What's behind the government's war on health care fraud—and doctors?
By Deborah Gesensway
When the federal government's full frontal assault on health care fraud and abuse hit the growing but still underused Medicare hospice program, some thought it might have gone too far.
Last fall, the HHS Office of the Inspector General (OIG) released an audit concluding that Medicare had wrongly paid about $83 million to hospices—a drop in Medicare's nearly $200 billion budget. The OIG recommended that HCFA try to recover that money from hospice organizations, and it threatened providers who provided hospice care to "ineligible" patients with prosecution. Hospice proponents have said the crackdown has mostly had the effect of chilling providers' attempts to enroll dying patients for a Medicare benefit they are entitled to early enough in the course of their disease to make a difference.
The controversy over the government's anti-fraud efforts in hospice care is just the tip of the iceberg of a bigger crackdown. While the government claims it is waging a war on health care fraud simply to keep unscrupulous providers from looting its coffers, many say that innocent physicians are being threatened, barred from seeing Medicare patients, and even prosecuted in court because they made inadvertent errors on claims forms, because they failed to provide enough documentation to satisfy auditors or because they misinterpreted confusing regulations.
Proponents of hospice care, for instance, complain that the government's charges are anything but clear cut. The problem is mostly one of differing medical opinions about how long a patient is expected to live if the disease runs its normal course. The OIG's auditors concluded from their readings of documentation in the charts that 1,373 beneficiaries in 12 hospices in four states actually had been ineligible for hospice under the Medicare rules. The National Hospice Organization reacted to the audit by saying a "flawed government review process" was "punishing hospice programs whose patients fail to die 'on time.' " To meet the Medicare definition of terminally ill, two doctors—the patient's attending physician and the hospice medical director—must attest that if the disease runs its normal course the patient is not expected to live beyond six months.
Heating up
The argument over the long-term benefits of the whole war on health care fraud and abuse for patients and the health care system is just starting to heat up. An OIG audit released earlier this spring found that about 11% of all Medicare fee-for-service benefit payments in fiscal year 1997 were improper, with 29% of that amount directly attributable to physicians. Doctors, hospitals and other health care providers, however, counter that very few of those "improper payments" were actually fraudulent, and that most were the result of documentation problems, disagreements about rules and the legal use of loopholes in payment rules that Congress or HCFA have failed to close. There may be a handful of fraudulent health care providers looking to bilk the system, they say, but the government's dragnet puts too many innocent providers at risk too.
Meanwhile, Clinton administration officials have said their policy of "zero tolerance" for waste, fraud and abuse in the Medicare and Medicaid programs has saved taxpayers more than $20 billion since 1993. They testified before Congress this spring that the new audit is proof they need to go even further in their fraud-fighting efforts. "We have encountered enough examples of reckless billing practices to be very concerned about the extent of fraud," Lewis Morris, the assistant inspector general for legal affairs, testified this spring. "Simply put, Medicare is highly vulnerable to fraud and other improper billing practices."
Who's right? The government or providers? To some degree, both appear to be. In the hospice case, for example, federal investigators found some legitimate problems with unscrupulous hospice companies paying nursing homes for patient referrals. There also appear to be many disagreements that grow out of the difficulty with prognosticating time of death for patients suffering from non-cancer diseases.
Many health care experts say that part of the problem is the perception among many in the government that stamping out Medicare fraud will help reduce the budget deficit. But Bill Sarraille, JD, a health care attorney with the Washington, D.C.-based law firm Arent, Fox, said that not even the best fraud detection efforts will change the reality that the government is committed to providing more health care to more people than it is willing to spend the money for.
"There are people out there who think that they can make a big enough dent in the budget through fraud and abuse enforcement efforts to fundamentally change this equation," Mr. Sarraille said. "And they are just plain wrong."
While the government's efforts to stamp out fraud and abuse in health care may or may not help balance the budget, the effort has so far proven to be lucrative. The first two years of Operation Restore Trust, one of the government's fraud-busting programs, for instance, returned $23 for every $1 spent, according to the HHS.
With those kinds of results, it's no surprise that the government is sinking more and more money into its anti-fraud efforts. The 1996 Health Insurance Portability and Accountability Act (HIPAA), which allocated more than $100 million each year to anti-fraud efforts, will double the number of OIG auditors and investors, expand the FBI's ability to investigate health care fraud and hire more Department of Justice prosecutors to see cases through the courts.
And the expansion continues, with everything from new draft regulations regarding the legality of various types of self-referrals under the Stark Act, to the "Physician at Teaching Hospital" (PATH) audits of how teaching hospitals have billed for physician services provided by residents. There is even a fraud and abuse hotline (800-HHS-TIPS) that since 1994 has logged nearly 14,000 complaints warranting follow-up action.
The buildup has already resulted in a 500% increase in pending health care fraud and abuse cases from 1992 to 1996, according to Mr. Sarraille. The number of whistle-blower lawsuits in the health care area grew 1,300% in that same time period, he said.
Feeling the pinch
The growth in fraud-fighting tools and personnel alone means physicians and other health care providers will feel more of a pinch, not less, over the next few years. "There is no question that the environment is a significantly heightened setting for fraud enforcement," said Alice Gosfield. JD, a Philadelphia-based health care attorney.
The current debate about evaluation and management (E/M) documentation guidelines has been influenced by this fraud-fighting climate. Any discussion about how to fix the rules has been tainted by fears that physicians who make inadvertent errors in how they document E/M services will end up charged with trying to defraud the government. (See "HCFA: 'Honest' E/M mistakes won't be prosecuted,".)
Experts in health care law complain that the government has no mechanism to differentiate between physicians who make documentation errors and those who knowingly and willfully steal health care dollars. "The problem is the 'knowing and willful' standard has been interpreted by the courts to be that one stupid thing done over and over again is just as bad as if you sat down to loot the till," Ms. Gosfield said.
Health care providers might see themselves charged with fraud with for billing problems, which include issues of poor documentation and inaccurate coding, or for business arrangements, which include violations of the Stark self-referral acts and the anti-kickback rules. (For a fuller discussion of these issues, see "Understanding the Fraud and Abuse Laws: Guidance for Internists" in the April 15 issue of Annals of Internal Medicine, available on the Web at www.acponline.org/journals/annals/15apr98/fraud.htm.)
According to Michael J. Werner, JD, the College's counsel for health policy, the courts have split in their interpretation of where these two types of laws intersect. A question, he said, is can a health care provider be prosecuted for allegedly making a false claim if the claim came about because the doctor or other provider made an illegal referral or acted in a way that could violate the anti-kickback statute?
Brace yourself
What can physicians do in such an environment? Many health care attorneys and physician organizations say the best way to ward off allegations of fraud and abuse is to take the situation seriously. Part of the problem is that investigators can find real fraud, and sometimes they don't have to look very hard to find it.
"Doctors, hospitals, labs, home health agencies are easy targets, but the reality is that there seems to be an enormous amount of medical spending in general that goes for services that provide very doubtful benefit," said M. Gregg Bloche, MD, JD, of Georgetown University Law Center, who wrote an editorial on this subject in the April 15 issue of Annals of Internal Medicine. "The allegations of fraud and abuse ring true with peoples' sense of doctors as being motivated by their financial self-interest more than their patient's interest."
Physicians also should consider spending the time and money to implement a compliance program before such action is mandated by the government. A compliance program is a good way to ferret out problems in billing systems—or even to identify disgruntled employees who may become whistle-blowers if their concerns are ignored—instead of waiting for the government to come calling.
"I think that if you are practicing in the health care sector now and you don't have a compliance program, you put a very large target on yourself," Mr. Sarraille said.
HCFA: 'Honest' E/M mistakes won't be prosecuted
According to the latest word from HCFA, physicians will not be punished for making "honest mistakes" when they document their use of evaluation and management (E/M) CPT codes.
HCFA Administrator Nancy-Ann Min DeParle clarified the Medicare and Medicaid administration's position on the relationship between the E/M documentation guidelines and fraud and abuse law in a letter to AMA President Percy Wooton, MD, in late April.
Medicare carriers will be reminded "of our long-standing policy that referrals are to be made to the Office of the Inspector General for possible sanctions only after the carrier determines the situation was not caused by error and there is evidence of intentional improper billing practices," she stated in the letter. " We have to believe there is some level of fraudulent intent before we make any referrals."
In the same letter, Ms. DeParle announced that the guidelines will be delayed further while they are revised under the direction of AMA's CPT Editorial Panel, which recommended the original guidelines. No final implementation data has been announced.
Until that happens, she said, doctors must continue documenting what they bill. The carriers have been directed "to use both the 1995 and 1997 guidelines, whichever is more advantageous to the physician" when reviewing E/M services, Ms. DeParle's letter states.
Fraud and abuse: a glossary
Here's how the law defines fraud, abuse and waste:
Fraud: You sat down to loot the till. Generally, fraud requires intent to deceive. But under the False Claims Act, you can also be accused of committing fraud if you exhibit a pattern of behavior that displays "deliberate ignorance" or reckless disregard for the truth.
Abuse: What you are doing is legal, but you are gaming the system. Perhaps you are being too clever by half. A common example is consistent unbundling of codes.
Waste: Refers to a poorly designed aspect of the program, one that might open it to gaming.
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