Many providers contend the shift is the result of sicker patients coupled with the widespread implementation of electronic medical records, as treatment and documentation of more complex cases requires greater time and effort. But the persistent increase in costlier codes has made pursuing potential billing abuse a Justice Department priority.

One area of focus for federal investigators has been upcoding, the practice of deliberately billing for more extensive and costly services than were actually performed.

In February 2017, nationwide hospital staffing provider TeamHealth Holdings agreed to plus interest to settle allegations that its hospitalist group practice, IPC Healthcare, submitted upcoded bills to Medicare, Medicaid, the Defense Health Agency, and the Federal Employee Health Benefits Program.

In June 2017, Carolinas Healthcare System agreed to to resolve allegations that it billed federal health care programs for “high complexity” urine drug tests when the tests conducted were only of “moderate complexity.” According to court documents, this upcoding persisted for four years and cost the government an extra $80 per test.

In October 2017, multi-location New York Spine & Wellness Center agreed to to resolve improper billing claims after a federal inquiry determined the practice routinely billed for moderate sedation services – which require physicians spend at least 16 minutes with patients – despite its doctors not meeting the minimum time criteria.

But upcoding is not exclusive to tax-payer funded health care. In the case of New York Spine & Wellness Center, for example, a private insurer first detected the Center’s sedation upcoding in January 2015, initially rejecting two claims that fell short of the 16-minute rule. A subsequent audit by the same insurer resulted in more rejections, but the Center continued its upcoding abuse for two more years until the U.S. Attorney’s Office intervened, seeking to recover overpayments by the state’s Medicaid program. Indeed, of the $1.9 million settlement, more than $660,000 will be returned to the New York Medicaid coffers.

Outcomes such as these are terrific news for taxpayers, but such retrospective vigilance by the Feds has little to no impact on private insurers, employee organizations, and individual payers.

While the government concentrates on recouping federal dollars post-payment, medical cost containment firms must protect private payer clients from overpaying upfront. For example, 911�Թ� uses tools such as in-depth bill review by certified coders and nurse auditors and pre-negotiated, bundled rates to wean out upcoding and other billing abuses on a transactional level. Such proactive approaches are a key core competency of medical cost management, and continue to be as important today as they have been historically.

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Recently, they adjusted the allowable percentage of charges from 95 percent down to 78 percent. This change was supposed to create savings for workers’ compensation hospital bills.  Shockingly, the increased dramatically and more than offset the increased percentage off charges discount.  This is an example of why a discount off charges is meaningless. We need to establish a fair base for services, be it cost up or market driven, and work from there. This is why it is critical to develop alternative cost control methods in areas where the laws or cost containment models are broken.  Competition creates value.

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911�Թ� found a similar situation in New York years ago.  The law allowed for a percentage mark-up above the cost of an implant (ex. 150%) . 911�Թ� noticed very high implant costs from one hospital, their implants were about 10 times more than we were seeing elsewhere. 911�Թ� did a background check on this hospital’s supply company and found out it was actually owned by the hospital.

In a legit scenario, if an implant cost $1,000 from the supplier, then the hospital should charge $1,500 maximum. In this example, the hospital bought the implant from their “supply company,” which had already marked it up tenfold to $10,000.  Then, the hospital billed at $15,000.

The games are endless.  Knowing the actual manufacturer’s rate and the lowest rate for each item allows for alerts and solutions to be created that help curb this costly issue for payers.

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I often hear how horrible the insurance companies are, and there may be many times when the stories are right.  I can also say that spending a week or two reviewing the medical bills submitted to carriers will change any person’s perspective on the situation forever.

The federal government is trying to crack down on the , and that gets the most press, but the same issues apply to everyone involved with healthcare.

When 911�Թ� is reviewing medical bills for our clients, we will occasionally find providers that do not exist when we call them. We will sometimes get what is obviously a cell phone with non-office noise in the background when calling a provider’s office.   Addresses that are not medical facilities will be on bills.  Providers that have lost their license to practice will be listed as the treating physician.  The list goes on and on.

Once, there was a provider who billed for more hours in physician services than there are in a day. That assumes this provider’s daily schedule was solely seeing our client’s insured patients and the provider worked more than 24 hours that day – statistically not likely.  Some things really get to me, and this was one of those things.

A couple of us drove to the doctor’s office and staked it out for a day.  No patient or provider went into the building for the whole day.  Wow – what bad luck.  The “busiest” office and the “busiest” physician I have ever come across and we saw it on a day when nothing was happening.  Later, we scheduled a visit at the facility.  When we looked around the office, there was still almost nobody there.  They didn’t even have the equipment for the majority of the services they had been charging our clients for.

There were, however, a ton of forms offering free consultations to people who had been injured at work or in an auto accident.  We took a bunch and we mailed them in whenever one of our clients got a new patient bill from this facility.  We eventually stopped receiving their bills.  For all I know, they’re still billing other carriers, just not the ones that work with 911�Թ�.

In this day and age, it’s critical that systems are in place to prevent fraud and overpayment.  I am horrified by the stories I hear at Medicare and other large carriers.  It’s costing all of us in increased healthcare costs and taxes.  A lot of this fraud would be easy to resolve forever with very basic controls.  It does a disservice to the patients, good providers and the health of insurance payers to not have good controls in place so that payments are only made for treatment that was actually done.

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I recently heard a story from an employee who caught a $500,000 bill that should have been $5,000 by calling the provider who confirmed the one day stay was not a half-million bucks.

The world is becoming more automated and the pace of decision making is picking up every day.  This means these simple mistakes are easier to make today, and can have a much more powerful impact than in days past.  These stories call out how basic common sense controls must be a part of any operations or system.

In our world of medical payments, a typo on our employees’ part or the provider’s part could cause massive overpayments if we’re not diligent and don’t have excellent controls in place. In a healthcare system that is in dire financial straights, we have a responsibility to our clients to find typos and negotiate inaccuracies, so no one is paying a penny more than they have to.

It is difficult to think of every possible mistake that could occur in every industry, but it is possible to make a reasonable pass up front and put those controls in place for every product, service or system.  It is also imperative that every company create a self learning process, where if a mistake is made, the organization learns from it, and puts controls in place to prevent the same mistake from occurring again.  These micro improvements add up to a bullet proof process and system over time.

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One that is not often explored is the street value of the drugs.  Reselling prescriptions provides many people an additional income stream. Here’s a  on the subject.

It’s important to have systems and indicators in place to watch for these patterns before they get out of control.

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