Case is centered around Level 2 and Level 3 E&M encounters.

This past week, I received a call from an older physician who has been in practice for 46 years; for privacy purposes, we will refer to him in this piece as Dr. Purple.

Before I tell you his story, remember that the nuggets I share are from a 20-minute phone call, so I don’t have all of the deep-dive specifics I know will be circling in your head! As I tell you the story, I have asked David Glaser, Shareholder with Fredrikson & Byron and regular RACmonitor contributor, to weigh in with his thoughts from a legal side to ensure that we truly learn something from this tragic course of events.

Dr. Purple started our call by with pertinent history from 2017. An individual presented to his office, flashed a badge, and indicated that he was a U.S. Department of Justice (DOJ) agent, demanding charts. His office, like many practices, opened the door wide and compiled without asking enough questions to know what was going on, or ever consulting a health law attorney. They made no list of the charts the DOJ investigator took, they have no idea how many it was; they have absolutely nothing but their memory of the event!

Let’s pause the story here, and turn to Mr. Glaser. David, can you tell us the reaction this provider and his staff should have had to this incident?

David Glaser: Shannon, you identified the first big mistake: if you ever give records to anyone, keep an exact copy of what you produce. It isn’t even good enough to keep a list of the patients whose records you sent, because you want to know exactly what went out. Did someone forget to copy lab or radiology information? Without an exact copy, you can’t tell. Numbering the pages is also a good idea. Unless the agent had a search warrant, which is highly unlikely, he should not have left with copies of anything. Medicare has the right to demand “immediate access” to records, but they rarely do so, and “immediate access” is defined as “within 24 hours.” There was plenty of time to consult with a lawyer and make copies of charts. I also wonder if the staff talked to the agent. They weren’t required to, and while a practice can’t forbid its staff from talking with government agents, it should explain to staff that they are not required to talk. Shannon, what happened next?

Dr. Purple states that about 6-12 months after the office intrusion, they called the DOJ to find out the status. Dr. Purple said the DOJ told him that his precision rate had been 85 percent, as determined from the review, which was good.

Mr. Glaser, can one call the DOJ and get an update like this, and if they could actually talk to someone, is this the sort of information they would give out during a phone call?

David Glaser: The government will talk to you during an investigation, but it was NOT a good idea for anyone in the clinic to make such a call. If you want an update from the government, an attorney should make that query for you, because you don’t want to find yourself getting asked questions during the call. Remember that making a factual error in a statement to a government investigation can launch an investigation into alleged obstruction of justice. Moreover, as a general rule, it is far better to wait for the government to call you. Let sleeping investigations lie.

Dr. Purple continued on with his work, thinking that the matter was behind him now – until Dec. 3, 2018, when he received follow-up from the DOJ.  

Mr. Glaser, are there parameters around how long organizations such as the DOJ, HHS OIG (U.S. Department of Health and Human Services Office of Inspector General), etc. have to provide results? I know if our firm took almost two years to turn a project around, we wouldn’t have any clients.

David Glaser: Not really. The only limit is the statute of limitations, and in a False Claims Act case that is a long time, 10 years from the date of billing in some cases, and always at least six years. If there is a qui tam suit filed, a court will require periodic updates, but it is common for investigations to continue for years. I have had some last nearly a decade.

Dr. Purple could not recall exactly how many records the DOJ reviewed, but approximated it was around 200. Incidentally, they finally received the disc from the DOJ with the audited findings, but no one has reviewed it as of yet. It appears they may have received it about 2-3 months ago, but it has remained under lock and key because he said it was so very hard to obtain. So since the filing, seven months have passed and only two actions have been taken by Dr. Purple: he obtained legal counsel and also the disc with the audit findings.

Upon reviewing the OIG filing, the case is centered around (are you ready?) … Level 2 and Level 3 evaluation and management (E&M) encounters. I find this shocking, as most cases do not include Level 2 visits, but it seems that the encounters in question included the modifier-25, which creates their argument in this case. The filing speaks to modifier-25 rules, according to the Centers for Medicare & Medicaid Services (CMS), and the E&M guidelines, according to American Medical Association (AMA) Current Procedural Terminology (CPT®), and then it also dives into the bundling edits that exist for E&M and office-based procedures. They included an excerpt from an HHS OIG report from November 2005 that states:

“The Centers for Medicare & Medicaid Services (CMS) does not normally allow additional payments for separate E&M services performed by a provider on the same day as a procedure.”

The DOJ filing goes on to include four cause of action for this case, and they are the following:

  • False Claims Act Presentment of False Claims
  • False Claims Act Making or Using False Record or Statement
  • Unjust Enrichment
  • Payment by Mistake

Mr. Glaser, it seems they are laying the groundwork to try and prove that Dr. Purple’s billing of the E&M with a modifier-25 created a false claim. This seems very important to me as an auditor, because often we hear clients and providers make comments regarding audit findings such as, “no, it’s not billed wrong, the encounter is just under-documented.” It appears, in the eyes of the government, that this NOT merely under-documenting, but rather intentional fraud. For an individual with no formal legal training, this seems like a huge leap. Can you help us understand this?

David Glaser: You are absolutely correct that Level 2 and 3 visits will rarely form the basis of a fraud case. You are also right that “under-documenting” is very different. As we both know, if you can show that the E&M services were provided as billed, missing documentation does not give rise to a Medicare fraud case. The key here is the modifier-25 question. In essence, the government is saying that there should not have been any E&M bill, because the E&M was bundled with a procedure. I don’t know the details of the case, but I can say that in my experience, I often think government auditors are far too harsh when criticizing modifier-25. If a physician visit was appropriate, in addition to the procedure, it can and should be billed, but the facts really matter here, and I haven’t seen Dr. Purple’s charts. 

The DOJ included benchmarking for Dr. Purple indicating that from Jan. 1, 2010 through Sept. 4, 2015 (5¾ years), his average use of the modifier-25 was 30-35 percent. That should be a statistic that makes one gulp! But it doesn’t seem very high for a family practitioner, given all those injections – vaccination requires a modifier-25 on the claim – and Dr. Purple’s area of specialty is family medicine. People go to their family practitioner with laundry lists of every body, muscle, joint, and skin complaint they can find.

After you work in a practice, you soon learn that a person of the age to be a Medicare beneficiary that has a wart removed typically does not ONLY talk about the wart. Their sciatic hurts, they need their sleeping pills refilled, their sugars have been slightly elevated; family practice is the catcher’s mitt of specialties. They catch all of the complaints of the whole body of all of their patients. All this is to say that 30-35 percent seems reasonable for a family practice, but apparently not to the DOJ.

Mr. Glaser- this makes me wonder: the government can’t just say “you are a statistical outlier, cough up some dough?”

David Glaser: You are exactly right. The government can use statistics as a basis to choose to audit you, but ultimately, they need to show that the service was billed improperly. It isn’t illegal to be an outlier. He may be the biggest user of modifier-25 in the country, but if he did it appropriately, there is no legal liability. We don’t grade on a curve. 

Interestingly enough, the DOJ is demanding a trial by jury to quantify the civil monetary fines and penalties. It’s hard to imagine that a healthcare provider physician who lives in rural West Virginia, treating his friends and neighbors for 46 years, will now have to stand before a jury of his peers to defend that he didn’t swindle Medicare for money at their expense. It is truly a disheartening place we have reached in healthcare.

Mr. Glaser, is this why they would choose a trial method, or is there more meat on the bone than that?

David Glaser: It truly is a request. The defendant in a case (Dr. Purple) gets to decide whether the trial will be in front of a jury or a judge. 

I wanted to wrap this up by circling back to why I thought this story needed to be told. Forgive the corny analogy, but it really does work here. The day the DOJ walked into Dr. Purple’s office, we had a “Compliance Code Blue.” Every practice should have a “crash cart” for such situations.

Mr. Glaser, what would you think needs to be included in this Compliance Crash Cart?

David Glaser: Not all that much, fortunately. I recommend that every clinic give its employees “what you need to know if you are contacted by a government agent” cards. If someone emails me, we offer them for free in reasonable quantities, and clinics are welcome to “steal” the information from the cards. The second thing is less tangible, but very important: train your staff. The training should be twofold: compliance training on how to identify and report concerns, and then instruction on how to react when the government shows up. On July 10 at 1 p.m. EDT/10 a.m. PDT, I will be doing a free webinar about how to interact with government agents and other officials. I will discuss what to do if agents visit your practice, as well as things like “what do I do if a patient has a fake insurance card?” and how to train staff about the fact that while sometimes you get in trouble for sharing information, other times you get in trouble for NOT sharing it. You can register here, and it should earn an HCCA credit: If you register but can’t make it, you will get a link to watch it on-demand, also for free.

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