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Washington Perspective

New fraud statistics from OIG help separate fact from fiction

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

By Robert B. Doherty

What is the likelihood of your practice being investigated for Medicare fraud?

If you listen to the lawyers who advise physicians and hospitals on how to avoid fraud prosecutions, the risk of being investigated is very real. They warn that unless physicians develop detailed compliance plans—with help from attorneys, of course—they risk being investigated by the Office of Inspector General (OIG) or Department of Justice. Physicians also regularly hear horror stories about honest practitioners being harassed by overzealous prosecutors over inadvertent billing errors.

Government investigators themselves send a mixed message. On the one hand, they insist that very few physicians have been investigated for fraud and abuse, and they say that those who have been convicted were involved in blatant violations of the law, not innocent mistakes. But the same officials also report that tens of billions of dollars are lost each year to "waste, fraud and abuse," leaving the impression that abuse, if not outright fraud, is rampant in the Medicare program.

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Until now, we have lacked hard numbers on how many physicians have been investigated for alleged fraud or abuse—and why. That changed in July when, as part of an ongoing dialogue with the OIG, the College became the first outside organization to review actual data on the OIG's new hot line that allows callers to report alleged Medicare fraud.

The OIG hot line

The OIG hot line is one of two principal conduits of information to the OIG for alleged fraud. Medicare carriers also give information to the OIG as they uncover evidence of improper billing during regular review activities. If a carrier believes that improper billings may be due to an intentional effort to defraud Medicare, it alerts the OIG. In rare circumstances, a prosecution may result.

Physicians have been concerned that callers to the OIG hot line will report innocent billing mistakes, leading to an OIG investigation into their billing practices. The data presented by the OIG, however, show this is not happening.

Callers to the fraud hot line (800-447-8477) first hear a recorded message advising them to contact their physician or their Medicare carrier if they have questions about issues like duplicate billing or services that were billed but not provided. The OIG's intent is for callers to first discuss their concerns with their physicians or Medicare carriers, rather than to immediately file a complaint with the OIG. Callers can always ask to speak to an OIG representative about their specific concerns or questions, however. The specialist then determines if the caller has raised an issue that merits further investigation by HCFA through a Medicare carrier or by the OIG itself.

The facts

From January through May 1999, the hot line received 172,248 calls. Only 4,774 resulted in a complaint against a health care provider. Of those, only 1,744 involved physicians. Of those calls, 1,102 came from beneficiaries, 476 came from other citizens, 62 came from anonymous sources and 104 came from current or former employees of physicians.

Of the physician-related complaints, 1,460 involved allegations of services billed but not rendered. Fewer than 100 of the complaints involved false billing, duplicate billing or kickbacks. Overutilization was cited in only 59 of the complaints, which OIG offers as proof that beneficiaries are not using the hot line to second-guess their physicians on medical necessity determinations.

In the data the College reviewed, almost all of the physician complaints were referred to HCFA for review by Medicare carriers. If a complaint is substantiated in these cases, the physician may be ordered to refund any overpayment plus interest. If the carrier discovers evidence of fraud, the case may be referred to the OIG. In the data we reviewed, only 14 of the hot line complaints against physicians were directly referred to the branch of the OIG responsible for initiating fraud investigations.

Finally, the OIG reported that of the 2,057 complaints against physicians that were reviewed in 1998, 1,038 were unsubstantiated, 630 were substantiated, 290 were partially substantiated, and 99 were handled in some other manner. (The data on closed cases for 1999 won't be available until the end of this calendar year.) In other words, slightly less than half of the already small number of complaints against physicians in 1998 were substantiated after further investigation by HCFA or the OIG.

What this means for internists

The OIG data should reassure internists. The fact that only 1% of calls to the hot line resulted in a physician-related complaint, and the fact that only a handful of those complaints resulted in a fraud investigation should quell fears that honest physicians are being harassed by overzealous OIG investigators. It's important to point out that the types of cases that have resulted in criminal convictions all involved egregious efforts to defraud the Medicare program. For example, one involved an internist who received kickbacks for signing durable medical equipment certificates of medical necessity for patients that he never examined.

The OIG has emphasized, however, that we should not assume that cases that did not lead to fraud investigations were simply "honest mistakes" or due only to poor instructions from Medicare carriers. OIG officials maintain that there is a range of billing practices—from honest mistakes to incompetence to intentional abuse—that continue to be of concern to the government.

ACP-ASIM has agreed to meet again with the OIG to review the types of cases that fall in the gray area between honest mistakes and outright fraud. Our goal is to get a better understanding of what kinds of problems the OIG is finding and how frequently they occur. Even if honest physicians do not have to worry about being investigated for fraud, a demand by a Medicare carrier for a refund of overpayments—plus interest—can cost a practice tens of thousand of dollars. Internists need to learn what they can do to make sure their bills and documentation are as accurate as possible. (See "How to steer clear of a Medicare billing audit.")

By engaging in a constructive dialogue with the OIG, ACP-ASIM is in a better position to separate fact from fiction about fraud and abuse. Our continued objective is to find ways to work together with the OIG to reduce improper billings and actual fraud without subjecting honest internists to unrealistic paperwork requirements or excessive medical review.

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

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