Medicare Compliance & Reimbursement

Hint: Common law takes into account both acts of commission and omission.

Can fraud be implied or does it have to be perceptible? Do your providers have the certification they need to justify their medical decision making and subsequent billing? Can payers withhold payment if they become aware of non-compliance with certification requirements? A recent U.S. Supreme Court judgement provides some answers to these questions.

Background: The case of Universal Health Services v. U.S. ex rel. Escobar was based on a young woman receiving mental health and therapeutic services from healthcare providers employed by Universal Health Services (UHS) — providers who lacked the requisite certification. Unfortunately, the young woman later had a fatal seizure and her parents sued UHS under the federal False Claims Act (FCA), as several of the providers were later determined to not have been properly licensed under state law. UHS coded, billed, and received reimbursement for the young woman’s services from Medicare and/or Medicaid, says Ed Gaines, JD, CCP, chief compliance officer, Emergency Medicine Div., Zotec Partners, LLC, in Durham, NC.

The plaintiffs in Escobar alleged that UHS had violated the FCA under an “implied fraud” theory — that UHS’ submission of claims to federal payers implied that the providers were in compliance with legal requirements when in fact they were not in compliance. This is known as the so-called “implied certification theory,” which argues that the mere presentation of claims for reimbursement implies full compliance with legal requirements for appropriate reimbursement, says Gaines.

SCOTUS Says Omission Must Be Misleading to Apply

In a unanimous opinion on June 16, the Supreme Court restated that common law, e.g. court made law, includes both acts of “commission” and “omission.” The Court agreed that implied certification may be the basis for FCA liability, provided, however, that the “omission” in this case would make the claims to governmental payers “misleading.”

Where the case becomes interesting is how the Court drew boundaries for FCA potential and future liability. The court rejected the argument by the government that an express condition for payment, e.g. provider licensing in this case, was relevant to whether the claim was “false or fraudulent” under the FCA. It went further to state that if every regulatory requirement is “a condition for payment,” then potential liability under the FCA would expand beyond any reasonable limits, says Gaines.

The court narrowed the scope of its opinion by stating that the FCA’s “materiality” and “scienter,” (e.g., whether the acts were “intentional,”) requirements were rigorous and demanding. Instead, the breach of regulatory requirements would have to be so substantial that the government payer programs would have withheld reimbursements had they known of the non-compliance with state provider licensing requirements.

What Does that Mean for Your Claims?

So, was the FCA liability expanded? Yes, but the arguments over the “materiality” and “intent” (scienter) requirements may go on for decades and in subsequent cases before the court.

Clinicians, coders and billers should pay particular attention to these two points: First, the proper licensing and Medicare/Medicaid credentialing, as well as enrollment of non-physician practitioners (NPPs), is critical in the ED setting. Second, the limitations of the Medicare “shared visit” policy to evaluation and management (E/M) services only and not NPP procedures is critical. Coding and billing procedures by the NPP under the ED physician could be a case where Medicare would not reimburse if it knew of the non-compliance with Medicare billing policies (Medicare Transmittal 1776), as the Escobar decision lays out, Gaines explains.

In contrast, E/M coding differs in cases when a CPT^® 99285 (Emergency department visit for the evaluation and management of a patient, which requires these 3 key components within the constraints imposed by the urgency of the patient’s clinical condition and/or mental status: a comprehensive history; a comprehensive examination; and medical decision making of high complexity…) is billed and reimbursed, and upon coding quality assurance review, it is determined that a CPT^® 99284 (Emergency department visit for the evaluation and management of a patient, which requires these 3 key components a detailed history; a detailed examination; and medical decision making of moderate complexity…) should have been billed instead, this scenario would not appear to be within the Court’s description of the “materiality” and “scienter” requirements. Medicare would have reimbursed the E/M services based on the documentation, but at a lower-level E/M code. Appropriate diligence should be the watch word, warns Gaines.

While one could argue that “negligence” or a one-level difference in code choice is not within the Court’s decision, gross negligence in code choice, intentional upcoding, and unbundling of services, such as abuse of the 25 (Significant, separately identifiable E/M service on the same day …) or 59 (Distinct procedural services) modifiers, could rise to the “materiality” and “scienter” requirements of the decision. A word to the wise is sufficient and diligent coding Q/A, auditing and monitoring may go a long way to reducing contingent liabilities, he adds.