ED Coding and Reimbursement Alert

Question: We keep hearing that we should be more careful about which cases to bill as observation and which are admissions. This is a difficult call for the doctors. Why all the recent scrutiny?

Codify Subscriber

Answer: Government and private insurance auditors are becoming ever more interested in the rising costs of hospital admissions, particularly when less expensive options (such as outpatient or observation care services) are medically indicated.

In fact, just last month, a Texas-based firm that provides physicians to hospitals to staff their EDs agreed to pay almost $30 million to resolve claims suggesting that the firm received kickbacks to boost hospital admissions for patients that should have been billed as outpatient or observation care.

Medicare pays about three times as much for inpatient admissions than it does for ED visits or observation visits on average, the Department of Justice said in a Dec. 19, 2017 news release on the settlement.

"Improper physician inducements not only compromise sound medical decision-making, but also cost American taxpayers millions in unnecessary medical costs," said US Attorney Andrew Murray in the news release. "Such kickback arrangements will not be tolerated."

The takeaway: Your emergency department physicians are responsible for the medical decisions they make, so erroneously admitting patients who don't have medically necessary reasons to be inpatients is problematic. Not only will it hurt insurers by overcharging them, but it isn't a sound medical practice, as patients shouldn't be treated for conditions they don't have.

If you believe your hospital administrators are pressuring physicians to make medically unnecessary admissions, you must speak up. The case above was reported by two physicians who found the arrangement to be questionable. Your office's compliance plan should dictate who to speak to if any infractions are found, and you should follow that plan in reporting the infractions.

Resource: For more on this case, visit https://www.justice.gov/usao-wdnc/pr/emcare-inc-pay-298-million-resolve-false-claims-act-allegations.