EDITOR’S NOTE: Healthcare attorney David Glaser responds to the article by Ronald Hirsch, MD in this edition of the RACmonitor eNews. 

Ronald Hirsch, M.D’s article in this issue of RACmonitor e-news recounts an article in Report on Medicare Compliance about a self-disclosure recently done by Cedars Sinai Medical Center in Los Angeles. Dr. Hirsch asks a number of great questions, for example whether it is necessary or appropriate to refund the entire payment received when there are questions about the coding for the claim.  

I wasn’t involved in the Cedar Sinai situation, and it is possible that there were unique, compelling reasons supporting the decision to refund the entire physician payment. However, generally speaking, one wouldn’t refund all of the payments received for a physician’s work under such a scenario. When I encounter a situation in which I believe a physician has chosen a higher code than appropriate, I recommend refunding the difference between what was billed and what we believe the service rendered was. 

The article also suggests that the money was refunded through the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) self-disclosure protocol. With the exception of Stark violations, I am very hard-pressed to envision a situation in which I would recommend using the self-disclosure protocol rather than making a refund directly to the Medicare Administrative Contractor (MAC). Why? Going to the OIG is admitting that you had some sort of improper intent. Remember that to impose any sort of false claims liability, the government must show that you, at a minimum, acted in “reckless disregard” of the law. 

When he was Attorney General, Eric Holder said “finally, the guidance reaffirms that the False Claims Act should be the basis for suit only where there is evidence that false claims were submitted knowingly – that is, with actual knowledge or in deliberate ignorance or reckless disregard of the truth. Let me make this very clear: the False Claims Act does not address – and we should never use it to pursue – honest billing mistakes or mere inadvertence.” Take the government at its word: don’t treat mistakes as fraud.       

When you enter the self-disclosure protocol, you can assume you will pay a penalty, meaning that your payment will be at least 1.5 times the amount of the overpayment. If you issue a refund to the contractor and the government seeks penalties, you likely won’t wind up materially worse off than if you had opted to start with the self-disclosure protocol. Why would you choose the worst-case scenario as a starting point? You ultimately may be required to pay penalties, but why start there?  

Let’s assume you don’t know whether a physician has coded correctly. Evidence suggests that it is possible the physician was incorrect, but it is also possible that the claims are accurate. Are you obligated to refund that money? I don’t think so. You have a duty to refund known overpayments. When the situation is ambiguous, you might have a duty to investigate. It is not entirely clear whether the new regulation requires you to investigate every suspicious claim (the regulation requires you refund “identified” overpayments and asserts that you have “identified” an overpayment when you “should have determined” you were overpaid.” This allows the government to argue that you “should have found the overpayment,” suggesting there may be a duty to conduct a review.) 

While the law isn’t clear, many organizations quite reasonably will choose to investigate. But if your investigation just yields further uncertainty, you aren’t legally required to issue a refund. You may opt to, but it isn’t a legal duty. One important note: many believe that when an evaluation and management service is not documented as described in the E&M documentation guidelines, the law requires a refund to Medicare. That belief is mistaken. A lack of documentation, by itself, shouldn’t prompt a refund Medicare absent very limited circumstances in which the regulations explicitly require documentation (for example, there is an explicit requirement for teaching physician services and for some anesthesia services.)  

If you are thinking “wait, you need to refund every time you are missing documentation,” please email me at dglaser@fredlaw.com and I will send you some information that should change your mind. 

Dr. Hirsch also described an OIG audit of another provider for which the OIG denied a drug because of a lack of documentation despite the fact that nurses swore the drug was administered. Having just gone through several OIG audits with clients in a variety of states, I want to say that just because the OIG asserts something has been overpaid does not mean that it has been. The OIG findings in these audits can be appealed, and on appeal, it is quite possible to have findings reversed. Remember that in most cases, missing documentation is not enough to support an overpayment where it is clear the service was really provided. The OIG might not accept the nurse’s sworn affidavit, but a judge should. If you don’t believe me, again, please drop me a line.

Finally, let’s answer Dr. Hirsch’s two questions: do routine audits fit into this policy, or does it apply only when “intentional” overcoding is suspected and audited? The 60-day rule applies to all overpayments, regardless of intent. The law attempts to convert billing mistakes into false claims if you choose to keep the money rather than refunding it within 60 days. Does the 60-day clock start when the first overcoded chart is found, or when the complete audit is finished? The preamble to the regulation acknowledges that it would be foolish to require piecemeal refunds on each claim as soon as it is reviewed. The preamble also suggests that when you are reviewing a number of claims for a common issue, you can wait until you reach a conclusion about all of the claims before the 60-day clock for submitting your refund begins. This is discussed at in the 81st edition of the Federal Register, 7663 and 7664 in the preamble. 

Thanks to Ron Hirsch (and Nina Youngstrom) for teeing up these important questions.

About the Author

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and is a member of the RACmonitor editorial board.

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