Coding component important element of compliance plan

Healthcare Financial Management, August, 1997 by Trudy Whitehead, Robert Salcido

In recent years the U.S. government has increased its fraud and abuse investigations in all sectors of the healthcare community. Healthcare providers that are successfully prosecuted may be excluded from the Medicare programs and are liable for monetary penalties. The best course of action is for providers to have a comprehensive compliance plan in place. An important element of such a plan is a component that will identify and address problematic coding issues.

Since the passage of the 1986 False Claims Acts (FCA) amendments, every sector of the healthcare industry has felt the sting of an FCA action.a The government has recovered more than $3 billion as a result of these investigations.(b) Because of these substantial recoveries, the government will certainly continue to use the False Claims Acts to scrutinize healthcare providers.

The most effective means to prevent a Federal fraud and abuse investigation of healthcare claims is for healthcare providers to install effective, comprehensive compliance or best practices plans that identify problematic claims. To ensure that their operations conform to the law, providers should review the following items:

* Billing procedures, to determine if services rendered are accurately reported, with particular attention directed toward avoiding up-coding or unbundling. Note that billing Medicare payers for services with Current Procedural Terminology (CPT) codes that HCFA has identified as nonreportable is viewed as an abusive billing practice;

* Admission procedures and treatment protocols, including possible violations of the Federal self-referral prohibition;

* Contracts with outside suppliers and consultants to ensure compliance with the antikickback law and private inurement issues;

* Record retention practices; and

* Medical record documentation standards to verify that all services billed are properly documented in the patient's medical record. Services not documented are considered nonreportable. In the event of an audit, providers may be required to repay funds for nondocumented services and may face possible fines.

Specific Coding Compliance Strategies

Most components of an effective compliance or best practices review are prospective in nature. A provider, usually with the assistance of consultants, establishes effective internal billing controls to ensure that its coding and documentation practices are in full compliance with the law. One component of a comprehensive compliance review, however, should be performed retrospectively: A provider should arrange to have a sample of claims examined for "high risk." Coding practices that are being scrutinized by the Federal government under several investigative projects include the following:

* The 72-Hour Project. This nationwide probe is targeting billing procedures for outpatient diagnostic services that occurred within 72 hours of a patient's admission to a hospital.

* The PATH (Physicians at Teaching Hospitals) Project. Billing practices at teaching hospitals are being examined to determine if hospitals billed for physician services that were performed by residents instead of physicians.(c)

* The Ohio Hospital Project. Several Ohio hospitals were investigated for improperly unbundling claims involving urinalysis, hematology tests, and organ/disease panels that the government asserted should have been bundled with other chemical tests. The American Hospital Association and the Ohio Hospital Association are suing HHS over this aggressive use of the False Claims Act.(d)

* Patient transfers billed as discharges. A governmental review that began in January 1997 is actively investigating whether hospitals are filing false claims by billing Medicare patient transfers as discharges.

Unfortunately, proper coding is less objective than these Federal probes might imply. Potential problems, for example, can occur when reporting outpatient services because CPT codes were written to identify physician services and often do not work well in the hospital outpatient environment.

Coding problems often are identified by fiscal intermediaries in the course of conducting focused medical reviews (FMRs). Through FMRs, intermediaries identify and target specific local coding practices that deviate from national norms. Healthcare facilities may be required to resubmit claims with incorrectly reported services identified during an FMR, and the intermediary may adjust the institution's reimbursement. Identified areas are addressed through education measures.

Recent coding issues have stemmed from FMRs, including divergence between national and local standards, use of revenue codes, documentation of mammography services, and use of unlisted CPT codes.

Divergence between national and local standards. Although HCFA issues national policies, those policies often are interpreted differently by intermediaries. Thus, institutions may correctly conclude that their coding and/or documentation practices conform with national standards when the local intermediary questions the claim.