Health Law Matters

CODING AND BILLING PRACTICES:  PHYSICIANS CAN PASS THE BUCK, BUT CANNOT SLIP THE GOVERNMENT

By Steven K. Sanborn,  Mitchell Warner, P.A.

As the government's fraud enforcement efforts continue to expand, small health care providers are increasingly becoming the focus of fraud investigations. Qui tam litigation, which are lawsuits brought by private citizens on behalf of the government, is also burgeoning. Now more than ever, physicians need to ensure that their coding and billing are done accurately. Even if a physician's coding is done by an individual who is not even employed by that physician, the physician is ultimately responsible for claims made under his or her name.

For instance, in hospitals, physicians and hospital employees who provide coding services often have little, if any, direct contact. While many hospitals now have compliance plans, which are supposed to ensure that coders have adequate training and keep up with changes in the rules, this training often focuses primarily on ICD-9-CM coding and DRG coding, as opposed to CPT coding. Moreover, physicians either do not have access to information pertaining to the training provided to coders, or they fail to take the initiative.

Physicians who sign billing contracts may also be less inclined to code accurately, completely, and for every service. Moreover, with a shift in control of the billing process to another entity, physician practices may have removed existing documentation and coding safeguards. Finally, with an outside entity administering the billing functions, the physician practice often does not retain the information concerning billing and collections.

Physicians are also increasing their exposure to liability by not maintaining their own patient records. For instance, even where a physician dictates a thorough note for every service provided, the note may never be transcribed, or the note may not ever be placed in the proper patient chart. Even if the patient's chart is maintained at an entity outside the physician's practice, such as a nursing home, the physician is ultimately responsible if the documentation does not support the code billed.

One Montana physician, Dr. Patsy Vargo, became the subject of an extensive fraud investigation, in part because of inadequate medical records maintained by an Air Force clinic. After a five year investigation, the government is pursuing a 37 million dollar civil lawsuit against Dr. Vargo, claiming that she defrauded the CHAMPUS program by claiming higher CPT codes than was warranted. Based upon one audit, the government determined, based upon statistical extrapolation, that Dr. Vargo submitted 7,400 inflated or unsupported billings over a four year period. Under the False Claims Act, the government can recover between $5,000 and $10,000 per false claim proven at trial, as well as triple damages.

Dr. Vargo claims that the government did not begin to look at her billing until she testified against a military officer accused of sexual harassment. Furthermore, the government's criminal case was dropped after the government's own billing expert, a physician who sits on the AMA's CPT editorial panel, concluded that the time estimated to be needed to substantiate her coding, roughly 15 to 20 hours per day, was not pertinent to the coding in her case. The expert also questioned the government's retroactive application of documentation guides that were not in effect at the time the claims were filed.

Under Dr. Vargo's provider agreement, the military had the responsibility for maintaining the medical charts. Dr. Vargo would dictate the notes after each patient visit, but she had no control over whether the documentation was filed appropriately in the patient's charts. Nevertheless, without evidence of corresponding documentation, Dr. Vargo is facing a difficult legal challenge to prove that her claims were filed accurately.

Physicians should carefully evaluate their practices, including their billing operations, to ensure that the practice is operating efficiently and in compliance with government regulations. Physicians should maintain control over coding, or at least improve access to hospital coders, including the assignment of all procedural and diagnostic codes. Physician practice policies should include systematic monitoring and review of billing accuracy and collections. If a physician contracts for billing service, the physician should have an adequate means to evaluate the effectiveness of the billing and collection process.

If billing is done within the practice, physicians should closely monitor the billing staff in order to maintain the accuracy of the billing functions. The physician should initiate a system of checks and balances, beginning at the initial patient encounter. The physician should also require that office coding and billing staff obtain continuing education and attend courses in order to keep up with the ever-changing requirements. Physicians' offices should maintain up-to-date coding manuals and ensure that current diagnostic and procedural codes are used.

Physicians should also oversee that medical records are kept in good order. If physicians notice that charts are not being updated regularly, or notes are not being dictated, or there are multiple incidents of misfiling, then the physician should take affirmative action to improve the maintenance of records, including appropriate training or re-training, if necessary.

With all the attention a physician must pay to coding, billing, documentation and other aspects of office management, physicians are finding it increasingly difficult to devote the necessary time to proper patient care. However, even busy physicians can reduce the risk of liability by devoting the resources toward proper office management. This may be ensuring that the practice has a trained and experienced office manager, billing personnel and other office personnel. We recommend to our physician clients that they implement a Compliance Plan, which will establish rules and guidelines to ensure that the office functions properly, even without direct physician supervision. While physicians may initially be hesitant to devote additional resources toward office management, ultimately it would make the offices much more efficient. And more importantly, it will go a long way toward keeping the physician in compliance with the law, out of court and possibly even out of jail!

Top Home Areas Attorneys Articles Links Contact Us Disclaimer

Copyright © 2000  -  Mitchell Warner, P.A.        The Medical Law Alert is a publication of the Mitchell Warner Health Law Group. Its purpose is to provide general information about significant legal developments, and should not be construed as legal advice on specific factual scenarios. For more information on the issues discussed in this publication, please contact Edward E. Hollowell at (800) 662-7403 or ehollowell@nchealthlaw.com