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Washington Perspective

Allies or adversaries? The OIG's real fraud and abuse agenda

From the April 1999 ACP-ASIM Observer, copyright 1999 by the American College of Physicians-American Society of Internal Medicine.

By Robert B. Doherty

Fraud and abuse.

Mention those dreaded words and physicians will experience emotions ranging from fear to anger. They fear that their own billing practices will someday come under the scrutiny of federal investigators. They are angry at a government that seems to view the medical profession as a den of thieves.

But federal officials say that physicians have it all wrong. We don't go after physicians for inadvertent mistakes, they insist. Only physicians who are intentionally out to steal from the program need be concerned.

OIG's perspective

These differing perspectives were on display when ACP-ASIM's Medical Services Committee met in February with McCarty Thorton, the top lawyer in the Office of Inspector General (OIG) for the Department of Health and Human Services. Mr. Thorton sought to reassure committee members that the OIG will initiate investigations only where there is evidence of a deliberate intent to commit fraud or abuse. He noted that very few physicians have been charged with fraud or abuse and, in those cases, there was solid evidence of violations. He asked for ACP-ASIM's help in correcting the common "misperceptions" about the government's intentions.

Members of the Medical Services Committee responded by providing examples that suggest a less benign view of the government's intentions. They specifically cited random pre-payment screens, which imply that all physicians may be billing improperly. They pointed to demands for excessive documentation, which suggest that the government doesn't trust physicians to bill only for necessary services. And they talked about exaggerated claims about the extent of fraud and abuse.

What is the truth, then? Are honest practitioners at risk of being investigated for fraud and abuse?

From a strict, legal standpoint, Mr. Thorton was right. The law says that to prove fraud, the government must establish that a physician "knowingly and willfully" intended to defraud the program, a very tough standard indeed. To impose civil monetary penalties for abuse, the government most show that the defendant engaged in a "reckless disregard of the truth" or acted in "deliberate ignorance of the facts," also a tough standard.

A misleading impression

But how the law is communicated to physicians is another thing altogether. Two recent events promoted by HCFA and the OIG give credence to internists' concerns that the government's real intentions may go beyond the requirements of the law.

In February, the OIG released its annual audit of how well HCFA is doing in eliminating improper payments. The audit found that HCFA made $12.6 billion in "improper" Medicare fee-for-service payments, representing 7.1% of total fee-for-service payments. Because this was less than the 1997 estimate of $20.3 billion, HCFA credited increased vigilance by carriers with reducing the amount of waste, fraud and abuse in the program.

When ACP-ASIM reviewed the report, however, we found huge flaws in its conclusions. The OIG admitted that it did not know how much of the 1998 "improper" payments was due to fraud. Yet by including documentation errors, incorrect coding, lack of documentation of medical necessity and noncovered and unallowable services under the heading of "improper" payments, the OIG creates an impression that waste, fraud and abuse are more prevalent than is the case.

The OIG claims that improper payments attributed to documentation errors amounted to $2.1 billion. Included in this estimate are payments for claims in which a provider failed to respond to the OIG's request for documentation. The OIG doesn't really know if those claims were improper, only that some physicians declined to provide them with documentation.

Similar problems can be found in the OIG's analysis of "incorrect" coding. OIG cites several examples of payment reductions that were due to one-level code discrepancies. In these cases, OIG's medical reviewers determined that the physicians billed for a slightly more complex service than they actually performed. ACP-ASIM believes that it is wrong to classify one-level coding discrepancies as "errors" given the inherently subjective nature of coding for physician services.

The other event that raises questions about the government's intentions is the recently launched "Who Pays, You Pay" beneficiary outreach program. As part of the program, beneficiaries will be encouraged to request itemized bills from their physicians. They will then be counseled to contact their physician first if they have questions about the bill. If they still have questions, beneficiaries are advised to contact their carrier or fiscal intermediary. Finally, if they believe fraud or abuse is present, they are encouraged to call the OIG hotline.

In conjunction with the campaign, AARP initially circulated a pamphlet that stated that "as much as 10% of Medicare charges" are fraudulent. (The 10% estimate apparently was based on the 1997 OIG financial audit of HCFA. That audit, like the 1998 audit, did not attempt to determine how much of the "improper" payments represented fraud.) AARP subsequently dropped this statement from the brochure, but the damage was already done. Beneficiaries and the press came away from the event believing that 10% of physicians' charges may be fraudulent.

Even with training, very few beneficiaries will be able to determine whether or not their physician coded or billed properly for a service. The "questions" that are referred to carriers or the OIG are likely to involve misunderstandings over complicated billing requirements, not fraud or abuse. But the campaign will make patients more distrustful of physicians.

A better way

The reality is that the government is sending a mixed message. It wants physicians to be anxious enough about being investigated that they feel compelled to "self-police" their own billings. It wants carriers to deny more claims. It wants beneficiaries to scrutinize their doctors' bills. But it wants physicians to believe that they don't need to worry about being charged with fraud or abuse for inadvertent errors.

Maybe physicians don't need to worry about jail time. But they do have a reason to worry about having to spend more time documenting services, about having to put up with more red tape and about having legitimate services denied.

ACP-ASIM believes it would be better for the OIG to enlist physicians as allies, rather than view them as adversaries, in reducing fraud and abuse. To this end, the College will continue to have a dialogue with HCFA and the OIG on ways we can work together. But at the same time, the College won't hesitate to criticize federal officials when they initiate actions that will only lead to more paperwork and more denials—and heightened distrust between patients and their physicians.

Robert B. Doherty is ACP-ASIM's Senior Vice President for Governmental Affairs and Public Policy.

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