Reimbursement Page

Stay Squeaky Clean: Avoid Medicare Fraud & Abuse
By Joe McTernan, AOPA Government Affairs Department

Medicare fraud.

These two words strike fear in the hearts of most health care providers. In response, O&P professionals often assert, "There is no fraud problem in O&P."

Unfortunately, U.S. District Court Judge Cecilia M. Altonoga, Senator Charles Grassley (R-Iowa) and the General Accounting Office (GAO) see it very differently. From their perspective, there is a huge fraud problem involving Medicare claims for orthotics and prosthetics. Even worse, they have numbers to back this perspective up.

The fraud perception
As reported in the Miami Herald on May 10, 2005, Judge Altonoga presided over a case in which more than 21,000 Medicare claims for artificial arms or legs were submitted over a four-month period. When these claims were isolated and investigated, the vast majority of the claims were for artificial limbs that were never delivered or required.

So many claims from one region of south Florida submitted over such a short period of time should have set off red flags at Medicare. Unfortunately, by the time the problem was identified, Medicare had already paid more than $122 million to 48 small businesses and the related billing agency.

Cases like this have piqued the interest of high ranking politicians like Grassley, chairman of the Senate Finance Committee. He recently quoted a GAO study that concluded fraudulent O&P claims in 2003 and 2004 cost the Medicare program more than $56 million.

Few outside the O&P profession will remember that the companies involved in the fraud were not legitimate providers of orthotic and prosthetic devices. No one will care that not a single ABC- or BOC-certified practitioner was associated with the companies involved. Instead, people will recall and associate these three phrases: "$122 million," "artificial limbs" and "Medicare fraud."

There is no fail-proof way to eliminate fraud and abuse in O&P or any other health care specialty. Through understanding and education, however, honest O&P professionals can make sure their activities don’t contribute to the problem.

Fraud defined
To fight fraud and abuse, you must first understand the difference between them.

Fraud occurs when a person intentionally provides false information that then results in some unauthorized benefit being given to him or another person. The critical word here is "intentionally." In a case of fraud, it must be proven that the accused individual intended to do wrong. Some obvious examples of fraud are explained in the next few paragraphs.

Billing for services not rendered.
Billing for services that were not rendered is fraud because it demonstrates both knowledge and intent. This type of fraud was at the root of the case in Florida.

Fraudulent billing of this sort involves intentionally collecting patient data, either through legal or illegal means, and subsequently creating fictional claims for services that were never delivered.

Often, this type of fraud involves Medicare beneficiaries as innocent victims who have never heard of the entity that submits a claim on their behalf, much less received anything from the provider. Less frequently, patients may collude with unscrupulous providers and split any proceeds from the fraud.

This type of fraud relies on the fact that Medicare receives more claims than it can possibly verify as valid and pays them without question. The goal of individuals who submit these false claims is to collect as much money as possible and then move on before anyone is aware of the fraud.

O&P services are particularly susceptible to this type of fraud because reimbursement for a typical brace or artificial limb is generally higher than reimbursement for other types of services, resulting in higher economic gains.

Misrepresenting a diagnosis for increased reimbursement.
Medicare policy often limits coverage of an orthotic or prosthetic device only for use in the treatment of certain conditions. This type of fraud occurs when a device is provided to a Medicare beneficiary in order to treat a problem for which the device is not considered a Medicare benefit.

For example, when an AFO is used solely to treat a pressure ulcer, it will be denied as a non-covered service according to Medicare policy. Changing the diagnosis code to reflect weakness of the ankle joint, without confirmation of the diagnosis from the physician, would be considered fraud if the diagnosis change was made in order to obtain reimbursement.

Offering or receiving a kickback or bribe.
Kickbacks and bribes involve offering or receiving money or services in exchange for participation in committing fraud. Sometimes even the Medicare beneficiary is a party to this type of fraud.

Improper consignment closet arrangements are one example of this type of fraud. While consignment closets themselves are not illegal according to the Department of Health and Human Services’ Office of the Inspector General (OIG), improper financial relationships disguised as consignment agreements are considered fraudulent

An example of this type of fraud is when an O&P company provides off-the-shelf braces to a physician for use in cases where an immediate fitting is normally required. Under this arrangement, every time a brace is dispensed by the physician or his staff and payment is received by the O&P facility, the physician receives a portion of the reimbursement as a kickback.

Deliberately misrepresenting the date of service.
With only a few exceptions, the date of service for a Medicare claim is the date the completed device was delivered to the patient. When O&P services are provided to Medicare beneficiaries in inpatient settings, such as a hospital or skilled nursing facility, payment responsibility for the service often falls upon the facility, since it must pay for medically necessary services provided to inpatients.

Deliberately misrepresenting the date of service on a claim form may cause the claim to be improperly paid by the DME Medicare Administrative Contractor (DME MAC). This is usually considered fraud because it is intentional and is done to obtain improper financial gain, in this case both for the inpatient facility and the O&P provider

Abuse defined
Since the definition of abuse does not include intent, it is not as severe an offense as fraud. Note, though, that the fine line between fraud and abuse blurs when there is repeated abuse.

Abuse is defined as "incidents or practices of suppliers that are inconsistent with accepted sound medical practices, directly or indirectly resulting in unnecessary costs to the program, improper payment or program payment for services that do not meet professionally recognized standards or are medically unnecessary."

The only difference between abuse and fraud is intent. Persons who are guilty of abuse lack the specific knowledge that the activity is improper.

Some examples of abusive billing practices are discussed below.

Fragmenting charges.
The practice of fragmenting charges, also referred to as claim splitting, occurs when a provider submits two or more separate claim forms for a single device. There are certain procedure codes that tend to come under higher levels of scrutiny than others.

Submitting one claim form containing the less-frequently scrutinized codes and a separate form with the controversial codes in an effort to obtain partial payment for the claim is considered abuse.

The only time a second claim form may be submitted to Medicare for a single service is if you use all the procedure code lines on the first form. In this case, additional codes may be listed on a second claim form.

Breaching the assignment agreement.
If you elect to accept Medicare assignment on a claim, you may not collect payment from the patient other than their appropriate deductible and/or coinsurance.

If you request "conditional" payment from the patient, or submit a bill to the patient for the difference between the Medicare allowable and your charge, you are breaching your assignment agreement and abusing the Medicare payment system.

An easy way to avoid this type of abuse is to evaluate very carefully whether to accept assignment and whether to enroll in the Medicare program as a participating provider. If you choose to be a participating provider, you agree in advance to accept assignment on all Medicare claims. Therefore, any collection activity outside of applicable co-payments and deductibles is considered to be a breach of the assignment agreement.

Waiving coinsurance or deductibles.
While Medicare allows you to waive coinsurance and deductibles in situations where patient financial hardship exists, the routine waiver of these fees can be viewed as an incentive for the patient to use your services.

An established pattern of waiving coinsurance and deductibles is an example of an abusive practice that can be considered fraud if intent can be proven. In this case, the intent would be to encourage Medicare beneficiaries to choose your services over a competitor due to the financial gain they receive by not having to pay their coinsurance or deductible.

How to avoid allegations of fraud or abuse
One way to avoid allegations of fraud and abuse is to establish internal audit procedures to identify potential problems. A well-crafted audit policy establishes the procedures used to perform the audits and specifies any corrective actions to be taken should policy violations occur.

Internal audits are not intended to create an environment of fear or mistrust; rather, they should be used to educate clinical and administrative staff about proper record keeping and billing practices.

Take stock of your own policies and procedures and make sure they are appropriate and up-to-date. Correcting small issues in the present will go a long way toward avoiding large issues down the road.

Joe McTernan is the assistant director of reimbursement services for the American Orthotic & Prosthetic Association (AOPA). AOPA is a not-for-profit trade association providing O&P-specific business services and products for professionals. Through reimbursement, coding and compliance education, AOPA works to inform and support the practice of O&P for the entire profession.

Questions? Call (571) 431-0876 or visit www.AOPAnet.org.