off a stern letter to five prominent medical groups threatening criminal prosecution for applying the technology to bill for more complex and costly services than merited — a practice is known as “upcoding.”

But the Centers for Medicare and Medicaid Services, which reports to Sebelius, is taking a much less confrontational stance as it opens a “listening session” this morning in Baltimore on the digital billing controversy.

The agency has lined up nearly a dozen health industry speakers representing mostly hospitals, doctors and the software industry to give their take on fair and honest billing and coding standards to impose as medicine wires up. No one at the meeting will represent patients or others who pay medical bills.

A CMS spokesman called the meeting "another step toward ensuring appropriate use" of electronic records, which are "critical to our efforts to reform the health care delivery system, lowering costs while improving the quality of care.”

The initial reaction from Sebelius and Holder came on the heels of the Center for Public Integrity’s “Cracking the Codes” series, a year-long investigation which showed that thousands of medical professionals billed sharply higher rates for treating seniors over the last decade — adding $11 billion or more to their fees. The findings suggested billing abuses could be worsening as doctors and hospitals switch from paper to electronic health records.

As the government has made good on plans to invest some $35 billion helping doctors and hospitals convert from paper to digital records, hundreds of technology firms have jumped into the market — often by promising doctors and hospitals that their gear can significantly boost the bottom line.

Most manufacturers and medical users contend the software merely allows them to more efficiently bill for their services, which in the past was often done by hand.

Critics argue, however, that with a flick of the wrist the devices can create a finely detailed medical file that’s often difficult for auditors to verify. Sebelius and Holder noted that in some cases, the machines can “cut and paste” information from previous doctor visits “in order to inflate what providers get paid.”

Sue Bowman, of the American Health Information Management Association, said her testimony in Baltimore would recommend research to figure out the precise role — if any — electronic records are playing in encouraging errant billing. “Like any tool (electronic health records) can help us be more efficient, but it can also be misused,” she said in an interview.

The Baltimore session takes place amid rumblings in Congress — at least among Republicans — that the multi-billion dollar initiative has veered off course.

Last month, six Republican U.S. Senators called for an overhaul of the plan, citing a range of concerns from patient privacy to stepped-up Medicare billing fraud.

Their report noted that many medical experts believe the digital systems can reduce health care costs and enhance medical quality by reducing wasteful testing and cutting down on harmful errors. But it also cited “troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled.”

GOP senators call for overhaul of electronic health records program

2013-04-16T16:01:39-04:00

Six U.S. Senators are calling for an overhaul of the federal government’s $35 billion plan for doctors and hospitals to switch from paper to electronic medical records, citing concerns from patient privacy to possible Medicare billing fraud.

The report issued Tuesday by the half-dozen Republicans concedes that many lawmakers and medical experts believe the digital systems can reduce health care costs and improve the quality of care by reducing duplicative testing and cutting down on medical errors.

But the report asserts that the Obama administration’s push to use billions of dollars in stimulus money helping doctors and hospitals buy digital systems needs to be “recalibrated.”

“Now, nearly four years after the enactment…and after hundreds of pages of regulations implementing the program,” the document says, “we see evidence that the program is at risk of not achieving its goals and that $35 billion in taxpayer money is being spent ineffectively in the process.”

Among the report’s conclusions:

Despite expectations of cost savings, the digital systems may be increasing unnecessary medical tests and billings to Medicare.
The government has not demanded that the various digital systems be able to share medical information, a critical element to their success.
Few controls exist to prevent fraud and abuse. Many doctors and hospitals are receiving money by simply attesting that they are meeting required standards.
Procedures to protect the privacy of patient records are “lax and may jeopardize sensitive patient data.”
It remains unclear whether doctors and hospitals that have accepted stimulus funding will be able to maintain the systems without government money.

Some of the concerns cited were detailed by the Center for Public Integrity’s “Cracking the Codes” series last year. The year-long investigation found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees.

The Center’s probe uncovered a broad range of costly billing errors and abuses that have plagued Medicare for years—from confusion over how to pick proper payment codes to outright overcharges. The findings indicated that Medicare billing problems are worsening as doctors and hospitals switch to electronic health records.

Addressing the coding abuses the senators wrote: “However, early reports raise concerns that health IT may have actually accelerated the ordering of unnecessary care as well as increased billing for the same procedures.”

The administration’s Office of National Coordinator, which oversees the program, referred a request for comment on the report to the Centers for Medicare and Medicaid Services. A CMS official did not respond to written questions.

It’s unclear what steps administration officials are taking to combat fraud and abuse from errant billing, a process known as “upcoding.”

U.S. Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder last September notified five medical groups of their intention to ramp up investigative oversight of upcoding, including possible criminal prosecutions, but it is not clear if any follow-up actions are underway.

In addition, the Centers for Medicare and Medicare Services on May 3 is holding a summit in Baltimore to discuss electronic records systems, “the increase in code levels billed for some Medicare services, and appropriate coding in an increasingly electronic environment.”

The Congressional report, titled “REBOOT: Re-examining the Strategies Needed to Successfully Adopt Health IT” was released on Tuesday by Senators John Thune (R-S.D.), Lamar Alexander (R-Tenn.), Pat Roberts (R-Kan.), Richard Burr (R-N.C.), Tom Coburn (R-Okla.), and Mike Enzi (R-Wyo.).

Electronic medical records probed for over-billing

2013-02-14T10:59:21-05:00

The Obama administration is forging ahead with a multi-billion dollar plan to shift from paper to electronic medical records, despite continuing concerns the program may be prompting some doctors and hospitals to improperly bill higher fees to Medicare. An investigation into those billing questions — which convened a hearing Wednesday — has yet to produce much in the way of results, and critics are questioning the seriousness of the efforts.

Some digital records software marketed to medical professionals may be encouraging use of elevated billing codes that pay fatter fees, according to the nation’s top health information technology official. That could undermine cost savings the government expects to achieve by adopting the digital systems.

“There is a lot we don’t know about that,” Farzad Mostashari, the National Coordinator for Health Information Technology, said Wednesday at a hearing of policy experts studying the billing issue. “We don’t know if the shift (in higher billing) reflects appropriate coding or inappropriate coding.” He added: “We don’t know if this leads to an increase in costs … or has other impacts.”

In October, Mostashari directed the panel of experts to investigate whether the digital systems allow doctors to cut and paste records from prior encounters with a patient, a practice known as “cloning.” Many experts say this process can raise the size of a patient’s bill, even though it reflects little in the way of added or necessary medical service.

Mostashari’s called for the review in the wake of the Center for Public Integrity’s “Cracking the Codes” series, which found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees. The investigation suggested that Medicare billing errors and abuses are worsening as doctors and hospitals switch to electronic health records.

Mostashari said at the start of Wednesday’s daylong hearing that it is “pretty clear” that if digital health records are “documenting care that didn’t occur, that’s not just fraud, it’s really dangerous medicine.”

But the policy panel spent less than an hour listening to four witnesses discuss the billing issue, suggesting that officials aren’t likely to quickly resolve concerns about potential fraud and abuse even as they commit up to $30 billion in government funding to encourage doctors and hospitals to purchase electronic records.

Ivy Baer, representing the Association of American Medical Colleges, recommended in her testimony that use of the “copy/paste” functions be limited and that doctors only document services “pertinent” to treating the patient’s current medical problem.

Michelle Dougherty, director of research and development from the American Health Information Management Association, said in prepared testimony that digital records can produce “volumes of redundant data” that are “very difficult to use and understand.” She said policy makers need to be aware of “red flags” that could produce inaccurate records — for instance, software that allows doctors with a single mouse click to check a box indicating that all body systems were examined and found to be normal, even though that not all were actually examined. Since doctors are compensated for the total amount of service they provide, these systems can improperly generate higher fees.

Dougherty also said that “cloned” documentation produced by cutting and pasting information from previous patient visits “continues to be a significant problem” that creates “unnecessary redundancy and at times inaccurate information.”

There was little talk of how wiring up medicine might raise doctor billings when President George W. Bush in 2004 set the goal of creating a digital medical record for every American within ten years. In early 2009, the Obama administration added billions of dollars in stimulus funds in the hopes that electronic health records would both enhance the quality of medical care and hold costs in check.

At the hearing’s conclusion panel chair Paul Tang, of the Palo Alto Medical Foundation in California, said that the group had little information about whether digital records improperly contributed to rising health care costs.

“We don’t have any data, positive or negative, that would be useful,” he said.

In all, the Obama administration expects to spend more than $30 billion helping doctors and hospitals purchase the gear and use it to improve health care. More than half the nation’s hospitals have received some payments, and so far more than $10 billion has been spent. Just over half the doctors now billing Medicare are using digital records.

But critics of the initiative have claimed for years that the office of national coordinator (ONC) has been more aggressive as a cheerleader for the technology industry than regulator and steward of billions of dollars in taxpayer money.

Donald W. Simborg, a California physician who participated in two government groups that studied the billing fraud issue, said on Wednesday that Mostashari’s review relies too heavily on panel members with close ties to the burgeoning health information technology industry. He questioned its effectiveness in determining if the digital equipment contributes to Medicare billing fraud.

Simborg likened the situation to “asking the NRA to investigate gun violence.” Simborg noted that the policy committee consists of strong supporters of electronic health records “who could hardly provide an unbiased and objective view on this.”

Ross Koppel, a sociology professor at the University of Pennsylvania, said that officials face a difficult balance in making sure that the software programs accurately reflect the services a doctor rendered and are not just maximizing payments.

In a brief interview on Wednesday, Mostashari bristled at the suggestion that his office is doing little to ensure that digital medical records don’t take taxpayers for a ride. “This is just the beginning of the conversation,” he said. An ONC official said that the Centers for Medicare & Medicaid Services plans to investigate the “upcoding” issue in regard to digital records, but could provide no details. The ONC panel is set to resume its deliberations today.

Criticism of the initiative also has come from Republicans in Congress concerned about its costs and from within the federal government.

In a Sept. 24 letter, Department of Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder warned five hospital and medical groups of their intent to ramp up investigative oversight, including possible criminal prosecutions, of doctors and hospitals that use electronic health records to improperly bill for more complex and costly services than they actually deliver — a practice known as “upcoding.”

In an Oct. 4 letter, four Republican House members urged HHS Secretary Sebilius to suspend government payments to hospitals and doctors, arguing the program may be wasting tax dollars and doing little to improve the quality of medical care. They argued that tax dollars spent so far have failed to ensure that the digital systems can share medical information, a key goal. Linking health systems by computer — called interoperability — is expected to help doctors avoid costly duplication of tests and medical errors. The House members have yet to get a response, according to a spokesperson.

The HHS Office of Inspector General also is investigating what it called “fraud vulnerabilities” related to use of electronic health records. The report is “currently in process” and is expected to be released sometime this year, according to agency spokesman Donald White.

While many experts believe that digital records will eventually prove their worth and help doctors keep people healthier, the government program has spawned an aggressive sales push by technology companies, which typically stress that their products can significantly boost the bottom line for doctors and hospitals. One company predicts an increase of one Medicare coding level for each patient visit to the doctor, potentially adding $225,000 in new revenue in a year, for instance.

Federal officials lack any system to monitor the accuracy of hundreds of billing and medical software packages in use across the country. That shortcoming caught the eye of the American Medical Association, which helped develop the billing codes and favors stricter government standards. In May, the doctors’ group urged officials to require testing that assures digital devices bill accurately and “do not facilitate upcoding.”

The information technology industry generally agrees that computerized medical records can lead to higher costs. But it argues that the software makes it easier for doctors and hospitals to more efficiently document all of the work they do — which they often failed to do on by hand on paper.

ATF's struggle to close down firearms dealers

2013-02-08T15:54:23-05:00

The federal agents who visited Scott Taylor’s rural Pennsylvania gun shop in early January 2010 — to conduct the store’s first inspection in more than three decades — found thousands of violations of firearm sales laws.

Taylor couldn’t properly account for more than 3,000 guns he had bought or sold during the previous three years, according to agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives. These and other violations led ATF to revoke his license to sell guns in November 2011. But that wasn’t the end of the story. Far from it.

Taylor blamed the infractions on his poor health and a computer crash that wiped out his business records. The gun shop, located in the basement of his Biglerville, Pa., home, remains open 14 months later while Taylor appeals the ATF action in federal court. Taylor had no comment. His lawyer, Scott L. Braum, said the violations have been corrected and “no rational person would expect them to reoccur in the future.”

A controversial process

The ATF case against Taylor’s Trading Post — one of a dozen reviewed by the Center for Public Integrity — offers a rare look inside the federal government’s contentious and, some critics say, weak-kneed, procedure for policing gun dealers nationwide.

Some dealers don’t see an ATF inspector for eight years or more. By law, ATF can inspect dealers once a year only and may revoke a license only when it believes the dealer “willfully” violated gun control laws. Some revoked dealers have handed their business off to a relative, or stayed open while their cases lumbered through the courts. Others have converted their inventory to a “personal” collection, which they can then sell without doing background checks of prospective buyers.

As the Obama administration presses for stricter gun controls in response to the killings of 20 schoolchildren in Newtown, Conn., last December, ATF’s oversight of the gun industry — particularly its secretive dealer inspection and revocation process — faces criticism from all quarters.

The process often drags on for years after ATF inspectors discover what they consider serious violations of firearms sales laws. Dealers notified of ATF’s intent to revoke their license are entitled to an informal hearing to contest the action. Senior ATF officials review the recommendations of the hearing officer before making a final agency decision. Dealers can appeal that decision in federal courts, and ATF often doesn’t oppose allowing the dealer to remain open pending the outcome of the court appeal.

Gun control advocates argue that the program has been crippled by inadequate funding and congressional meddling and that as a result ATF can’t assure the public that gun dealers are doing their best to keep weapons out of the wrong hands. They argue that the laws favor dealers over public safety and that ATF has too few inspectors to do its job properly.

One group favoring tighter gun controls meeting at the Johns Hopkins Bloomberg School of Public Health in Baltimore in January recommended that ATF be “required to provide adequate resources” for more inspections and “develop a range of sanctions for gun dealers who violate gun sales or other laws.”

Becca Knox, director of research for the Brady Campaign to Prevent Gun Violence, added in an email that federal law “handcuffs” ATF by “barring it from conducting more than one spot inspection a year for gun dealers, or from requiring store inventories.”

ATF criticized

By contrast, some gun-rights groups, including the National Rifle Association, have blasted ATF oversight as arbitrary and unfair — and are lobbying to make it harder for ATF to drive dealers out of business.

The National Shooting Sports Foundation, the firearms industry’s trade association, also questions whether dealers accused of misdeeds are afforded due process in ATF revocation hearings. But the trade group stresses that it tries to work with ATF to keep dealers on the right side of the law.

“We want retailers to stay in business and assist law enforcement,” said Lawrence Keane, the foundation’s senior vice president and general counsel. He said “the vast majority of licensees take that responsibility seriously.”

ATF spokesman Mike Campbell in Washington defended the inspection process, saying, “I think ATF is doing the best job they possibly can with the resources and priorities that we have set to reduce violent crime.”

Federal law obligates licensed dealers to record all transactions so that guns connected to a crime can be traced. This means that dealers must faithfully log all “acquisitions and dispositions” by manufacturer, model, serial number, caliber and the date they bought and sold the gun and to whom.

Gun dealers, from local pawnshops to big-box retailers such as Walmart, also must submit buyers’ names for background checks to confirm they aren’t felons or other prohibited buyers, like those who have been declared mentally ill by a judge. Records must be kept on file for 20 years and be available for inspection, even if ATF agents seldom drop by to check.

An uneven record

ATF’s track record in making sure dealers follow the law is difficult to assess, because its inspection and disciplinary actions occur almost entirely behind closed doors. ATF had licensed some 65,000 firearms dealers as of fiscal 2011, when it conducted 13,159 “compliance” inspections. ATF doesn’t release detailed inspection findings for each dealer, but says about half were “in full compliance.” The most common violations are failures to record gun transactions properly. The ATF revoked 71 dealers’ licenses in 2011, but what these dealers did to warrant that penalty isn’t disclosed either. The allegations usually surface only after a dealer decides to fight the revocation in federal court, where pleadings are public record.

The dozen revocation cases reviewed by the Center for Public Integrity were all filed in, or decided by, federal courts since January 2010. Most of the dealers who sued to keep operating had been cited repeatedly for violations that could impact public safety.

One Wichita, Kan., dealer admitted selling a gun to a man who answered “yes” when the dealer asked him if he’d ever been convicted of a crime of domestic violence, among other violations. A Tennessee pawnshop had sold guns to 16 people despite “reason to believe” (from their answers to a questionnaire) that they were prohibited from buying them. A Wisconsin pawnbroker with a history of infractions allegedly sold two rifles to a “straw buyer.” A straw buyer is a person with a clean record who makes a purchase on behalf of someone who is legally prohibited from doing so.

Federal judges sided with the ATF in all three of these cases. But each case took three years or more from the discovery of the violations until the court ruled. All three dealers were repeat offenders who had been warned after previous inspections that further violations could cost them their licenses. For instance, ATF cited the Wisconsin dealer in 2004 for seven instances of selling a firearm to persons who “had indicated they were prohibited from purchasing firearms,” according to court records. In March 2007, ATF inspectors returned and found two similar cases as well as the rifle sales to straw buyers. The results of the 2007 inspection prompted the revocation order.

For the most part, dealers who take the ATF to court don’t dispute that the violations occurred. Rather, they argue that most infractions were paperwork errors or oversights, not “willful” violations that warrant revocation of a license. Three dealers cited ill health to partly explain why they fell behind in their paperwork and should be given a second chance. One Maine dealer cited by ATF for repeatedly failing to keep and locate sales records cited multiple infirmities, including ADHD, which he said made it “extremely difficult to focus and stay on task.” He lost his license.

Back in Biglerville

Taylor, the Pennsylvania dealer, said he was struggling at age 60 with diabetes and simply “overwhelmed” trying to keep up. He couldn’t produce a registry to fully account for 3,732 guns in his inventory when ATF agents inspected his shop Jan. 4, 2010 — his first inspection in more than 30 years, court records show.

After working for months to unsnarl his paperwork, agents concluded that 168 firearms were “missing.” Taylor couldn’t locate sales and acquisitions records for 2007, 2008 and 2009, either, a period when he sold or disposed of 2,856 firearms, according to court records.

In his defense, Taylor said he began entering sales data into a computer in 2004, only to see it crash and wipe out his records. At an ATF hearing in Harrisburg in August 2011, Taylor was apologetic and promised to turn things around. But he met with little sympathy from the agency.

“He didn’t stop selling guns. He continued to sell guns. In fact, he sold thousands of guns and he bought thousands of guns, but he stopped keeping records of the acquisition and disposition of those firearms despite knowing that the law required him to keep those records,” ATF attorney Kevin White argued, according to a hearing transcript.

Taylor sued in January 2012 to keep his license. He lost the first round in late December, when a federal magistrate recommended a judgment for ATF. The magistrate noted that more than 100 firearms acquired by Taylor had “disappeared without a trace,” which, he said, “presents significant potential concerns for public safety.” But Taylor’s lawyer said he is challenging the magistrate’s decision.

Taylor said he remains open and his website advertises “a full line of gunning and shooting accessories and gunsmithing to the general public.”

ATF has long faced criticism that its inspection program isn’t tough enough. In July 2004, the Justice Department inspector general reported that most dealers were being inspected “infrequently or not at all.” The report said that without regular inspections ATF “cannot effectively monitor” whether dealers are following the law. The report recommended that inspections be done at least once every three years, but the agency has not been able to meet that goal. Spokesman Campbell said ATF hopes to visit dealers once every five years.

In fiscal 2011, ATF had 776 investigators in its inspection branch.

Though ATF revoked just 71 dealers that year, about 12 percent of the more than 10,000 inspected dealers were issued “warning letters,” which indicates serious violations whose recurrence could prompt revocation.

The sloppy record keeping by some dealers may well have helped put guns on the streets. In 2007, when ATF agents reviewed about one of 10 dealers, they found 30,000 guns missing. During fiscal 2011 inspections, ATF identified nearly 177,500 “unaccounted for” firearms, which could not be located either in inventory or in sales records. The agency worked with dealers and eventually was able to account for all but 18,500 of the firearms, which the agency called a “significant threat” to public safety.

ATF critics see other major gaps in the oversight program, such as loopholes allowing some dealers to stay in business even after their licenses are revoked and they lose their court appeals.

An investigative report in the Milwaukee Journal Sentinel in December 2010 identified more than 50 stores in 20 states in which a revoked dealer was able to turn operations over to a relative or friend, for example.

In addition, dealers who exhaust all appeals can as a last resort convert their stock to a personal collection, which they can sell privately. U.S. Rep. David N. Cicilline, D-R.I., has filed a bill to end this “fire sale loophole.”

“Closing the fire sale loophole is a commonsense first step Congress should undertake in order to prevent guns from getting in the hands of criminals and the seriously mentally ill,” Cicilline said in a statement.” It’s not at all clear, though, how much support the bill has in Congress.

‘Wildly one-sided’

Some in the gun industry remain deeply suspicious of ATF and strongly oppose granting it more power. They argue that petty violations can result in dealers’ undeservedly facing a revocation hearing and that ATF needs to follow proper legal procedures to protect dealers’ rights.

Christopher M. Chiafullo, a New York attorney whose firm defends gun dealers at revocation hearings, calls the process “wildly one-sided” and argues that it “makes a mockery of the legal system.” He said dealers cited for violations aren’t given a chance to settle or accept probation, only revocation. Their only recourse, he said, is to file suit in federal court to overturn a decision by ATF, but these cases are often unsuccessful.

The Justice Department in February of 2012 published draft regulations that it hoped would clarify the inspection program by guaranteeing dealers the right to submit “facts, arguments, offers of settlement, or proposals of adjustment for review and consideration.”

The Justice Department is expected to act on the regulation, which the NRA has soundly criticized, in June.

Christopher A. Conte, the NRA’s legislative counsel, in a May 3, 2012, letter to ATF said that the current system for revoking the licenses of dealers is “directly contrary to what Congress intended for these hearings.”

He argued that dealers are entitled to “formal proceedings where the agency has the burden of proof, where the evidence offered must be reliable, probative, and substantial, and where the applicant may present evidence and conduct cross-examination of the agency’s witnesses.”

In the past, the NRA has unsuccessfully supported congressional bills that would rewrite the licensing law so that ATF could levy fines and other penalties short of revocation. The NRA argues that changes in the law are necessary to prevent what it says are “all-too-common situations” in which ATF has revoked a dealer’s license for “insignificant technical violations.”

IMPACT: Maryland bill would protect homeowners from investors buying debt

Baltimore,Maryland,United States — 2013-01-18T18:11:20-05:00

Maryland lawmakers are sponsoring legislation to prevent Baltimore-area residents from losing their homes for failing to pay small municipal water bills —a stunning scenario detailed in a Center for Public Integrity story.

The legislation is aimed at preventing a repeat of what happened to Vicki Valentine, a Baltimore woman who lost her family’s mortgage-free home over what began as an unpaid water bill of $362. The Center told Valentine’s story in 2010 as part of an investigation into the impact of tax-lien sales on struggling property owners.

Counties in Maryland, like many other states, sell investors the right to collect unpaid property taxes and other municipal debts of $250 or more at auctions, which often are conducted online and can draw investors from all over the world. The law in Maryland allows lien holders to charge double-digit interest rates and in some cases tack on thousands of dollars in fees. Homeowners who fail to pay may face foreclosure on their property.

But the new bill introduced earlier this week in the Maryland General Assembly would prohibit tax collectors in the City of Baltimore and suburban Baltimore County from including residential property in the tax sale when the lien “arises solely from any unpaid water, sewer and other sanitary system charges” and is less than $750 in total.

“We’re one of the few jurisdictions in the United States of America that thinks an equitable solution to not paying water bills it to take your house,” said State Sen. James Brochin, D-Baltimore County, the measure’s chief sponsor. “It’s predatory and bizarre.”

Brochin’s bill has three co-sponsors. It’s the second time that lawmakers have sought to amend the tax sale law since Valentine’s story, which was published jointly with The Baltimore Sun, surfaced.

Valentine was evicted in February 2010 from the west Baltimore home her family had owned for decades after a judge ordered her to pay more than $3,600 in legal fees and other costs—nearly ten times her original debt.

A former mental health counselor with four children, Valentine conceded that she owed the water bill, and later some taxes on the property. But she argued the fees were excessive and in any case she couldn’t afford them.

Brochin said that city officials should shut off metered water service when homeowners fail to pay, rather than subject them to the tax sale, through which investors can profit from the financial distress of others.

“People are losing homes to foreclosure for a lot of other reasons. We don’t need to add to it,” Brochin said.

A spokesman for Baltimore Mayor Stephanie Rawlings-Blake said the mayor would review the bill to study its impact on the city's ability to collect debts from delinquent property owners. He said the city had implemented several reforms in recent years to protect city residents in such matters. However, the city, in common with other tax collectors in the state, has previously opposed restricting liens that are subject to sale. Officials contend that threats of foreclosure compel some people to pay taxes and other municipal bills and that losing that leverage could aggravate budgetary problems.

Maryland’s tax sale system has drawn controversy in recent years. Three men have pleaded guilty to criminal charges in a Justice Department bid-rigging investigation, including two longtime Baltimore tax-sale investors who made more than $10 million from fees and other costs collected over a six-year period from the owners of more than 6,000 properties.

Internet ammunition sales draw scrutiny

2013-01-31T17:16:44-05:00

Proposed legislation to regulate online purchases of ammunition and high-capacity magazines is bringing new attention to a growing cyberspace ammo market that has operated with little government oversight.

Under federal law, firearms dealers must obtain a federal license and keep records of their transactions, but there’s virtually no federal regulation of ammunition suppliers or sales —though there was prior to 1986. Adults who currently want to stockpile large amounts of ammo—say 1,000 rounds of rifle fire or more— can buy it from dozens of web sites that specialize in bulk sales, often at low prices. Some sites also hawk magazines that fire up to 100 rounds without reloading, which critics argue have repeatedly been tied to deadly mass shootings and should be outlawed.

Some of the online sellers list no names of their owners, give only a post office box as their address and ship merchandise to customers using overnight couriers. Buyers can access a special search engine to compare inventory and prices at more than 30 dealers.

Nima Samadi, who follows the $3 billion- a-year small arms industry for the market research firm IBISWorld, said online ammo sales have been gaining in popularity “due to convenience and lower prices consumers can get by buying in bulk online.”

Legislative efforts

But some gun control advocates in Congress hope public outrage over the recent Newtown, Conn., massacre, in which 20 elementary school children and six school employees were killed, will prompt a closer look at these businesses and the firepower they can unleash.

Earlier this month, U.S. Rep. Carolyn McCarthy, D-N.Y., re-filed a bill from last summer that would put an end to online and mail-order sales by requiring that ammo transactions take place “face to face.”

The bill also would license ammo dealers and require them to report purchases of 1,000 rounds or more, which McCarthy has said would bring ammunition sales “out of the shadows and into the light, where criminals can’t hide and responsible dealers can act as a line of defense against the planning and stockpiling of a potential mass killer.”

In a separate action, U.S. Sen. Richard Blumenthal, D-Conn. on Jan. 8 said he would push for instant background checks to prevent ammo from being sold to felons, the mentally ill and others prohibited from buying firearms. Blumenthal, in a prepared statement, called ammo sales “the black hole in gun violence prevention.”

Also this month, McCarthy re-filed a bill—first introduced last summer in the wake of the Aurora, Colo., movie theater shootings—that would ban the manufacture and sale of magazines carrying more than 10 rounds. These magazines have been used in 15 mass shootings since 2000, according to the Violence Policy Center, a gun control advocacy group in Washington.

“These devices are used to kill as many people as possible in the shortest amount of time possible and we owe it to innocent Americans everywhere to keep them out of the hands of dangerous people,” McCarthy said in a statement.

In addition, a White House panel on gun violence led by Vice-President Biden is considering a range of proposals, including universal background checks for gun buyers and tougher penalties for carrying firearms near schools. Biden is expected to present recommendations this week. President Obama has already called for new laws to ban the sale of assault weapons and large-size magazines. An assault weapon ban in effect from 1994 to 2004 also banned new high-capacity magazines.

Attempts to ban or restrict ammo sales could prove to be among the most contentious measures under review, with nobody fully confident they can predict the outcome.

Tighter regulation “is certainly a possibility,” said Samadi, the arms industry analyst. But he noted that public opinion is fickle and said “it’s hard to accurately predict what will happen.”

The online sale of ammo “is a somewhat new and developing industry and there isn’t too much information out there,” he added.

Fervent opposition

The National Rifle Association strongly opposes ammunition regulation. The NRA argues that banning online ammo sales “would turn back the clock to the days when ammunition was only available in person at licensed stores, driving up prices and making less popular cartridges nearly unobtainable for millions of lawful gun owners.”

The National Shooting Sports Foundation, the industry trade group, would not comment. In the past, however, the group has said regulations “would not affect criminals or their ability to obtain ammunition.”

Retail interstate shipments of ammunition were made legal by the 1986 Firearm Owners’ Protection Act. The law allowed ammunition to be shipped to individuals through the mail and eliminated existing record-keeping requirements.

The NRA notes that officials of the federal Bureau of Alcohol, Tobacco, Firearms and Explosives had concluded by the 1980s that licensing ammo dealers for nearly two decades provided “no substantial law enforcement value” in keeping bullets out of the wrong hands. Officials supported loosening regulation at that time. ATF spokesman Mike Campbell said in an interview that the agency no longer comments on pending legislation.

Marc Gallagher, a co-owner of ammoseek.com, the search engine that helps buyers find the best prices, agrees. He said it “appears that the lawmakers proposing such laws are merely attempting to capitalize on horrible tragedies to further their agenda and disdain for the Second Amendment.”

Such legislation “would do nothing to prevent criminals and crazy people from doing horrible things with guns,” Gallagher wrote in an email. “It would only prevent honest and law-abiding citizens from being able to freely purchase ammunition online,”

Gun control forces have thus far made limited political headway against that argument—and concerns that an online ban would infringe on private business. A 2009 California law that required all handgun ammo sales to be face-to-face was struck down by the courts, though supporters of the law are trying to reinstate it this year. New York Gov. Andrew Cuomo also said this month that he favors a ban on online ammo shipments. While a few other states and some localities have restricted shipments of ammo or large-capacity magazines to residents, efforts at federal regulation have stalled.

That was the case last July when U.S. Sen. Frank Lautenberg (D-N.J.) and McCarthy introduced S. 3458 and H.R. 6241, called the “Stop Online Ammunition Sales Act” on the heels of the Aurora movie theater shootings in which 12 people died and dozens more were wounded. Police found an AR-15 semi-automatic rifle magazine capable of firing 100 rounds at the scene. Authorities said at the time that the shooter, James Holmes, 24, bought four guns at local gun stores and more than 6,000 rounds of ammo online. One of the firms authorities tied to these sales is bulkammo.com , according to media reports.

The company’s lawyer, Oliver Adams, of Knoxville, Tenn., did not respond to requests for comment from the Center for Public Integrity. In the past, he has said that the company was “actively assisting in the investigation.”

The firm maintains a St. Louis post office box and takes orders by phone or email 24 hours a day, with a promise to ship merchandise promptly. Federally licensed firearms dealers must have a “premises address,” where transactions take place and inventories and records can be inspected by federal agents.

Bulkammo.com says on its website that it was set up to provide “serious shooters and training professionals with a reliable, economically priced source for bulk ammunition.”

The website doesn’t name the proprietors, except to say an employee named “Steven,” a former Marine, is a member of a staff that is “experienced and well-prepared to become your private armorer.” The firm passes muster on Angie’s List and has many favorable comments from satisfied customers on gun enthusiast websites and blogs.

“We shoot a lot of rounds (just like you) and we understand the frustrations and inconveniences of finding good suppliers who consistently have what is needed at good prices,” according to the website.

The company requires buyers to certify, among other things, that they are at least 21 years old, have never been convicted of a misdemeanor domestic violence charge or other crime and have “not been adjudicated as a mental defective” or “committed to any mental institution.” (Under federal law, people over 18 years of age can purchase rifle ammunition, 21 years old for handgun ammo .)

Other firms list a wide range of ammo for sale, though several say they are having a tough time filling rising demand, presumably from customers concerned that Congress might impose new restrictions in light of the Newtown slayings. Calls and emails to several of the online dealers were not returned.

The price for .223 bullets, the size fired by the semiautomatic rifle used in the Newtown shootings, can be bought for as little as $400 for 1,000-rounds. High-capacity magazines start at about $28, though they can cost much more depending on the manufacturer and the number of rounds they hold. Some sellers throw in free shipping and offer other discounts and promotions.

Although the online dealers don’t appear to have their own lobbying organization in Washington, some have been contributing to an NRA fund called the National Endowment for the Protection of the Second Amendment .

MidwayUSA, a Missouri company, began a program in 1992 that asks customers to “round up” the total of each order to the nearest dollar or higher. Other dealers signed on and together have funneled some $9.5 million to the NRA’s Institute for Legislative Action, a lobbying arm, according to the company’s website. MidwayUSA did not respond to requests for comment.

In December, MidwayUSA announced that contributions topped $1 million for 2012, the most since the round-up program started. That drew a note of thanks from NRA official Chris Cox, according to the company’s website.

“With the reelection of President Obama, America can bank on more attempts to diminish our freedom and constant legal challenges to the Second Amendment,” said Cox. “This significant support is coming at a time of great need.”

Hospital 'facility fees' boosting medical bills, and not just for hospital care

2012-12-23T10:41:34-05:00

After Vermont hospitals started buying up the medical practices of local physicians, state Sen. Kevin Mullin of Rutland, began hearing complaints that prices some patients were paying for routine medical care had soared.

One family accustomed to paying about $120 in out-of-pocket costs for doctor visits and other medical services was outraged when they ended up forking over more than $1,000 for similar visits, Mullin said, mostly for seeing doctors whose practices had been bought out by a local hospital.

“The only thing that was different was the office was [now] hospital-owned,” said Mullin, a Republican. “All of a sudden everything was charged differently.”

The root of these increases are controversial charges known as “facility fees,” and they are routinely tacked on to patients’ bills not just for services actually provided in hospitals, but also by outpatient care centers and doctors’ offices simply because they’ve been purchased by hospital-based health care systems. Hospitals argue they can’t afford to keep the doors open without facility fees.

Hospitals have billed them at least since 2000 when Medicare set billing standards for doctors employed by hospitals, and private insurers went along. Since then, the fees have grown increasingly common, costly and controversial. Critics argue that the billing practice needlessly adds billions of dollars to the nation’s ballooning health care costs and needs to be revamped. Some private insurers have protested the fees and in some cases even refused to pay them, which can add to the patient’s share of the bill. But getting rid of the charges — or even requiring medical offices to post facility fees — has proved daunting, reformers say.

Mullin introduced legislation earlier this year to ban the practice in his state, only to see the bill “watered down” to simply require that the fees be disclosed in advance. The state Senate approved the amended bill, but it failed to pass in the House, even though the state hospital association supported it.

Now, as budget cutters on Capitol Hill drill into Medicare payment policies in hopes of finding new veins of cost savings, the fairness of these fees is facing new scrutiny — including from the federal commission that advises Congress on Medicare spending policy. Hospitals are fighting back and have enlisted support from the Service Employees International Union, which represents more than one million nurses, doctors and other health care workers.

The stakes are high indeed. A decision by Medicare to quit allowing the fees would almost certainly lead private insurers to do the same across the country and all but put an end to them.

“This is low hanging fruit [for cutting costs],” said Dr. Kevin Kavanagh, a retired physician who heads HealthWatch USA, a patient advocacy group based in Kentucky.

Tom Nickels, the American Hospital Association’s vice president for federal relations in Washington, strongly defends the fees. But he agrees that the issue “is clearly in play” as lawmakers scramble to slash health care costs in coming months.

Fees for more than hospital care

Facility fees are a routine part of any hospital bill. But patients can also be hit with facility fees when they seek care from:

· Private physicians who have sold their medical practices to a hospital and stayed on as employees. More than half the nation’s doctors now work on salary. When that happens, patients may suddenly get a bill from the doctor and a separate one from the hospital that owns the office. Some prestigious health systems, such as the Cleveland Clinic, also put their doctors on salary and charge a facility fee for office visits.

· Outpatient medical centers that are part of a hospital-owned network, including centers treating serious diseases such as cancer or operating specialized clinics for the elderly.

· Urgent care centers set up by hospitals largely to treat relatively minor ailments. Thousands of these centers exist nationwide, about one third believed to be hospital-owned. Some don’t tell patients in advance about facility fees.

· Outpatient surgery centers where doctors perform routine operations. The centers can charge facility fees that run into the thousands of dollars. As deductibles rise on some insurance policies, patients may not realize they can get stuck with paying larger hunks of these bills than in the past.

The fees date back to April 2000, when Medicare clarified its policy for billing by health groups that hired physicians. At the time, CMS officials acknowledged that critics wanted the agency to forbid hospitals from buying up medical practices for the purpose of converting them to hospital “facilities” that could tender higher fees for the same services.

In a response published at the time in the Federal Register, CMS said it understood the concerns, but lacked the authority to “prohibit this practice.”

The issue popped up last year when the House passed legislation that extended the payroll tax holiday and unemployment compensation benefits. Tucked into the “Middle Class Tax Relief and Job Creation Act” was a provision to cut about $6.8 billion in Medicare costs by targeting doctor services in hospital-owned offices.

The hospital industry fought back hard — and ultimately successfully. The cuts never passed the Senate and were not in the final conference committee bill signed by President Obama in February.

Making the case

The health care industry argues that prices must be based at least in part on where a medical service is rendered. That means hospitals, which have high overhead and substantial costs for equipment, technology and personnel, expect to collect more money for the same service than at a doctor’s office. Similarly, outpatient centers impose fees to cover the cost of supplies, equipment and space and in most states aren’t obligated to tell patients about the fees in advance so they can shop around.

The American Hospital Association argues that phasing out the payments “threatens patient access to care.” The group said that hospitals tend to treat “sicker, more complex patients” and are better equipped than doctors’ offices and should be paid more. Cutting the fees would impact low-income and chronically ill people who depend on networks of hospital-based outpatient clinics, the group said.

Hospitals add that charging facility fees for medical care in doctors’ offices or care centers they own helps spread the cost of keeping expensive units, such as emergency rooms, open round the clock, and helps them absorb losses from patients who can’t pay their bills.

Some patients clearly disagree. Like Linda Romaniello, of Davie, Fla. After her 8-year-old daughter was nipped by a dog, she took her to a local urgent care center and left with a bill for more than $500. The child was treated with antibiotic gel and a simple bandage during her 15-minute visit, according to the South Florida Sun Sentinel, which reported on the incident last year.

Because the center was owned by Baptist Health South Florida, the hospital-based system slapped a $275 facility fee on top of the $233 doctor’s bill. The woman’s insurance refused to pay half the fee and Romaniello argued she would have gone elsewhere had she known about the extra fees beforehand. Florida has since passed a law requiring urgent care centers to post prices and all its clinics do so, a Baptist spokesperson said.

Dr. Marc Salzberg, president of the Urgent Care Association of America, said these fees “should be transparent to the consumer” and that people should know about them “before they get care.” Salzberg says his group believes there are between 6,000 and 9,000 of these centers nationwide, 30 percent to 40 percent of them hospital-owned.

Connie Peterson, 67, a retired graphics designer who lives in Iowa City, Iowa, also experienced the sting of facility fees. She was aghast after receiving a bill for nearly $26,000 in facility fees from an outpatient surgery center where she spent less than an hour.

“I was livid when I received the bill,” said Peterson. She spent months trying to get an explanation that made sense to her. “All I wanted was an itemized bill to let me know exactly what I’m paying for. I never got that,” she said.

Peterson had three procedures to remove nasal polyps during her 45-minute stay at the Iowa City Ambulatory Surgical Center in April. The center billed more than $8,000 in facility fees for each one, bringing the total to $25,872. She had to pay $1,086 of that.

In a letter responding to her complaint, the center said its rates were in accordance with national standards. Unlike hospitals, these centers don’t itemize charges, but bill all inclusive rates which include facility fees.

As more hospital systems set up specialty medical practices, there’s been some movement on requiring more disclosure, but it’s still not clear how many of these hospitals tell patients up front that they could be paying higher rates as a result.

“Hospitals are not really interested in being candid about what they are doing. They tell you that you will get two bills instead of one,” said John W. Phillips, a Seattle lawyer who has filed class action lawsuits seeking to make hospitals disclose the fees — and in ways people can easily understand. In one case he filed, a Seattle hospital agreed to refund the fees and post a price schedule in future.

Some hospitals do so already. New patients at the Senior Health Clinic at North Hills Hospital in North Richland, Texas, receive a letter advising that as an “outpatient department” of the hospital the center will add a facility fee, which “covers the cost of the clinic staff, supplies, equipment and space.” Similarly, Sarasota Memorial Hospital in Florida posts a notice on its website that advises those who schedule clinic visits that they will be charged a fee.

Responding to criticism, hospitals are supporting a bill in Congress that would require more disclosure so that patients can compare prices.

The Health Care Price Transparency Promotion Act of 2012 (HR 5800) introduced in May by U.S. Reps. Michael C. Burgess, R-Texas, and Texas Democrat Gene Green, directs states to pass laws requiring that hospitals notify patients in advance of out-of-pocket costs. It also orders up a study within 18 months to recommend ways in which to make information available to patients in an easy- to-understand format.

More than 30 states already require some degree of disclosure, though critics complain that what patients see often is difficult to compare or simply too dense for many people to decipher.

“Consumers ought to be told what they will be required to pay,” said Nickels, the hospital association’s lobbyist.

The battle is joined

Meantime, though, the broader fight over facility fees continues, albeit a bit under the radar. The Medicare Payment Advisory Commission, or MedPAC, which advises Congress, stirred up the debate in January when it recommended that the health plan for seniors pay for visits with doctors at the same rate, no matter where they occurred, and regardless of whether the doctor practices independently or is employed by a hospital.

The panel noted that hospitals buying up medical practices in recent years have been tacking on facility fees that increase the patient’s bill even when the doctor is working from the very same office. In March, the commission recommended standardizing payments over three years, sparking an outcry from the hospital industry.

MedPAC said that eliminating facility fees that Medicare pays for doctor services would reduce Medicare spending from between $1 billion and $5 billion over five years. The current system fails to create “clear benefits for patients,” the commission said, adding: “Medicare should be discouraging, not encouraging, expenditures by health care providers that do not benefit patients.”

The current system also can leave elderly patients liable for a heftier chunk of the bill. The commission noted that in 2011 Medicare paid doctors $68.97 for a 15-minute office visit, of which the patient was responsible for a co-payment of $13.79. For that same service in a hospital-owned medical practice, Medicare paid a total of $124.40. In that case, the patient co-payment was $24.88.

“I don’t see a policy justification for why a physician’s time is worth more as a hospital employee,” said Jeff Goldsmith, a Virginia health care consultant. Goldsmith said Medicare is paying a “subsidy” that is “encouraging hospitals to buy up practices and dramatically increase the cost of their services.”

Dr. Robert Berenson, a former MedPAC vice-chairman, said the proposed changes would lead to “major league savings” and could prove tempting if Congress “gets serious about reducing Medicare spending.” But Berenson conceded that hospitals opposing the changes are “pretty damn powerful.”

A September letter sent to members of Congress by five hospital groups said the changes proposed by MedPAC would reduce payments to hospitals by 71 percent for ten common outpatient visits. “To pay a hospital — with our emergency department, surgical, nursing, emergency transportation and myriad other costs — the same as a physician office does not make sense,” the letter stated.

Those five hospital groups have plenty of muscle on Capitol Hill. The five organizations together spent at least $22 million in political contributions and lobbying costs this year, according to the Center for Responsive Politics.

Nickels, the hospital association lobbyist, said Congress is looking for ways to finance the so-called “doctor fix,” an annual ritual passed to prevent Medicare payments to physicians from plummeting by 27 per cent, as required by a 1997 law. Hospitals are worried because adopting MedPAC’s recommendations could bring in enough cash to partly pay for the ‘fix.’

To complicate matters further, nearly two dozen prestigious health systems, such as the Cleveland Clinic, which employs physicians and charges facility fees for services rendered in their offices, also are fighting to maintain the status quo. These systems often have been credited with offering higher quality care and for keeping costs in check. To penalize them would be a “giant step backward in [health] delivery system reform,” Dr. J. James Rohack, co-chair of the 19-member Integrated Health Care Coalition, wrote in a July letter to the House Ways and Means Committee.

The health groups also have some powerful allies. In a Dec. 4 full-page ad in The Washington Post, the service employees union argued that hospital-based clinics “have provided the primary — and sometimes only — access to physicians for the nation’s underserved rural and urban communities.” Cutting back the fees “will force these clinics to close,” the ad states.

But MedPAC hasn’t shown any signs of giving up. Last month, the commission suggested that Medicare also pay a single rate for a variety of medical procedures, regardless of the site. The commission staff noted that Medicare pays 90 percent more for a laser eye procedure done in a hospital outpatient department than in a doctor’s office because of added facility fees. The commission is set to vote on a final recommendation in January, though it’s unclear whether Congress would support such a change.

Hospitals have argued that such cuts would impair their ability to keep staff on hand for emergency rooms and “disaster readiness.” In a letter sent to the Medicare advisory panel in late October, Rick Pollack, executive vice president of the hospital association, cited the “threat of terrorist attacks, recent mass shootings, the aftermath of Hurricane Katrina and the devastating tornados over the past year.”

But adopting what MedPAC calls a “site-neutral” payment policy would save Medicare $900 million over the course of a year and seniors would save $250 million more in out of pocket costs, according to the commission.

The controversy is erupting as the hospital industry faces tighter scrutiny over billing matters. In September, the Center for Public Integrity series Cracking the Codes documented how hospital emergency rooms have dramatically increased Medicare billings for facility fees and doctor services, adding more than $1 billion in costs to taxpayers over the past decade. Top government officials, including Attorney General Eric Holder, have since threatened possible criminal prosecution for doctors and hospitals that bill for more complex and costly services than they provided.

Insurers are getting more combative, too. Dolores Mitchell, who heads the state of Massachusetts Group Insurance Commission, said she is encouraging health plans and patients to resist paying higher prices for the same services.

“If the nature of the visit is identical, it shouldn’t cost more money,” said Mitchell, who oversees health plans that cover more than 400,000 government employees and their families. “It shouldn’t make any difference.”

Mitchell said that the fees may be justified when patients are treated in a room that requires a sterile atmosphere or other high-tech hospital equipment. “But where it’s simply an office visit, to charge a facility fee is inappropriate,” she said. But she added: “Once you get a revenue stream, it’s very hard to turn off the spigot.”

Whether Congress will cut off these payments is not yet clear. Former MedPac vice-chairman Berenson said that any policy change would need to account for losses hospitals incur to keep essential services open. That might happen, he said, if Congress considers the matter as part of a deal on taxes and entitlement programs such as Medicare.

“If not part of ‘entitlement reform,’ I think prospects for congressional adoption are less,” Berenson said.

Feds tighten scrutiny of health records

2012-12-14T14:38:00-05:00

Federal officials, in an apparent effort to clamp down on Medicare fraud and abuse, are tightening scrutiny of the growing numbers of doctors who rely on electronic medical records to bill for their services.

The Centers for Medicare and Medicaid Services has directed its auditors to look more closely to make sure the systems are properly documenting the services being paid for by the government. The new policy, announced in November, went into effect earlier this week.

The new directive was first reported by FierceEMR.

At issue is the impact electronic medical records can have on billing for doctor visits. Doctors must choose one of five escalating payment levels, known as “Evaluation and Management” codes that best reflect the amount of time spent with a patient as well as the complexity of the care.

Medical groups argue that computers make it easier for them to document all of the work they do, which leads to higher codes and fees. But officials worry that the software also can be manipulated to inflate bills — a practice known as “upcoding.”

The stakes are high. Medicare spent more than $33.5 billion in 2010 using these numeric codes for services ranging from routine doctor office visits to outpatient hospital or nursing home care. More than half the doctors billing Medicare were using electronic records in 2011, and that number has since grown further, officials said.

CMS officials would not comment directly on the new policy, but said their purpose was partly to remind doctors that they must document that all billed medical care was necessary. The directive discourages the use of check-off lists that the agency said gather information “primarily for reimbursement purposes.” These sorts of records “generally do not provide sufficient information to adequately show” that a doctor visit was necessary, CMS said.

Dr. Stephen R. Levinson, a Connecticut physician and expert on medical coding, said that “this is another way of saying that cloned documentation won’t be approved for payment,” said Levinson.

Michelle Dougherty, director of research and development for the American Health Information Management Association, said the new directive “will help shape billing practices.” She said it was an “important clarification” that has identified weaknesses in billing using the software in electronic records systems. The group, which boasts about 64,000 members, has strongly supported more guidance from the government about what is proper as medicine enters the digital era.

Dr. David Kibbe, a senior advisor to the American Academy of Family Physicians on digital medicine, said the digital records systems can be misused in order to promote higher billing. “I don't know how extensive a problem this represents,” he added. “Perhaps no one does.”

The Medicare billing process has come under heightened scrutiny in the wake of the Center’s "Cracking the Codes" series, published in September. The investigative project documented that thousands of medical professionals have steadily billed Medicare for more complex and costly health care over the past decade — adding $11 billion or more to their fees—and strongly suggested that the rapid growth in the use of electronic health records and billing software has contributed to the higher charges.

The Center’s year-long examination also identified a wide range of costly billing errors and abuses that have plagued Medicare for years—from confusion over how to pick proper payment codes to outright false charges.

Officials have pushed ahead with digitizing medicine without taking steps to minimize billing fraud. Insurance auditors criticized digital records systems as far back as 2006. That year Medicare contractor First Coast Service Options chided Connecticut doctors who “frequently over-documented” to justify higher billing codes.

In early 2009, federal officials announced they would pay billions of dollars to hospitals and doctors who agreed to buy electronic medical records and use them to improve the quality of health care. CMS has since provided about $4 billion to medical professionals who made the switch.

Yet late last year, the Department of Health and Human Services Office of Inspector General said its contractors had detected overbilling and would begin investigating “potentially improper payments” linked to electronic medical records. The office also advised doctors they could be held accountable if the codes they used didn’t “accurately reflect the services they provide.”

William Mahon, a Virginia expert on health care fraud, called the new CMS directive a “big deal.” He said federal officials have realized they must strike a balance between encouraging doctors to adopt the new technology and preventing them from using it to game the system. “This will create a lot of waves,” Mahon said.

Joe Ferro, a Florida billing consultant who serves on a panel on fraud and abuse for the trade association Healthcare Information and Management Systems Society, or HIMSS, said that one of the selling points for electronic health records was their ability to offer powerful tools for documenting medical care. Now the government appears to be restricting the use of the tools. “That’s the way I read this,” he said.

Many experts believe electronic health records hold great potential to keep people healthier and the shift from paper to digital medical records has enjoyed strong political support in Congress. Yet in recent months Republicans have begun to question the billions in tax dollars spent on the program. Funds for the conversion are part of the nearly $800 billion economic stimulus package passed by Congress in February 2009.

Medicare paid $3.6 billion for electronic health records but didn't verify quality goals were met

2012-11-29T10:33:32-05:00

In early 2009, federal officials announced they would pay billions of dollars to hospitals and doctors who agreed to buy electronic medical records and use them to improve the quality of health care.

But the Centers for Medicare and Medicaid Services has since paid out more than $3.6 billion to medical professionals who made the switch without verifying they are meeting the required quality goals, according to a new federal audit to be released today.

The Department of Health and Human Services Inspector General’s audit warns that the electronic records program is “vulnerable” to abuse and that officials should immediately “strengthen” oversight to protect tax dollars from being wasted.

Many experts believe electronic health records hold great potential to keep people healthier. To achieve that goal, government officials insisted that doctors and hospitals receiving payments meet a lengthy checklist of quality standards, ranging from writing prescriptions electronically to recording immunization and smoking histories.

Yet it’s not clear if that’s happening because nobody checks to make sure. In a response included in the audit report, CMS Acting Administrator Marilyn Tavenner said that requiring medical professionals to prove they are meeting the quality requirements prior to cutting them a check would be burdensome and “significantly delay payments.”

Tavenner said that the agency plans to conduct some audits in the future and would then take steps to recover any improper payments. But the Inspector General opined that CMS should verify compliance first to avoid having to track down miscreants later, a much maligned practice sometimes referred to as “pay and chase.”

A CMS spokesman declined to address the audit findings directly, but said: "Protecting taxpayer dollars is our top priority and we have implemented aggressive procedures to hold providers accountable."

The shift from paper to digital medical records has enjoyed strong political support in Congress, though how best to pay for it—and who deserves the money— has been controversial. Funds for the conversion are part of the nearly $800 billion economic stimulus package passed by Congress in February 2009.

Last year, the Center for Public Integrity reported that about half the first batch of federal dollars went to providers who had converted to the technology long before the stimulus program was announced. A spokesman for Sen. Tom Coburn, R-Okla., called that an “inexcusable waste of taxpayer dollars,” saying it “makes no sense” for the government to “pay physicians for systems they already have.”

Criticism from Republicans in Congress has mounted in the wake of the Center’s "Cracking the Codes" series published in September. The investigative project documented that thousands of medical professionals have steadily billed Medicare for more complex and costly health care over the past decade — adding $11 billion or more to their fees—and strongly suggested that the rapid growth in the use of electronic health records and billing software has contributed to the higher charges.

In an Oct. 4 letter to Health and Human Services Secretary Kathleen Sebilius, four Republican House leaders asked federal officials to suspend the payments, arguing the program may be wasting billions of tax dollars and doing little to improve the quality of medical care.

The four members wrote that the program has failed to ensure digital systems can share medical information, a key goal. Linking health systems by computer is expected to help doctors do a better job treating the sick by avoiding costly waste, medical errors and duplication of tests.

From May 2011 to August of this year, Medicare paid about $3.6 billion to 74,317 medical providers and 1,333 hospitals that made the switch to electronic records. Doctors can receive as much as $44,000 each, while hospitals get a minimum of $2 million. Costs are expected to rise to $6.6 billion over the next four years.

According to the Inspector General’s audit, CMS lacks the tools to check whether many of the medical quality measures are being met. For instance, auditors said that CMS had no way to know whether doctors and hospitals were writing the required numbers of prescriptions electronically.

“CMS does not verify the accuracy of professionals’ and hospitals’ self-reported information prior to payment because data necessary for verifications are not readily available,” auditors wrote.

The Inspector General also noted that some of the problem may stem from software systems that can’t produce accurate quality assessments.

The report cited as an example a “report to customers” issued in February by GE Healthcare, a manufacturer of digital records systems. The notice said that two of its products could produce “inaccurate” quality reports and that it had notified CMS and its customers, and was working to correct the problem.

The new report said the Inspector General has audits underway to find out if some medical providers have been gaming the system. It did not say when those audits would be completed.

Hospitals request government help in curbing possible billing abuses

2012-11-15T13:01:24-05:00

The nation’s largest hospital group has asked federal officials to create new Medicare pay scales for emergency rooms and outpatient clinics and determine if electronic health records are prompting hospitals to overcharge the federal program.

The American Hospital Association, which represents about 5,000 hospitals nationwide, also signaled that it wants to work with law enforcement officials to write Medicare billing standards that keep its members on the right side of the law.

Hospitals want to ensure that they “receive only the payment to which they are entitled,” Rich Umbdenstock, the group’s president, wrote in a letter dated Nov. 12. The letter was sent to Department of Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder.

“Hospitals share the administration’s goal of a health system that offers high-quality, affordable care and work hard to ensure billing is correct the first time,” Umbdenstock wrote.

The industry has come under fire in the wake of the Center for Public Integrity’s “Cracking the Codes” series, which found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees. The investigation suggested that Medicare billing errors and abuses have been worsening as doctors and hospitals switch to electronic health records.

Medicare regulators acknowledge they are struggling to rein in a surge of aggressive — and potentially expensive — billing by doctors and hospitals linked in some cases to the rapid proliferation of electronic medical records and billing software. A variety of federal reports and whistleblower suits also reflect these concerns.

The center’s analysis of Medicare billing data found that between 2001 and 2008, hospitals dramatically increased their Medicare billing for emergency room care, adding more than $1 billion in costs to taxpayers. Use of the top two most expensive billing codes nearly doubled, from 25 percent to 45 percent of all claims, during that time. In many cases, patients were treated for seemingly minor injuries and complaints in the emergency room.

Hospitals argue that some of the possible overbilling lies in the government’s repeated failure to establish strict billing guidelines for hospitals. As a result, hospitals have since 2000 been using a set of codes designed for physician billing —a system open to broad interpretation by hospitals. The letter suggests AHA should work with the Centers for Medicare and Medicaid Services to “establish a set of national hospital…guidelines.”

Although the Obama administration in early 2009 laid plans for spending as much as $30 billion helping doctors and hospitals purchase electronic health records, little effort was spent making sure that the systems billed accurately.

“We recommend that HHS take immediate steps to develop mechanisms to ensure these new technologies are consistent with existing coding conventions,” the hospital association letter said.

The hospital association also called for HHS to develop a code of ethics for software manufacturers and make sure that the systems can’t be used for “unlawful financial gain.”

Federal officials acknowledged in September that some doctors and hospitals may be cheating Medicare by using electronic health records to improperly bill the health plan for more complex and costly services than they actually deliver — a practice known as “upcoding.”

HHS Secretary Sebelius and Attorney General Eric Holder on Sept. 24 warned five hospital and medical groups of their intention to ramp up investigative oversight, including possible criminal prosecutions, of upcoding.

The stimulus-funded plan to help finance the purchase of digital medical records by doctors and hospitals to improve the quality of medical care has enjoyed widespread political support in the past. But it has recently come under fire from Republicans.

Some are concerned primarily about the wisdom of spending billions on the projects, while others have raised questions about the safety of the devices. Critics worry that the software glitches in electronic medical records can contribute to medical errors.

U.S. Rep. Renee Ellmers, R-N.C, who chairs the Committee on Small Business healthcare and technology subcommittee, expressed concerns about safety in a Nov. 14 letter to HHS Secretary Sebelius. She noted that a year ago the Institute of Medicine had urged HHS to develop a plan to minimize patient safety risks, but that the plan has not yet been provided to Congress.

IMPACT: HHS IG pledges focus on Medicare billing abuse involving electronic records

2012-10-24T13:35:33-04:00

Federal officials will focus on possible Medicare overbilling by doctors and hospitals that use electronic medical records, a top government fraud investigator said Wednesday, in announcing investigative priorities for the coming year.

“Electronic medical records can improve quality of care and efficiency and help us uncover cases of fraud and abuse. At the same time, we must guard against the use of electronic records to cover up crime,” said Daniel Levinson, the Department of Health and Human Services inspector general, in a video presentation.

The video posted on the agency’s website on Wednesday summarized the inspector general’s “work plan,” for 2013, a listing of Medicare and Medicaid fraud fighting efforts the agency plans to emphasize.

The plan states that the agency “will identify fraud and abuse vulnerabilities in electronic health records (EHR) systems as articulated in literature and by experts to determine how certified EHR systems address these vulnerabilities.” The agency did not provide further details of its review.

The economics of switching to electronic health records is receiving new scrutiny in the wake of the Center for Public Integrity’s “Cracking the Codes” series, which found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees. The investigation suggested that Medicare billing errors and abuses are worsening as doctors and hospitals switch to electronic health records. A similar report was subsequently published by the New York Times.

Earlier this month, Dr. Farzad Mostashari, the Obama administration’s National Coordinator for Health Information Technology, said he would ask a panel of policy experts to examine the billing controversy. Mostashari said he wants to find out if the digital systems are triggering higher billing codes by allowing doctors to cut and paste records from prior encounters with a patient, a practice known as “cloning.”

Many experts say that this process can raise the size of a patient’s bill, even though it reflects little in the way of added or necessary medical service.

Dr. Stephen R. Levinson, a Connecticut physician and expert on medical coding and billing issues, called the inspector general’s focus a “warning shot across the bow” for physicians. While Medicare requires an efficient auditing effort, Levinson also criticized the “punitive nature” of the audits, which are “turning physicians off.”

Other critics have noted that the software itself may encourage medical professionals to bill for more complex and costly services than they actually deliver — a practice known as “upcoding.”

Republicans in Congress also are expressing concern about the government’s program to spend more than $30 billion helping doctors and hospital purchase digital record keeping systems—and to use them as a means to improve the quality of medical care.

In an Oct. 17 letter to HHS Secretary Kathleen Sebelius, four Republican senators raised questions about whether electronic health records are hiking the number of medical tests doctors ordered as well as boosting billing and “thereby [increasing] the overall costs of the program” to taxpayers.

IMPACT: Administration official asks for Medicare billing review

2012-11-07T23:52:00-05:00

The nation’s top health information technology official has launched an internal review to determine if electronic health records are prompting some doctors and hospitals to overbill Medicare.

Dr. Farzad Mostashari, the Obama administration’s National Coordinator for Health Information Technology, said in an interview Monday afternoon that his policy-setting committee of experts would examine the issue and make recommendations on how to address it.

It is the second government action in the wake of the Center for Public Integrity’s “Cracking the Codes” series, which found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees.

The Center’s year-long investigation, published in September, suggested that Medicare billing errors and abuses are worsening as doctors and hospitals switch to electronic health records. A similar report was subsequently published by the New York Times.

Mostashari said he wants to find out if the digital systems are triggering higher billing codes by allowing doctors to cut and paste records from prior encounters with a patient, a practice known as “cloning.” Many experts say that this process can raise the size of a patient’s bill, even though it reflects little in the way of added or necessary medical service.

“If we are just copying the same information over and over, that’s not good medicine,” Mostashari said. “I’ve asked the policy committee to provide guidance on that.”

Mostshari also said that he wanted to determine if some software functions that do little more than prompt doctors to inflate the size of their bills “should be off limits.”

In response, the American Hospital Association and other groups that received the letter have sought to shift blame to the federal government, which the groups say has done little to set guidelines for acceptable billing tactics, particularly in hospital emergency rooms.

Meanwhile, the 64,000 member American Health Information Management Association has announced it will hold an industry summit in Chicago early next month to press for standard electronic health record guidelines that discourage billing fraud and abuse.

The group said in a statement earlier this month that “recent concerns” that electronic health records “could lead to fraud further highlights the need to establish these standards.”

“We urge the government to truly investigate the depth of the recently reported problems so we can determine the scope of the issue and take steps to fix it,” said Lynne Thomas Gordon, the group’s chief executive officer.

Lydia Washington, an association executive who is chairing the conference, said she hopes the group’s panel of experts will “suggest policy and standards that are needed” both to prevent billing fraud and assure patient safety and data integrity.

President George W. Bush in 2004 set the goal of creating a digital medical record for every American within ten years. In early 2009, the Obama administration added billions of dollars in stimulus funds in the hopes that electronic health records would both enhance the quality of medical care and hold costs in check.

In his interview with the Center, Mostashari stressed that doctors and hospitals must do more than simply buy digital systems to collect stimulus dollars. Medical professionals must gradually meet a series of medical quality standards that are designed to “keep people healthier,” he said. Many medical leaders also want to use digital records to mine data from millions of patients in the hope of discovering better ways to treat disease and cut costs.

But the push for better quality medicine is facing off against an aggressive sales push by technology companies, which typically stress that their products can significantly boost the bottom line. One company predicts an increase of one Medicare coding level for each patient visit to the doctor, potentially adding $225,000 in new revenue in a year, for instance.

Federal officials lack a system to monitor the accuracy of hundreds of billing and medical software packages in use across the country. That shortcoming caught the eye of the American Medical Association, which helped develop the billing codes and favors stricter government standards. In May, the doctors’ group urged officials to require testing that assures digital devices bill accurately and “do not facilitate upcoding.”

The information technology industry generally agrees that computerized medical records can lead to higher costs. But it argues that the software makes it easier for doctors and hospitals to more efficiently document all of the work they do—which they often failed to do on by hand on paper.

While the drive to digitize medicine has received strong support from both political parties in recent years, some cracks have begun to appear.

In an Oct. 4 letter, four Republican House members urged HHS Secretary Sebilius to suspend government payments to hospitals and doctors, arguing the program may be wasting tax dollars and doing little to improve the quality of medical care. They argued that tax dollars spent so far have failed to ensure that the digital systems can share medical information, a key goal. Linking health systems by computer—called interoperability—is expected to help doctors avoid costly duplication of tests and medical errors.

The letter was signed by Ways and Means chairman Dave Camp, R-Mich., Energy and Commerce Chairman Fred Upton, D-Mich., Ways and Means health subcommittee chairman Joe Pitts, R-Pa. and energy health subcommittee chair Wally Herger, R-Calif.

The Ways and Means Committee added in a statement: “Recent reports revealed that the EHR (electronic health records) program may be leading to higher Medicare spending and greater inefficiencies while doing little if anything to improve health outcomes.”

The industry’s trade association, the Healthcare Information and Management Systems Society, opposed the suspension. It said in a statement that “significant progress has been made” and that “widespread interoperability is within reach.”

Medicare, which covers 49 million elderly and disabled people and spent more than $500 billion in 2011, has emerged as a presidential campaign issue, with both Barack Obama and Mitt Romney promising to tame its spending growth while protecting seniors. But there’s been little talk about the impact of billing and coding practices in driving up costs, and what to do about them.

Top House Republicans demand suspension of electronic medical records program

2012-10-05T12:11:27-04:00

Four Republican House leaders want federal officials to suspend payments to hospitals and doctors who switch from paper to electronic health records, arguing the program may be wasting billions of tax dollars and doing little to improve the quality of medical care.

In an Oct. 4 letter to Health and Human Services Secretary Kathleen Sebilius, they suggested that $10 billion spent so far on the program has failed to ensure that the digital systems can share medical information, a key goal. Linking health systems by computer is expected to help doctors do a better job treating the sick by avoiding costly waste, medical errors and duplication of tests.

The letter urges Sebilius to “change the course of direction” of the incentive program to require that doctors and hospitals receiving tax money get digital systems that can “talk with one another.” Failure to do so, the letter says, will result in a “less efficient system that squanders taxpayer dollars and does little, if anything, to improve outcomes for Medicare.” The letter urges Sebelius to suspend payments under the program until rules are written requiring that the systems share information.

The letter is signed by Ways and Means chairman Dave Camp, R-Mich., Energy and Commerce Chairman Fred Upton, D-Mich., Ways and Means health subcommittee chairman Joe Pitts, R-Pa. and energy health subcommittee chair Wally Herger, R-Calif.

The Office of National Coordinator for Health Information Technology, which runs the incentive program, did not respond to a request for comment on the letter on Friday.

The harsh criticism from Congress is unusual given the strong support that digitizing medicine has received from both political parties in recent years.

President George W. Bush in 2004 first set the goal of creating a digital medical record for every American within ten years. But in early 2009 the Obama administration championed using stimulus money to achieve the goal, hoping electronic health records would both enhance the quality of medical care and hold costs in check.

In all, the Obama administration expects to spend more than $30 billion to help doctors and hospitals purchase the gear and use it to improve health care. More than half the nation’s hospitals have received some payments from the program, and so far more than $10 billion has been spent. About half the doctors now billing Medicare are using digital records.

Many medical leaders also hope digital records revolutionize the nation’s health care delivery. For starters, researchers hope to be able to mine data from millions of patients to discover better ways to treat disease and improve the nation’s overall health, which requires computers to link to each other. The initiative also is backed by a broad coalition of groups, from an elite corps of technology experts to organized labor.

But the congressmen also noted emerging concerns that so far the digital medical revolution has prompted doctors and hospitals to bill higher charges to Medicare.

The Center for Public Integrity’s “Cracking the Codes” series, published last month, found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees.

The Center’s year-long investigation strongly suggested that Medicare billing errors and abuses are worsening as doctors and hospitals switch to electronic health records. A similar report was subsequently published by the New York Times.

“Recent reports revealed that the EHR (electronic health records) program may be leading to higher Medicare spending and greater inefficiencies while doing little if anything to improve health outcomes,” the House Ways and Means Committee said in a statement.

Obama administration officials acknowledged the problem for the first time last month, asserting that some doctors and hospitals may be cheating Medicare by using electronic health records to improperly bill the health plan for more complex and costly services than they actually deliver — a practice known as “upcoding.”

The Center for Public Integrity investigation found that digital medical and billing equipment can with the touch of a button create an exquisitely detailed medical file and thus present a challenge to government auditors concerned about preventing billing abuse and fraud.

But in the rush to get the program off the ground federal officials failed to impose strict controls over billing software, despite warnings from several prominent medical fraud authorities to do so. Now officials admit they lack a system to monitor the hundreds of billing and medical software packages in use across the country to prevent overbilling.

Most manufacturers and medical professionals using the gear contend that it merely allows them to more efficiently bill for their services, which in the past was often done by hand.

Medicare’s shaky finances also have emerged as a presidential campaign issue, with both Barack Obama and Mitt Romney promising to tame its spending growth while protecting seniors. But there’s been little talk about the impact of billing and coding practices in driving up costs, and what to do about them.

Suit alleges retaliation for exposure of upcoding

2012-10-05T12:53:26-04:00

Paula Sellers suspected the small Nevada hospital where she worked was overcharging Medicare and other health insurers for some emergency room services.

Sellers ran Boulder City Hospital’s health information department, which helped apply the complex series of Medicare billing codes doctors and hospitals must use to get paid for treating the sick.

But Sellers alleges in a lawsuit that her bosses told her to “back off” when she doubted the accuracy of the coding — and fired her in May when she refused to sign off on it.

“When she tried to complain, she got terminated,” said her lawyer, Jesse Sbaih. The wrongful termination lawsuit, filed in July in Clark County District Court in Las Vegas, has been moved to federal court, where it is pending. The hospital and its billing agent deny the allegations.

Every year, hospitals and doctors use the five-digit billing codes, developed by the American Medical Association, to bill Medicare for hundreds of millions of office visits and other services. Hospitals use these “Evaluation and Management” codes to bill for emergency room and outpatient physician charges and other fees. In past years, Medicare has for the most part paid medical bills with few questions asked, even though the coding process can be confusing and subjective.

But billing practices are facing new scrutiny as Medicare officials and other insurers seek ways to put the brakes on escalating health care costs. On Sept. 24, U.S. Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder notified five groups representing hospitals and medical professionals that they could face criminal prosecutions for padding bills by choosing higher-paying codes even if the services delivered didn’t justify them — a process known as “upcoding.”

The federal government action follows The Center for Public Integrity’s “Cracking the Codes” series, published last month. The year-long investigation found that thousands of medical professionals used the codes to steadily bill higher rates for treating seniors over the last decade — adding $11 billion or more in Medicare costs shouldered by taxpayers.

The Center’s probe uncovered a broad range of costly billing errors and abuses that have plagued Medicare for years — from confusion over how to pick proper payment codes to apparent overcharges in medical offices and hospital emergency rooms. The findings also suggest that Medicare billings are rising as doctors and hospitals switch to electronic health records.

In campaign speeches, both Barack Obama and Mitt Romney have promised to tame Medicare’s spending growth while protecting seniors. But neither candidate has said much about how suspect billing and coding practices drive up costs — even as many in the health care industry are debating possible solutions.

Like several other court cases before it, the Sellers lawsuit shows how disagreements over what’s acceptable coding and billing practice can prove contentious.

In her suit, Sellers said that in December 2010 the Boulder City hospital hired Emcare Inc., which provided emergency room physicians and took over coding duties as part of its contract.

Sellers alleged in her suit that said she quickly concluded that the new coding policy was “alarmingly inaccurate.” In October 2011, she audited 428 claims and found 353 errors, which she said could have caused the hospital to be hit with “penalties by Medicare, Medicaid and others improperly and fraudulently billed,” according to the suit.

Deborah Hileman, senior vice president for corporate communications at Emcare, said in an e-mail that the company “does not comment on legal matters.” But Emcare, which is a defendant in the Sellers suit, has denied wrongdoing and any role in the woman’s dismissal.

Boulder City Hospital officials did not respond to requests for comment. However, hospital lawyers alleged in court filings that Sellers was fired after more than two years on the job for refusing to carry out her duties and for “repeated acts of insubordination.”

In one court filing, Emcare’s lawyers called Sellers an “insecure department head who felt unappreciated and threatened by the hospital’s decision to rely on another provider to perform certain coding tasks.”

Emcare supplies emergency room and other physician staff to more than 500 hospitals across the country. The Dallas-based company says its services can improve the quality of medical care, and asserts that its coding software and billing practices can help hospitals boost their revenue through more accurate coding. The company’s billing arm, for instance, states on its website that one Florida hospital increased its facility charges by 47 percent using the firm’s services.

In her suit, Sellers cited a federal court case in which Emcare Inc in May 1997 paid $7.75 million to federal and state governments to settle accusations of overcharging. Justice Department records state that Emcare allegedly hired a billing company that inflated codes “to reflect more expensive medical procedures than what was actually performed.” according to Justice Department records.

Medicare officials have not said if they are reviewing records from any individual digital medical record or billing companies. But recent Medicare audits of hospital emergency rooms have found high rates of coding errrors, including one review in March of emergency rooms in Texas and Oklahoma that found $45 of every $100 was “paid in error.” Officials worry that some in the rapidly growing industry, which routinely boasts that its software can boost the bottom line, may be tempted to overcharge.

“There are troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled,” the Sept. 24 warning letter from Sebelius and Holder states.

The letter went on to say that “false documentation of care is not just bad patient care; it’s illegal,” and threatened criminal prosecutions.

Hospital and physician groups don’t dispute that coding levels have been on the rise, or that digital records systems are partly responsible. But they argue that computers are simply better than the human hand at documenting services rendered and billing for them — a position echoed by the software companies.

For instance, the American Hospital Association agreed that “upcoding” should not be tolerated, but added that “more accurate documentation and coding does not necessarily equate with fraud.”

The group also suggested that federal officials are partly to blame for failing to write clear guidelines for hospital emergency department and clinic visits — a request the group said it had made 11 times since 2001.

Dr. Donald W. Simborg, a California physician who headed two government panels that warned of a surge in fraud related to use of electronic health records, commended government officials for cracking down. But in a Sept. 25 letter in response to Sebelius, he argued government needs to move “beyond threats of prosecution” and focus on adding fraud detection to the electronic systems sold to doctors and hospitals.

As officials in Washington step up scrutiny of the process, thousands of workers who assist in coding for doctors and hospitals sometimes struggle to interpret the rules accurately.

Sellers, for instance, argued that she couldn’t go along with what she considered to be a breach of ethics and so she decided to change the coding against the wishes of her bosses.

In response, administrators at Boulder City Hospital said they took Sellers’ claims of unethical coding seriously and hired an outside firm to investigate. The firm found her claims to be “unsubstantiated,” the hospital wrote in a disciplinary report.

“Your actions of recoding resulted in errors and loss of revenue,” the report said.

Sellers’ “unjustifiable failure and refusal to comply with her supervisors’ directives delayed the billing and reimbursement of more than $250,000 in revenues at a time when the hospital was in dire need of funds,” hospital lawyers wrote in court filings.

IMPACT: Cabinet officials signal crackdown on Medicare billing abuse

2012-10-09T22:18:29-04:00

Top federal officials are stepping up scrutiny for doctors and hospitals that may be cheating Medicare by using electronic health records to improperly bill the health plan for more complex and costly services than they deliver.

U.S. Health and Human Services Secretary Kathleen Sebelius and Attorney General Eric Holder notified five medical groups of their intention to ramp up investigative oversight, including possible criminal prosecutions, by letter on Monday.

The government action follows The Center for Public Integrity’s “Cracking the Codes” series, published last week. The year-long investigation found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees.

“There are troubling indications that some providers are using this technology to game the system, possibly to obtain payments to which they are not entitled,” the letter states, adding: “There are also reports that some hospitals may be using electronic health records to facilitate ‘upcoding’ of the intensity of care or severity of patients’ condition as a means to profit with no commensurate improvements in the quality of care.”

The letter said that “false documentation of care is not just bad patient care; it’s illegal.” The Centers for Medicare and Medicaid Services, which oversees the program “is specifically reviewing billing through audits to identify and prevent improper billing.” The letter went on to say that CMS is “initiating more extensive medical reviews to ensure that providers are coding…accurately.”

The letter adds that “law enforcement will take appropriate steps to pursue health care providers who misuse electronic health records to bill for services never provided. The Department of Justice, Department of Health and Human Services, the FBI and other law enforcement agencies are monitoring these trends and will take action where warranted.”

Most of the five groups sent the letter on Monday had no comment. The American Hospital Association said it agreed that upcoding should not be tolerated, but added that “more accurate documentation and coding does not necessarily equate with fraud.” The group also asked federal officials to develop national guidelines for hospital emergency department and clinic visits —a request the group said it hade made 11 times since 2001.

The group said it does not question the need for auditing to identify billing errors, but added that “the flood of new auditing programs…is drowning hospitals with a deluge of redundant audits, unmanageable medical record requests and inappropriate payment denials.”

The suggestion that digital medical gear has fueled a rise in potentially improper medical billing is a touchy one for the Obama administration, which has championed electronic health records as a means to both improve the quality of medical care and cut costs. The administration is spending more than $30 billion in economic stimulus funds to help doctors and hospitals purchase the gear. More than half the nation’s hospitals have received some payments from the program, according to HHS.

But critics have also noted that digital medical and billing equipment can with the touch of a button create an exquisitely detailed medical file and thus present a challenge to government auditors concerned about preventing fraud.

The letter sent Monday was the first acknowledgment by top federal officials that the digital era may spawn more costly Medicare fraud and billing abuse. In the past, federal officials have largely accepted the explanations of doctors and hospitals that higher-level billings are mainly the result of patients on Medicare getting sicker and older and taking more time to treat—even though there’s little evidence to back that view.

Sebelius and Holder took aim at the common practice of using electronic health record software to “clone” documentation from previous medical visits “in order to inflate what providers get paid.”

“We will not tolerate health care fraud,” the letter states. “The President initiated in 2009 an unprecedented cabinet-level effort to combat health care fraud and protect the Medicare trust fund and we take those responsibilities very seriously,” the letter states.

Medicare pays doctors for office visits using five escalating payment codes, which range from a minimal visit of about five minutes for about $20 to about $140 paid for more complex treatments that generally take 40 minutes or more of face-to-face time with the doctor. Federal officials expect doctors to report a range of the five codes because some patients require more time and effort to treat than others. Medicare uses the scales to pay for more than 200 million office visits each year and other doctor services that cost taxpayers more than $33 billion.

But doctors over the past decade have increasingly spurned lower-level codes for ones that pay better —even though there’s little hard evidence that they spent more time with patients or that patients were sicker and required more complicated and time-consuming care. Hospitals also use the billing codes, and the Center found similar problems with billing for emergency room services.

More than 7,500 physicians billed the two top-paying codes for three out of four office visits in 2008, a sharp rise from the numbers of doctors who did so at the start of the decade, the Center’s data analysis found. Officials said such changes in billing can signal that some doctors are billing for more complex services than they delivered, a practice known as “upcoding.”

As the government has invested more heavily in electronic health records, hundreds of technology firms have begun marketing digital records system, often doing so by promising doctors and hospitals that they can significantly boost revenues with the devices.

Most manufacturers and the hospitals using the gear contend that the digital gear merely allows them to more efficiently bill for their services, which in the past were often done by hand.

In 2010 alone, Medicare paid for more than six million more patient visits at the second highest level code, 99214, than the year before. That upsurge cost Medicare more than $1 billion, government records show.

CMS acting Administrator Marilyn Tavenner earlier this year confirmed that the agency planned to contact as many as 5,000 doctors it identified as billing outside norms, but said the effort was “not intended to be punitive or sent as an indication of fraud.”

She said the agency would focus on the top ten high billers in each Medicare region as a first step, but that it might cost the agency more to investigate suspicious claims than it could collect.

The agency, Tavenner wrote in a letter published in a May Inspector General’s report , “must take into account the respective return on investment of medical review activities.”

The five medical groups sent the letter are: the American Hospital Association, the Association of Academic Health Centers, the National Association of Public Hospitals and Health Systems, the Federation of American Hospitals.

The association of public hospitals said in a statement that it “shares the government’s goal of a health care system that offers high-quality, affordable care. Our hospitals and health systems adhere to high ethical standards and reject practices that might result in fraudulent or improper claims. We stand ready to help regulators understand fully the many aspects of electronic health record use in the hospital setting as they consider actions to ensure proper billing practices.”

Grassley says providers who overbill Medicare are draining its finances

2012-10-09T22:18:29-04:00

Medical professionals who cheat Medicare by billing for more complex and costly services than they deliver threaten to drain the elderly health-care program’s already shaky finances, Sen. Charles Grassley said Thursday.

The Iowa Republican’s comments came in reaction to The Center for Public Integrity’s “Cracking the Codes” series published this week. The investigation found that thousands of medical professionals have steadily billed higher rates for treating seniors on Medicare over the last decade — adding $11 billion or more to their fees.

Grassley called the findings “disturbing,” though “not surprising” because any time Medicare creates a new payment structure, “a cottage industry develops to teach providers how to maximize revenue in the system.”

The Center’s year-long examination uncovered a variety of costly billing errors and abuses that have plagued Medicare for years—from confusion over how to pick proper payment codes to outright overcharges. The findings also suggest the problems are worsening as doctors and hospitals switch to electronic health records.

Medicare pays doctors for office visits using five escalating payment codes, which range from a minimal visit of about five minutes time for about $20 to about $140 paid for more complex treatments that generally take 40 minutes or more of face-to-face time with the doctor. Federal officials expect a medical practice to report a range of the five codes because some patients require more time and effort to treat than others. Medicare uses the scales to pay for more than 200 million office visits each year and other doctor services that cost taxpayers more than $33 billion.

But Medicare billing data analyzed by the Center show that doctors over the past decade increasingly abandoned lower-level codes for better paying ones—even though there’s little hard evidence that they spent more time with patients or that patients were sicker and required more complicated and time-consuming care. Hospitals also use the billing codes, and the Center found similar problems with billing for emergency room services

More than 7,500 physicians billed the two top paying codes for three out of four office visits in 2008, a sharp rise from the numbers of doctors who did so at the start of the decade, the Center’s data analysis found. Officials said such changes in billing can signal that some doctors are billing for more complex services than they delivered, a practice known as “upcoding.”

“Providers should be compensated appropriately for their time and skills. If there are concerns that payment rates are inadequate, we need to have an open and frank discussion about that,” Grassley said in a statement.

“However, anyone who’s systematically upcoding to make up for what are seen as inadequate payment rates is cheating the system. That kind of gaming is self-defeating because it makes Medicare’s financial condition worse, with less money available for services,” Grassley said.

In 2010 alone, Medicare paid for more than six million more visits at the second highest level code, 99214, than the year before. That upsurge cost Medicare more than $1 billion, government records show.

Medicare’s finances have emerged as a presidential campaign issue, with both Barack Obama and Mitt Romney vowing to tame its spending growth while protecting seniors. But there’s been little talk about the impact of billing and coding practices in driving up costs, and what to do about them.

However, the American Academy of Family Physicians said it expects an upcoming surge in Medicare audits of doctor billings for the two highest codes—99214 and 99215— in 15 states, including Florida and Texas.

The 99214 code requires two of three components: a detailed history or examination and medical decision making of “moderate complexity.” It typically requires 25 minutes of face-to-face contact with the patient.

To bill for the top code, 99215, doctors must do two of three things: a comprehensive examination, a detailed history of the patient’s health status, or make a medical decision of “high complexity.” That typically requires 40 minutes.

A spokesperson for the Centers for Medicare and Medicaid Services, which runs Medicare, said the proposal to step up audits “was not a final decision” and the pilot project would review only the top code.

“This is not a widespread audit. Rather it is a test to determine if a widespread audit should be approved to proceed,” the statement said.

These “Evaluation and Management” codes were developed in 1992 by the American Medical Association, which controls their use.

Physician groups argue that coding guidelines are vague and subjective and that just as many doctors undervalue their work by picking lower codes as bill too much. Medical organizations also argue that more elderly patients over the past decade have been diagnosed with multiple health problems that require additional time and effort to treat. But the Medicare billing data analyzed by the Center do not show that patients are getting more infirm; their reasons for visiting the doctor’s office and hospital emergency rooms were essentially unchanged over the decade. And the average age of patients remained the same as well. It is clear that Medicare auditors have uncovered a high rate of billing mistakes — many of them overcharges—in several states.

A Medicare contractor called Trailblazer audited patient office visits in early 2010 in Virginia and found mistakes in half the records it reviewed. A similar audit in Colorado, New Mexico, Oklahoma and Texas reported a 91% error rate for billing for office visits, for instance.

She said the agency would focus on the top ten high billers in each Medicare region as a first step, but that it might cost the agency more to investigate suspicious claims than it could collect.

The agency, Tavenner wrote in a letter published in a May Inspector General’s report , “must take into account the respective return on investment of medical review activities.”

At the same time, the agency is considering stepping up the audits by Recovery Audit Contractors, known as RACs, an oversight program created by Congress to identify Medicare overpayments and recoup them.

These reviews have come under fire from doctors, particularly because the companies are paid a percentage of any money they recover. The American Medical Association in a position paper said it is “deeply opposed” to the contingency fees “since it is a bounty-hunter like program that creates a financial incentive for RACs to identify overpayments.”

In June, a bi-partisan group of lawmakers asked the Government Accountability Office to evaluate whether the program is working effectively and whether some doctors are being subjected to multiple audits at the same time.

“What we’re pushing for is legislative oversight,” said Frank Cohen, a Florida consultant who assists doctors with coding and billing issues. He said the companies have become “far too aggressive and zealous with regard to their audit tactics.”

CMS in its statement said that the agency “monitors the contractors’ actions closely” and reviews a sample of their work regularly.

The 15 states covered by the proposed RAC audit are: Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, New Mexico, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and West Virginia.

Billing complexity spawns new industry

2012-11-01T11:48:15-04:00

Eleven years ago, Dr. Kathryn Locatell’s testimony at a U.S. Senate hearing on alleged Medicare billing abuses generated a rush of media coverage, but little lasting reform.

Locatell, a California physician, helped expose medical billing consultants who made a living teaching doctors how to use the billing system to reel in higher fees.

The techniques ranged from billing for medical treatments that weren’t needed to packing a patient’s file with irrelevant details as a means to justify higher, more lucrative, Medicare billing codes.

“The information presented to us at the seminars did not include any method of … ensuring that the services billed for were medically necessary,” Locatell testified at the June 2001 Senate Finance Committee hearing.

Despite much legislative hand-wringing and media attention — CBS Evening News told her story prominently — little changed in the aftermath of the congressional probe.

More than a decade later, federal officials are still struggling to make sure doctors code accurately and charge Medicare only for treatments that are medically necessary, a Center for Public Integrity investigation has found.

The Center’s analysis of Medicare billing records found that more than 7,500 doctors billed the two top paying codes for three out of four office visits, a sharp rise from the start of the decade. Government records also show medical professionals billing billions of dollars in suspect payments in recent years through coding errors.

The Center also examined more than a dozen recent Medicare audits that revealed medical care which auditors said was not necessary, properly documented or correctly coded in a strikingly high percentage of patient files sampled — sometimes half or more. Medicare officials projected overcharges of more than $1.4 billion due to coding errors for office visits during 2010 alone.

Locatell, a geriatric medicine specialist in Sacramento, said doctors today face even more financial pressure to chase dollars than a decade ago.

“It’s so easy to pad your documentation so you can meet the requirements” for higher billing codes, she said in an interview. “Until we get enough movement of people clamoring for something different … it will not change, and vested interests won’t allow it to change.”

Medical groups deny that their members “upcode” patient visits. Most doctors, they say, bill less than they deserve, often because they aren’t exacting in writing down all the work they do, or out of fear of being audited.

But the American Medical Association, which wrote the billing codes and controls their use, also has raised the specter of increased upcoding tied to the explosion in use of electronic health records. In May, the AMA urged tighter government controls to assure that the digital devices don’t prompt upcoding by, among other things, facilitating “documentation of irrelevant services.”

‘Codetalkers’

Medicare and other health insurers use the AMA’s fee scales to pay doctors for routine medical services, such as office visits and other care provided in hospitals and nursing homes.

The five-digit scales, called “Evaluation and Management” codes, reflect the complexity of the service and the time it usually takes. Medicare paid out more than $33 billion in 2010 using the codes, which are the bread and butter for many medical practices.

Yet from the early 1990s, when the current system was established, coding has bewildered many doctors. Dr. Stephen Levinson, a coding expert and physician, notes that doctors aren’t taught much in medical school about how to code correctly — even though it’s essential to getting paid. Many doctors would rather focus on treating patients than wading through arcane billing tracts, he said.

“Doctors want to focus on patients. They’re not policy wonks,” noted Michael Miscoe, a Pennsylvania health care lawyer and medical coding specialist.

The need for coding assistance has spawned a multi-billion dollar industry that employs tens of thousands of professional coders. Some work in doctors’ offices and hospitals, while others sift through computerized records at home or at billing companies. An estimated 2,000 companies nationwide handle billing for doctors and hospitals, according to the Healthcare Billing and Management Association

By all accounts, demand is rising. Courses on how to code are a staple of online universities and training programs. The U.S. Department of Labor has forecast medical coding to grow faster than most other occupations and create 37,700 new jobs by 2020.

Two national groups have set curriculum and accreditation standards for coders. The American Association of Professional Coders, founded in 1988, boasts more than 117,000 members. The American Health Information Management Association, which has advocated for accurate medical record keeping since 1928, has 64,000 members. Both groups have written ethics canons to which members must adhere.

Raemarie Jimenez, the director of education for the coders’ association, said doctors aren’t trained in the “business of medicine” and using a professional offers them a “safeguard.”

Yet it’s widely accepted in medicine that coding is more art than science and that two experts often will disagree over which code to assign. And despite years of government campaigns to foster correct coding, errors are common and show signs of worsening with electronic billing systems.

Federal officials concede they have no idea how much tax money is lost through simple coding mistakes and disagreements, and how much occurs from deliberate overcharging. It’s also not clear who is making the mistakes. The Medicare billing records analyzed by the Center for Public Integrity don’t indicate whether high-billing doctors coded their own bills, hired professional coders or billing companies, or took advice from consultants.

The system’s shortcomings were evident after investigators, with Locatell’s help, went undercover in 2001 and sat in on sessions conducted by “revenue maximization” consultants.

At the ensuing hearing, U.S. Sen. Charles Grassley, R-Iowa, lamented that officials had no way to know how many doctors were turning to billing consultants — let alone how many handed out dubious advice.

“There is no mandatory accreditation or certification of health care consultants. Anyone can put out a shingle and call themselves a health care consultant,” Grassley said at the time.

Robert Hast, a GAO investigator involved in the 2001 undercover operation, testified that certain advice dispensed at the seminars was “inconsistent” with federal Medicare law.

One example cited: a patient with a sore throat for whom the doctor collected “extraneous information” that once entered into the medical file was used to justify a higher billing code. Another consultant had advocated diagnostic tests such as heart monitoring tests for all cardiac patients, whether needed or not, according to testimony.

One consultant’s website promised to boost a doctor’s earnings by $10,000 per month, with the consultant pocketing 40 percent of the money, witnesses said. Though federal officials said at the time and still believe that these “percentage billing arrangements” can create an incentive to overcharge, they remain in wide use. But the Healthcare Billing and Management Association contends these deals are “appropriate and reasonable,” according to executive director Brad Lund.

Though most don’t provide precise financial details, a range of billing and coding consultants promise doctors their methods and products will boost revenue. One website, for instance, promises its coding methods will stay on the right side of the law and generate a “10%-15% increase in revenue.”

There’s still little oversight of consultants who offer billing advice, even though their numbers appear to be increasing with a decision by the federal government to spend as much as $30 billion in stimulus funds helping doctors and hospitals purchase electronic health records.

For instance, some online advertisements for electronic records and billing software assure doctors they can profit from higher coding once they get wired up.

Many billing consultants argue that doctors are simply getting their just due after years of understating the work they perform. Still, several said that coding controversies will not go away so long as doctors are paid by the number of services they provide.

Florida consultant Frank Cohen, for instance, believes that little will change unless the government scraps the billing codes and find new methods for paying doctors.

Cohen, who advises physicians on proper coding, said “nebulous” coding guidelines assure “there’s going to be a wide range of errors.”

Health lawyer and coding expert Miscoe agreed. “Fundamentally, we need to change the reimbursement system so doctors can go back to being doctors,” he said. “There’s got to be something wrong when they [doctors] need coding experts to get through a regular day.”

Growth of electronic medical records eases path to inflated bills

2013-05-02T16:46:45-04:00

Electronic medical records, long touted by government officials as a critical tool for cutting health care costs, appear to be prompting some doctors and hospitals to bill higher fees to Medicare for treating seniors.

The federal government’s campaign to wire up medicine started under President George W. Bush. But the initiative hit warp drive with a February 2009 decision by Congress and the Obama administration to spend as much as $30 billion in economic stimulus money to help doctors and hospitals buy the equipment needed to convert medical record-keeping from paper files.

In the rush to get the program off the ground, though, federal officials failed to impose strict controls over billing software, despite warnings from several prominent medical fraud authorities. Now that decision could come back to haunt policy makers and taxpayers alike, a Center for Public Integrity investigation has found.

Experts say digital medical records may prove — as promised — to be cost-effective, allowing smoother information sharing that helps cut down on wasteful spending and medical errors.

Yet Medicare regulators also acknowledge they are struggling to rein in a surge of aggressive — and potentially expensive — billing by doctors and hospitals that they have linked, at least anecdotally, to the rapid proliferation of the billing software and electronic medical records. A variety of federal reports and whistleblower suits reflect these concerns.

Regulators may lack the auditing tools to verify the legitimacy of millions of medical bills spit out by computerized records programs, which can create exquisitely detailed patient files with just a few mouse clicks.

“This is a new era for investigators,” said Jennifer Trussell, who directs the investigations unit of the U.S. Department of Health and Human Services Office of Inspector General.

“We are all excited about the many benefits of electronic health records, but we need to be on the lookout for unscrupulous providers who take advantage of this new technology,” she said.

The Center for Public Integrity has recently documented how some health professionals have seemingly manipulated Medicare billing codes to gain higher fees. The investigation unmasked thousands of doctors consistently billing higher-paying treatment codes than their peers, despite little evidence in many cases that they provided more care.

Some of the sharpest surges in more costly coding have occurred in hospital emergency rooms, according to the Center’s data analysis, where billing software has been widely used.

Interviews with hospital administrators, doctors and health information technology professionals confirmed that digital billing gear often prompts higher coding, though many in the medical field argue that they are simply recouping money that they previously failed to collect.

For example, Holy Name Medical Center in Teaneck, N.J., saw a spike in billing codes after wiring up its emergency room in 2007, according to hospital CEO Joe Lemaire.

Coding ‘Slam Dunk’

Electronic medical records can influence pay scales known as “Evaluation and Management” codes. Medicare spent more than $33.5 billion in 2010 using these numeric codes for services ranging from routine doctor office visits to outpatient hospital or nursing home care. More than half the doctors billing Medicare were using electronic records in 2011, and more are expected to follow.

For an office visit, a doctor must choose one of five escalating payment codes that best reflects the amount of time spent with a patient as well as the complexity of the care. The lowest-level code for a minor problem, 99211, pays about $20. But the doctor can bill roughly $100 more for the top level. Hospitals use similar codes for billing emergency room and outpatient services.

The subjective nature of the coding process has left the medical community and those who pay its bills in constant conflict. Many doctors and billing consultants argue that most practitioners habitually charge too little because they neglect to put down on paper all of the work they do, which if done more diligently would justify higher codes and fees.

The HHS Agency for Healthcare Research and Quality, an advocate for pressing ahead with electronic health records, accepted that view when it wrote in September 2009 that doctors may choose billing codes that are too low. The agency suggested that converting to digital systems would enable doctors to bill higher fees, “translating into enhanced revenue.”

By contrast, government auditors and many private insurance investigators see evidence that some doctors pick higher codes to inflate their bills — a practice known in medical circles as “upcoding.”

The rapid expansion of electronic health records is adding a whole new dimension to that quarrel. Government officials, however, have yet to step in and settle whether the hundreds of software products on the market consistently prompt doctors and hospitals to bill at higher levels than they did prior to going electronic — and if the higher fees are merited.

Doctor Backlash

Warnings that digital billing equipment could unleash a torrent of inflated charges date back to the administration of President George W. Bush.

In July 2005, the American Health Information Management Association identified an “unintended incentive for fraud because healthcare organizations and software developers need to prove a return on investment for the coding products,” reads the report, which was commissioned by HHS officials.

Two months later, a second American Health Information Management Association panel stated that “without a deliberative effort to build fraud management” into networks of digital medical records “health care payers and consumers will be exposed to new and potentially increased vulnerability to electronically-enabled healthcare fraud.”

Dr. Donald W. Simborg, a California physician who co-chaired that panel, said its findings were dismissed out of fear that doctors would shun the digital devices if they thought buying one might lead the government to second-guess their fees, and perhaps even accuse them of impropriety.

Simborg also headed up an executive team HHS turned to in 2007 to recommend fraud controls in digital gear certified for sale to doctors and hospitals.

In a May 2007 report, the 23-member group, which included representatives from medical groups, health insurers and government, warned against approving software that assisted doctors in selecting billing codes. It is “not appropriate to suggest to the provider that certain additional data, if entered, would increase the level” of the billing code, according to the report.

“Our report was totally ignored for fear of a physician backlash,” said Simborg. The report saw print under the bland title “Recommended Requirements for Enhancing Data Quality in Electronic Health Records” that gave little hint it dealt with the sensitive fraud issue, he said.

The billing tools that the study panel panned have been trumpeted in recent years by electronic health record manufacturers hoping to persuade doctors and hospitals to shell out thousands of dollars — millions in the case of a hospital — to computerize.

“This is the big elephant right now and we aren’t touching it,” said Simborg.

Dr. Robert Kolodner, a physician who headed the federal push for electronic medical records in 2007, acknowledged that billing abuse took a backseat to steps likely to entice the medical community to embrace the new technology.

Kolodner said officials were certain the savings achieved by computerizing medicine would be so great that billing abuse, “while needing to be monitored, was not something that should be put as the primary issue at that time.”

That view didn’t change much with the 2009 arrival of the Obama team, which was sympathetic to some of the tech companies that stood to benefit handsomely from the conversion.

For instance, giant tech vendor McKesson submitted to the Obama-Biden Transition Team its vision for the rollout, which recommended “significant start-up funds” to get the ball rolling.

Since 2009, the Obama administration has held dozens of public meetings on electronic health record policies and standards, but none that focused primarily on fraud control and billing integrity.

The administration’s Office of National Coordinator for Health Information Technology, which is spearheading the drive, declined to discuss the billing controversy.

But on April 27 of this year that office asked the HHS Office of Inspector General to study the issue. Spokesman Peter Ashkenaz said that ONC “will review any recommendations that are made in the report and will address those at that time.”

Donald White, a spokesman for the inspector general’s office, said that the issue “is on the radar” and the office will be “looking into these codes and how electronic health records may be affecting them.”

But government officials admit they lack a system to monitor the hundreds of billing and medical software packages in use across the country. That shortcoming caught the eye of the American Medical Association, which helped develop the billing codes and favors stricter government standards. In May, the doctors’ group urged officials to require testing that assures digital devices bill accurately and “do not facilitate upcoding.”

‘Improper Payments’

Connecticut doctor Stephen R. Levinson, who authored a major textbook on medical coding published by the AMA, strongly believes that many electronic medical records systems improperly raise coding levels.

He said the units are programmed to easily allow doctors to cut and paste records from prior encounters with a patient so that “records of every visit read almost word for word the same except for minor variations confined almost exclusively to the chief complaint.”

That extra documentation often triggers the software to raise the billing level and the size of the patient’s bill. But Levinson said information from previous visits is often not “medically necessary” to treat a current problem — and thus not a legitimate factor in charges.

Levinson said “cloned documentation” in a patient’s file often “doesn’t make sense clinically,” but it steps up billing and rewards the doctors with a “slam dunk” higher billing level, even though it takes 30 seconds to copy and paste.

“This is done in the wrong way and doesn’t satisfy the patient’s needs,” he said.

These “cut and paste” features produce voluminous files that are difficult for auditors to challenge, even when they suspect that the doctor did very little to warrant the higher fees.

That’s starting to change, however, greatly raising the stakes for doctors and hospitals that could face a demand for repayment from the government on behalf of patients.

Insurance auditors criticized “over documentation” as a billing ploy as far back as 2006. That year Medicare contractor First Coast Service Options chided Connecticut doctors who “frequently over-documented” to justify higher billing codes.

The Department of Health and Human Services Office of Inspector General late last year announced it would ratchet up audits of “potentially improper payments” linked to electronic medical records. The office also advised doctors they could be held accountable if the codes they used didn’t “accurately reflect the services they provide.”

Electronic health records figured prominently in a critical Medicare audit of Texas and Oklahoma hospital emergency rooms in March. The audit concluded that $45.14 of every $100 billed for emergency room care “was paid in error.”

Auditors said that billing codes were “higher than was reasonable and necessary to adequately care for the patient’s needs or treat the presenting problem.”

One unidentified hospital billed Medicare for the highest level code, 99285, for treating a woman who arrived at the emergency room complaining of mild to moderate abdominal pain. The code is generally reserved for conditions of “high severity” that “pose an immediate significant threat to life and limb,” auditors wrote.

After a battery of tests, including a CT scan, and intravenous antibiotics and morphine, the doctor diagnosed a urinary tract infection, sent the woman home and told her to follow up with her regular doctor.

Auditors said the woman’s case should have been coded two rungs lower based on the degree of medical decision-making required.

They also criticized the electronic record system for generating “testis and penile assessment findings” for a female, noting “coding at a higher level based on clinically unnecessary (or anatomically incorrect) systems examined is not acceptable.”

Hospitals have faced scrutiny over their use of electronic billing in emergency rooms from other quarters as well.

Dr. Alan Gravett, an Illinois emergency physician, argues in a federal “whistleblower” lawsuit that hospitals have jacked up emergency room bills with the help of aggressive billing software.

The doctor filed suit under seal in the U.S. District Court for Northern Illinois in January 2007. He alleges Methodist Medical Center in Peoria, Ill., where he worked for six years, installed a McKesson Corporation digital records system in March 2006 “specifically to increase its billings and recovery from government funded health insurance programs.”

Gravett alleges that the billing system had a “tendency to inflate nearly every” emergency room code. This happened “despite the physicians’ belief that lower … codes were warranted based on the degree of care they provided,” according to the suit.

The lawsuit alleged that patients who were treated in the emergency room for many seemingly simple conditions were “as a matter of course” coded at high levels. The diagnoses included toe injury, sprained ankle and toothache.

The software, according to Gravett, prompted charges for conditions such as “alcoholic intoxication” or “psychiatric cases” to a code four or five, “even when such patients are treated and released, or released with no treatment.”

The screen also prompts doctors to add documentation to reach a higher coding level, according to Gravett’s court filings.

To pressure doctors to go along, the hospital distributed a monthly report called a “lost charge analysis,” which ranked doctors by how much revenue they produced, according to the suit.

“This was done to pressure the physicians to out-bill one another, and weed out physicians that were not generating as much income as those willing to upcode,” according to the court filing.

Methodist hospital spokesman Duane Funk said the hospital has yet to be served with the suit and would have no comment. McKesson did not respond to requests for comment.

A second “whistleblower” lawsuit filed in the state of Washington in 2006 alleged that Health Management Associates, a Florida-based hospital chain, used software called Pro-Med Clinical Systems that prompted questionable billing.

The suit was brought by two emergency room physicians at one of the company’s hospitals, Yakima Regional Medical and Heart Center. The doctors alleged that using Pro-Med led to “misleading medical charts,” including “examinations which had not occurred and physical observations which had not been noted by the physician.”

The software “automatically ordered a series of expensive and unnecessary tests,” according to the suit, which was dismissed in February 2009.

Pro-Med, based in Coral Springs, Fla., was not named as a defendant. Pro-Med CEO Thomas Grossjung said the hospital, not the software company, set the treatment protocols.

Maryann Hodge, vice president of marketing for Health Management Associates, said the hospital chain was never served with a copy of the suit, though it had cooperated with federal officials investigating the matter.

The hospital chain’s use of Pro-Med has come under review in a more recent federal investigation of emergency room billing, records show.

Health Management Associates, which owns or leases more than 60 hospitals in 15 states, disclosed in a May Securities and Exchange Commission filing that the HHS inspector general’s office was investigating it’s business operations, including whether “Pro-Med software has led to any medically unnecessary tests or admissions.” Hodge said the company could not comment further on the investigation.

A second hospital chain that has used Pro-Med also has been served with a subpoena from federal investigators.

Community Health Systems, Inc., which owns and operates some 130 hospitals in more than two-dozen states, told investors in April 2011 that HHS was investigating “possible improper claims.” The subpoena requested documents concerning use of the Pro-Med software in emergency rooms, according to the SEC filing. Tomi Galin, Community Health Systems’ vice-president for corporate communications, said at the chain's hospitals the software does not order tests or “make any recommendation to physicians about whether to admit patients, place patients in observation or discharge patients.”

Both hospital chains said in SEC filings that they are cooperating with investigators. Pro-Med CEO Grossjung said his firm also had met with federal investigators, but the probe had “nothing to do with the software itself.”

Doctors’ groups also are reporting higher fees associated with electronic records, though they argue that the systems merely allow them to catch up with billing practices that for years did not pay them enough.

Robert Tennant, a Washington lobbyist with the Medical Group Management Association, which represents large medical practices, said the software simply helps doctors pick the correct code. “With a paper based system there’s a little bit of concern from providers that they don’t have sufficient documentation to support a particular” coding level, he said. Electronic systems, however, can quickly retrieve a patient’s documented history.

“I don’t use the term ‘upcode.’ I use ‘correct code.’ I see it more as physicians being reimbursed more appropriately for the work that they’re doing,” he said.

After the Gold Rush

Judging from their marketing strategies, there’s little doubt among the makers of electronic health records that their products will pay for themselves — and then some — through higher coding of patient bills.

Sales literature touts features such as “charge capture,” highlighting the computer’s skill at never missing a billable item that a human might overlook.

Many companies stress that the software can pay for itself through more lucrative codes, a benefit called “ROI,” short for return on investment. That pitch suggests a doctor who collects stimulus payments over time will cover the purchase costs and eventually turn a nice profit as a result of higher fees from higher coding.

For instance, one manufacturer predicts a rise of one coding level for each patient visit, which it said could add up to $225,000 over the course of a year. Another cites a medical journal report that a medical practice in Utah “produced an average billable gain of $26 per patient visit.”

Ross Koppel, a sociology professor at the University of Pennsylvania who has studied design weaknesses in the software, said that sales agents stress how the machines help doctors document the work they do.

“That presumably is fair and good, but everybody knows there is a ‘wink, wink’ behind that indicating it will help … make the patient’s visit look more involved than it is.” That “generates additional revenue” for doctors, Koppel said.

The industry’s trade association, the Healthcare Information and Management Systems Society, has published a guide for doctors to use in estimating how much new revenue they can expect by going electronic. It cites as one key benefit, “increased coding due to elimination of lost charges and using appropriate coding levels based on services delivered.”

But some others note that doctors may initially lose money from wiring up their practices, mainly due to the time it takes them and their staffs to learn how to use the equipment and its high upfront cost.

‘Unintended Consequences’

The emphasis on improving the bottom line, rather than the quality of medical care, has disappointed some longtime health policy hands.

The Obama administration’s foray into digital medicine “has backfired at this point,” said Dr. Robert Berenson, a former vice chairman of MedPac, a commission that advises Congress on Medicare payment issues.

Berenson said that the current crop of electronic medical records encourage too much medical documentation “for the purposes of billing” and not better patient care.

The software helps doctors submit bills for “a higher level code than was performed,” said Berenson, who served as a member of the 2008 Obama transition team on health policy. “It’s a lot of money and the money goes right to the bottom line,” he said.

The criticisms are not just about money. The American College of Physicians, which represents more than 100,000 internists, considered the threat to patient safety serious enough that in May it announced a class for doctors in “potential problems associated with the use” of electronic medical records and “strategies to overcome these problems.”

Some doctors grumble about slogging through pages of redundant information that appears to be in a patient’s file simply to satisfy requirements for stepped up billing codes.

Just like in the days of poor physician handwriting, the voluminous computer generated files can prove tough for doctors to quickly decipher and decide how to treat a patient’s illness.

“We’re getting a whole generation of records that are not illegible, they are largely un-interpretable. It’s a horrific problem,” said Dr. Bob Elson, a former health information technology specialist, now a physician at the Cleveland Clinic.

These criticisms aside, many in the medical community regard the switchover not only as inevitable, but also as an opportunity to revolutionize medicine. For starters, researchers hope to be able to mine data from millions of patients to discover better ways to treat disease and improve the nation’s overall health.

The initiative continues to pick up speed behind a broad coalition of political players, from an elite corps of technology experts to organized labor groups that support moving medicine into the 21st century with dispatch.

Tennant, whose group represents medical practices, noted that Congress and the Obama administration have sent a “clear message” that they want physicians to adopt electronic health records.

He said “a slight uptick” in codes would be more than offset by savings on duplicative tests and other waste associated with paper records systems, and by higher quality care.

So far, the government has shelled out about $5 billion in incentive payments to doctors and hospitals that have adopted the technology, according to the Government Accounting Office.

How much Medicare has paid out in higher codes related to digital billing is trickier to assess. In 2011, 57% of Medicare doctors were using an electronic health record, most for three years or less, according to an HHS survey. Officials expect those numbers to climb as doctors scramble to avoid Medicare payment cuts to those who fail to adopt the technology starting in 2015.

But Elson, the Cleveland clinic doctor, said that government officials may have oversold the benefits to Congress by failing to account for health care costs to rise from higher coding, at least in the short term.

“That’s a huge oversight if that whole issue wasn’t factored into the strategy,” Elson said.

How doctors and hospitals have collected billions in questionable Medicare fees

2013-02-13T17:55:11-05:00

Thousands of doctors and other medical professionals have steadily billed higher rates for treating elderly patients on Medicare over the last decade — adding $11 billion or more to their fees and signaling a possible rise in medical billing abuse, an investigation by the Center for Public Integrity has found.

Medical groups argue that the fee hikes are justified because treating seniors has grown more complex and time-consuming, both due to new technology and declining health status. The rise in fees may also be a reaction, they say, to years of under-charging, and reflect more accurate billing. The fees are based on a system of billing codes that is structured to make higher payments for treatments that take more time and effort.

But the Center’s analysis of Medicare claims from 2001 through 2010 shows that over time, thousands of providers turned to more expensive Medicare billing codes, while spurning use of cheaper ones. They did so despite little evidence that Medicare patients as a whole are older or sicker than in past years, or that the amount of time doctors spent treating them on average was rising.

While it’s impossible to know precisely why doctors and hospitals moved to better-paying codes in recent years, it’s likely that the trend in part reflects “upcoding,” — the practice of charging for more extensive and costly services than delivered, according to Medicare experts, analysis of the data and a review of government audits.

And Medicare regulators worry that the coding levels may be accelerating in part because of increased use of electronic health records, which make it easy to create detailed patient files with just a few mouse clicks.

Many health policy experts have long believed that billing errors and abuses, from confusion over how to pick proper payment codes to outright overcharges, are common in Medicare. But the Center’s year-long examination has outlined their scope in an unprecedented manner, uncovering a range of costly medical coding mistakes and abuses that have plagued the government-paid health care plan for years and are worsening amid lax federal oversight.

“This is an urgent problem,” said Dr. Mark McClellan, who directs the Engelberg Center for Health Care Reform at the Brookings Institution in Washington. McClellan, a former director of the Centers for Medicare and Medicaid Services, or CMS, said the agency must send a message that it “won’t stand by and do nothing … that they are paying attention to this.”

Among the investigation’s key findings:

Doctors steadily billed Medicare for longer and more complex office visits between 2001 and the end of the decade even though there’s little hard evidence they spent more time with patients or that their patients were sicker and required more complicated — and time-consuming — care. The higher codes for routine office visits alone cost taxpayers an estimated $6.6 billion over the decade.
More than 7,500 physicians billed the two top paying codes for three out of four office visits in 2008, a sharp rise from the numbers of doctors who did so at the start of the decade. Officials said such changes in billing can signal overcharges occurring on a broad scale. Medical groups deny that.
The most lucrative codes are billed two to three times more often in some cities than in others, costly variations government officials said they could not explain or justify. In some instances, higher billing rates appear to be associated with the burgeoning use of electronic medical records and billing software.
Medicare administrators have struggled for more than a decade to crack down on medical coding errors and abuses, often in the face of opposition from medical groups including the American Medical Association, which helped design, and now controls the codes. Whether they make honest mistakes or engage in willful misconduct, there’s little chance doctors who pad their charges will face any serious penalties.

CMS officials declined numerous interview requests. However, in an e-mail response to written questions, officials said while they believe most doctors and hospitals are “honest and try to bill Medicare correctly,” the agency also “is keenly aware that certain Medicare providers and suppliers seek to defraud the program.”

Dr. Robert Berenson, a former vice chairman of a federal commission that recommends Medicare payment strategies to Congress, called the Center’s findings “clearly significant,” and said they indicate an urgent need to revamp the pay scales.

“It is really time to deal with this issue. There are so many perverse outcomes, including spending for taxpayers,” Berenson said.

That so many doctors deviate widely from billing norms — and have done so for years with apparent impunity — spotlights Medicare’s chronic vulnerability to abuse and fraud, several experts said.

Thomas Scully, an architect of the Medicare pay scales during his White House days under the first President Bush, is now critical of the system. He said it was put in place in order to curb rising doctors’ fees, but Medicare’s pay hikes have been too small to match rising medical office expenses. Many doctors have responded by picking the highest codes possible, he said.

“You are going to pedal faster and code more aggressively,” said Scully, also a former director of the federal Medicare agency and now a Washington lobbyist with a range of health care clients. “I’m not sure it’s malicious. It’s a fact a life,” he said.

However, the U.S. Department of Health and Human Services inspector general in a May report stated that payments made under the doctor-visit codes rose 48 per cent between 2001 and 2010, from $22.7 billion to $33.5 billion. The report also noted that the coding system has been “vulnerable to fraud and abuse.”

And agency officials acknowledge that the surge in these billings has been driven at least partly by potentially illegal “upcoding” which the government has largely failed to stamp out through the years.

“We have some people who will use any excuse to get more money for the services they do,” said Jennifer Trussell, who heads the investigations unit for the HHS inspector general’s office. “They don’t see it as a crime.”

AMA president Jeremy A. Lazarus agreed that doctors have shifted toward billing higher priced codes. But the “contributing factors are unclear,” he said in a written statement. “There could be several possible reasons for this trend, but more analysis is needed,” Lazarus said.

Secret Code

The current billing scales, known as Evaluation and Management codes, were unveiled in 1992 as part of an unusual and secretive arrangement between Medicare officials and the AMA, the nation’s most influential doctors’ group.

The AMA wanted Medicare to reward doctors for the “thinking part” of medicine, or their skill in diagnosing and treating illness, as well as the time it takes. Medicare expected the pay scales to cut down on billing abuses and to save taxpayers money by setting measurable standards that all doctors would follow.

On paper, the process seems straightforward enough: the lowest of the five coding levels for an office visit, 99211, signifies a minimal health problem and five minutes either spent treating the patient or supervising a nurse or other health worker who does so.

That simple visit pays the doctor about $20 from Medicare.

The top code, 99215, requires much more effort. Doctors must do two of three things: a comprehensive examination, a detailed history of the patient’s health status, or make a medical decision of “high complexity.”

That typically requires 40 minutes of face-to-face contact between doctor and patient and pays about $140.

Medicare officials expect medical professionals to bill a range of the five fee codes because some patients require more time and effort to treat than others. The government trusts them to bill correctly and medical groups say the vast majority of America’s physicians follow the complex coding rules as best they can. Medicare pays for more than 200 million office visits each year.

However, doctors and hospitals have increasingly abandoned the lower-level codes for better paying ones. Medicare officials have largely failed to challenge these surges in billing across a broad spectrum of medicine, from doctors working in hospital emergency departments and nursing homes to family physicians and specialists seeing patients in their offices.

Government officials and medical data experts note that sharp spikes in billing strongly suggest some doctors and hospitals engage in “upcoding,” by finding ways to bill for higher codes than justified.

Medical groups counter that most doctors charge less than they deserve. The only way to tell for sure is to review patient records that support each of the 370 million such claims Medicare pays annually, which officials say is impractical and not cost-effective.

Physician groups don’t dispute that coding errors are commonplace in medicine or that a tiny fraction of doctors may exploit loose federal oversight to fatten up their fees.

But they argue that coding guidelines are vague and subjective and that just as many doctors undervalue their work by picking lower codes as might be tempted to bill too much.

The medical organizations also argue that more elderly patients over the past decade have been diagnosed with multiple health problems that require additional time and effort to treat, a contention undercut by much health care research.

And they cite growing use of computerized medical records and billing systems for enabling doctors to document the level of treatment they provide more easily than by hand, which pays off in higher codes. Federal officials are spending as much as $30 billion in economic stimulus money to help doctors and hospitals purchase the digital gear, and more than half the doctors billing Medicare are using it, with more expected to follow.

Dr. Thomas Weida, a family physician in Hershey, Pa., said that wiring up his office has boosted the amount of time spent face-to-face with a typical patient by five minutes or more, both from the amount of stored information he reviews and increased time writing and prescribing treatments. That alone could justify higher billing codes in many instances, he said.

“You’re having to do a lot more than you did before,” said Weida, a medical coding expert for the American Academy of Family Physicians.

But digital systems also can prompt doctors to “code at the highest possible level,” said Dr. David Kibbe, who has consulted with the family physicians’ group. Often, that means that with “the push of a button” doctors can create reams of documentation to support higher codes, Kibbe said.

Some doctors identified by the Center’s data analysis as disproportionately billing high codes for office visits cited the poor health condition of their patients as a key justification for doing so.

“I know they are high,” said Dr. Brantley B. Pace, who has practiced family medicine for more than a half century in Monticello, Miss., when asked about his billing practices, among the highest in the Medicare billing sample.

Pace said many of his longtime patients live with multiple infirmities that require his attention. “I rarely have a person who comes to me for a cold,” he said.

Data experts noted that some individual doctors may in fact be justified in billing much higher than their peers. But they stressed that the sheer numbers of physicians from a range of medical specialties who do suggests some degree of manipulation of the payment scales.

Billing Norms

The Center for Public Integrity analyzed a representative 5 percent sample of Medicare patients and their claims submitted by more than 400,000 medical practitioners and 7,000 hospitals and clinics, starting in 2001. The cost analysis projected the increase in Medicare costs as more doctors picked higher codes each year over the decade.

The added fees totaled at least $11 billion, adjusted for inflation — more than half of it from higher doctor fees for office visits and the rest from other services, including treatment in nursing homes and hospitals.

The investigation identified thousands of doctors, from a broad range of specialties and locales, who adjusted their billing patterns sharply upward and netted higher fees as a result. A 1979 federal court injunction in Florida bars HHS from publicly releasing doctors’ names and Medicare reimbursements.

The Center sued HHS to obtain the Medicare data but had to agree not to publish the names of individual doctors, unless they agreed to discuss their billing histories. Most who were contacted declined to do so.

From 1999 through 2008, the number of doctors who billed at least half of their office visits at one of the two most expensive codes more than doubled to at least 17,000 practitioners. Those who quit using the two least expensive codes rose 63 percent, climbing to more than 13,000 in 2008.

“Those are codes we see abused quite frequently,” said Trussell, of the HHS inspector general’s office.

In 2010 alone, Medicare paid for more than six million more visits at the second highest pay rate than the year before. That upsurge cost Medicare more than $1 billion, government records show.

Some doctors relied on the same code for nearly every patient visit despite Medicare guidelines calling for a balance because not all patients who see the doctor require the same degree of attention or time.

More than 750 doctors billed the two highest-paying codes exclusively for office visits, some for as long as seven years straight, for instance.

The changes in billing patterns vary sharply by region. For instance the Milwaukee area saw a steep jump in use of the two highest codes, from 19 percent at the start of the decade to 45 percent in 2008. The Phoenix and Salt Lake City areas also saw hefty jumps. By contrast, some major urban areas, including New York City and Los Angeles, decreased slightly over the decade.

Medicare has been paying for longer and more complex office visits despite annual surveys by the federal Centers for Disease Control and Prevention showing that the average time doctors spent with patients didn’t change much over the years.

Jerry Cromwell, a researcher with RTI International in North Carolina, in a 2006 study found the average Medicare doctor visit lasted about 18 minutes, or less. Yet Medicare billing records show a sharp rise in services over the decade that were supposed to take 25 minutes or longer in face-to-face contact with a patient.

Cromwell said it has been a “real challenge” for Medicare officials to verify how much time doctors typically spend with patients. He identified “upcoding” as one possible explanation for the discrepancy.

The Medicare billing data do not show that patients are getting more infirm; their reasons for visiting the doctor’s office were essentially unchanged over the decade. And the May report by the HHS inspector general said its review of 2010 Medicare claims found that many high-end billers tended to treat patients who were slightly younger than average.

Researchers also said there’s not much evidence that elderly people on Medicare have been getting sicker over time — certainly not enough to justify the sharp rise in more costly billings.

Eric Seiber, an Ohio State University researcher who has studied physician billing trends, said Medicare officials have yet to conduct studies to determine to what extent the pay scales are being manipulated.

“There is a lot of money there and we have almost no handle on it. It’s so hard to pin down,” Seiber said.

The Medicare billing data also lend little support to the argument that many doctors on average choose codes that are too low. In 2008, three times as many physicians were billing only the two top codes as picked the two lowest ones, for instance.

In addition, federal officials projected that Medicare overpaid nearly $658 million in 2010 as a result of wrongly coded bills for office visits at the second most expensive payment level. Officials found underpayments to be a tiny fraction of that amount, or about $6.1 million, according to government records.

Malcolm Sparrow, a health care fraud expert and professor at the John F. Kennedy School of Government at Harvard University, said: “If there are changes [in billing] over time costing the public billions of dollars, there should be an explanation.”

Coding Errors

Medicare manuals state that the government trusts doctors to bill accurately and pays bills “generally based solely on your representations” in the claim.

“When you submit a claim for services performed for a Medicare [patient], you are filing a bill with the federal government and certifying that you have earned the payment requested and complied with the billing requirements,” the manual reads.

Yet Medicare auditors through the years have repeatedly detailed high rates of doctor billing errors, though mostly in obscure audits which captured little public notice and spurred little government action.

In June 2000, Medicare officials identified incorrect coding as Medicare’s third most prominent error, triggering $1.7 billion in suspect payments. Much of the time, errors paid doctors too much, not too little.

“These improper payments, as in past years, could range from inadvertent mistakes to outright fraud and abuse. We cannot quantify what portion of the error rate is attributable to fraud,” auditors wrote.

In 2001, members of a government panel were so fed up with the payment scales that they recommended junking them. Two years later, Congress passed Medicare reform legislation that called for studies to consider alternatives to the pay scales.

But the law required Medicare officials to consult physicians’ groups before making any changes, a legacy of the decision to allow the AMA to develop the codes. Medical groups have since been able to block any reform effort, according to former government official Scully and other insiders.

Scully said it was a “big mistake” for the government to give the AMA such a prominent role in creating the doctor payment yardstick. “As a result the AMA has amassed enormous power,” he said.

Medicare officials deny the AMA and other medical groups have outsized influence over the payment system. But they concede that the system has been left in place for years because they could not reach an agreement on ways to improve it.

Most patients have no idea doctor pay scales exist because Medicare and other insurers don’t typically help people decipher them. As owner of the copyrights on the codes and their definitions, the AMA controls their publication and aggressively enforces its copyright.

Princeton University Professor Uwe E. Reinhardt, a prominent health care economist, said government officials could have paid the AMA a lump sum to develop the codes, simplified them and retained their ownership for taxpayers. Doing so would have opened up the process to public scrutiny and given patients a better understanding of health care finances. Other critics note that millions of seniors might help the government check on the veracity of medical bills if they knew the lingo and how to crack the codes.

“I wish I had some way to check up on the billing process,” said Judy Ryden, a retired community college teacher who is on Medicare and lives in Grants Pass, Ore. “Unless I had a degree in medical coding I have no idea what all that means. I can’t tell whether a charge is legitimate or not,” she said.

AMA president Lazarus in his statement noted that while the AMA provides “guidance for the appropriate use” of billing codes, it “does not profit in any way if physicians bill an insurer for a complex service rather than a simple service.”

Lazarus noted that the group “does not receive a single taxpayer dime” for its oversight of the codes. He said the system “saves taxpayers millions of dollars” by allowing medical information to be communicated efficiently and reliably.”

Without the system, “the transfer of vital information between physicians, hospitals and health plans would break down under an even greater burden of costly paperwork,” Lazarus said.

The payment system also has given rise to a cottage industry of coding experts and medical practice consultants who conduct seminars for doctors that often encourage higher coding — in some cases through Internet pitches that promise doctors significantly higher profits.

Medical organizations also teach their members ways to code at higher levels legitimately. In one 2009 article, the academy of family physicians noted that using the second-highest level for most office visits could put an additional $30,000 to $75,000 in a doctor’s pocket.

As a result, the billing codes intended to hold medical fees in check have instead contributed to spiraling Medicare costs.

Error Prone

Today, startlingly high rates of billing mistakes — many of them overcharges — persist, according to Medicare audits conducted in several states.

In May 2011, Medicare contractor Palmetto GBA notified more than 11,000 California doctors that it would begin auditing their claims for office visits after concluding that too many were being billed at high-level codes.

Another Medicare contractor called Trailblazer audited patient office visits in early 2010 in Virginia and found mistakes in half the records it reviewed. A similar audit in Colorado, New Mexico, Oklahoma and Texas reported a 91% error rate for billing for office visits.

Billy Quarles, a spokesman for BlueCross BlueShield of South Carolina, which owns both companies, said “inadequate documentation” was the primary reason for the high denial rates in the Trailblazer audit.

“In some cases the documentation available did not support the level of service billed, but more often, the documentation was not sufficient to determine medical necessity or evidence of a face-to-face encounter with the patient,” Quarles said.

A third Medicare contractor, WPS Medicare, conducted a similar review of doctors in Wisconsin, Illinois, Michigan and Minnesota after discovering unusually high levels of the second highest code, most of them coding errors on routine patient visits.

In both cases, the audits focused on family practice doctors and specialists in internal medicine. Doctors who failed to respond could face denials of their claims.

“Upcoding”

Deliberately inflating bills to boost profits can constitute health care fraud, but few offenders face any liability.

And chances of getting caught are very small because Medicare rarely audits closely and typically has no way of finding out unless someone on the inside comes forward and alerts them. Federal officials have recently stepped up efforts to use computers to detect abnormal billing patterns, however.

Many of the more than 50 “upcoding” court cases reviewed by the Center for Public Integrity resulted from whistleblower lawsuits, often filed by an employee who fears retribution after alerting superiors to the billing problems. They can share in money the government recoups, and most cases are settled with no admission of wrongdoing.

Minnesota family doctor David Lang offers an example. He sued his employer, the Apple Valley Medical Clinic in suburban Minneapolis, as a whistleblower after concluding that some of the 14 doctors working there were upcoding Medicare claims.

He also took his findings to federal officials, who joined the civil case.

In his suit, Lang said that when he brought up some “extraordinarily high” doctor billings to the clinic’s board, he faced threats and retaliation.

For instance, he said he was accused of seeing patients with “alcohol on his breath,” an allegation Lang refuted by demanding a test, which showed no liquor in his body, according to court filings.

The Apple Valley clinic’s managers denied wrongdoing, though they settled the suit by paying the government more than $180,000 in December 2010. The clinic did not respond to requests for comment. But Lang, a partner in the clinic, says it now bills properly.

“We’ve cleaned it up,” he said.

Lang said in an interview that he believes billing irregularities are “prevalent” in medical offices. He said some doctors overbill “consciously and without remorse,” while others may regard inflating a few service codes as a relatively harmless way to help defray rising office expenses — or to silently protest what they regard as stingy pay from Medicare.

According to Lang, Medicare officials should publicize these cases widely to limit what he called “robbing from the public.”

But that seldom happens.

Like many others, Lang’s lawsuit file was sealed by a federal court judge with only his initial allegations made public.

Even criminal prosecutions conducted in open court may not bring a significant penalty. Several criminal cases reviewed were settled with a plea bargain that not only kept the doctor out of jail, but also let him continue participating in Medicare.

Billing administrator Lynne Lewis helped trigger such a case after concluding that her boss, Massachusetts pain specialist Dr. Anil Kumar, was “upcoding” some bills.

When she confronted Kumar about his billing tactics, he testily told her that he did business that way “long before you came,” and would do so “while you are here” and “long after you are gone,” according to her lawsuit.

The tongue lashing didn’t deter Lewis. She filed a whistleblower lawsuit against the doctor and federal authorities charged Kumar with health care fraud.

Prosecutors accused Kumar of fraudulently billing every new patient visit as if it were a consultation referred by another doctor. At the time, Medicare paid more for consultations than for simple office visits.

In June 2010, Kumar agreed to pay the government $586,000 in a settlement deal in which he did not admit any wrongdoing. He still practices in Stoneham, Mass., and is in good standing with Medicare. He had no comment.

Growing Tensions

Though the Obama administration has made a significant commitment to cracking down on Medicare fraud and abuse, officials don’t appear to have an aggressive strategy for cutting down on medical coding abuses.

She said the agency would focus on the top ten high billers in each Medicare region as a first step, but that it might cost the agency more to investigate suspicious claims than it could collect.

The agency, Tavenner wrote in a letter published in the May IG report, “must take into account the respective return on investment of medical review activities.”

It is clear that CMS is meeting resistance to fraud-control audits from doctors’ groups — and threats that some physicians might dump Medicare patients if the government doesn’t back off.

In December of 2011, California Medical Association president Dr. James T. Hay fired off a letter to federal officials in Washington noting that audits of doctor billings have “created great consternation” among the state’s doctors and saddled them with what he deemed an “enormous administrative burden” on their office staffs.

“Clearly, physicians want their purposefully overbilling and illegally behaving peers to be found and stopped. We also want to be paid fairly,” Hay later wrote in a CMA publication.

Hay added a threat that targeting doctors for review unfairly “will only further induce physicians to decrease or stop their participation in the Medicare program.”

Asked about the controversy, Medicare officials said they didn’t believe the limited number of proposed audits would lead doctors to dump Medicare patients. Officials said they had responded to the letter by “conducting a telephone conference and additional discussions with [Medicare payment contractor] Palmetto,” but declined to offer details.

These sorts of clashes are likely to become more common. Several provisions in the health care reform law step up penalties for doctors and hospitals who fail to return any overpayments within 60 days, for instance.

In draft regulations, Medicare officials predicted the new policies would result in about 125,000 medical providers returning from three to five overpayments each during a typical year.

Many experts also predict an even sharper clash lies ahead over electronic health records, which Medicare officials are pushing doctors and hospitals to purchase, and also are widely marketed for their power to document higher billing codes — and thus boost the bottom line. More than half of doctors billing Medicare used the devices in 2011, and more are expected to do so.

Reinhardt, the health economist, said that government must be cautious to pay health professionals properly for their work, and that under the current coding system, fees often are too low, which in turn encourages higher coding.

“If it is a dishonest payment system, doctors will be dishonest,” Reinhardt said.

Judgment calls on billing make 'upcoding' prosecutions rare

2012-09-18T16:19:11-04:00

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."