Physician Billing Fraud and Overpayments: How to Stay Out of Trouble

Overpayments might not top your list of physician billing issues, but with recent CMS actions, it might be time to rethink that stance. 

Over the past few years, CMS has been placing more attention on addressing overpayments. Take, for example, the case of McBride Orthopedic Hospital. The provider agreed to pay $414,649 for alleged violation of the Civil Monetary Penalties Law. The OIG determined that McBride had improperly submitted up-coded claims to federal healthcare programs for:

• Improperly appending modifier 51, 58, and/or 59 for professional services related to surgeries performed by two employee-physicians
• Billing professional and facility fees that were related to post-surgical patient visits performed by an LPN without physician supervision
• Improperly appending modifier 25 and/or billing as split/shared evaluation and management services performed by an employee-physician during office visits [1]

Physicians in particular should pay attention. A Florida group practice settled for over $440,000 for failing to refund overpayments in a timely fashion and not complying with CMS rules [2]. Additionally, in 2019, the agency released plans to recoup funds paid by Medicare that should have been billed to Medicare Advantage plans [3]. They attribute many of the overpayments to providers that have not been properly screening patients for insurance coverage — billing Medicare fee-for-service instead of Medicare Advantage plans. This notice involved sending multiple letters, but should also serve as a warning to providers that being lax about overpayments is a thing of the past. 

For physician billing, this means that your staff will need to be more proactive on the front end about verifying coverage and that your practice should be implementing and continuing processes to identify overpayments and figure out the root cause.

In a word, yes. Even though CMS has stepped out to notify providers of overpayments, technically, providers should be identifying and resolving these overpayments themselves. 

CMS says that Medicare overpayments should be refunded within 60 days. Still, there are practices that aren’t regularly running credit balance reports. The penalties can be high. The credit balance form itself specifies, 

“Failure to submit this report may result in a suspension of payments under the Medicare program and may affect your eligibility to participate in the Medicare program. Anyone who misrepresents, falsifies, conceals or omits any essential information may be subject to fine, imprisonment or civil monetary penalties under applicable federal laws.” [4]

Preventing overpayments starts with studying payer requirements and regularly reviewing whether or not your billing processes are correct. Here are a few tips from an experienced compliance professional to avoid incorrectly over-billing and going through the hassle of rectifying overpayments [5].

Study Payer Requirements Before Claim Submission

Payer contracts and billing guidelines can be very complex. Paperwork requirements and specific coding demands can make denials more likely regardless of how a procedure is performed. Your billers and coders should be trained on published requirements to understand how claims should be coded and billed. 

Federal programs like Medicare, Medicaid, and Tricare maintain manuals, statutes, regulations, and other forms of guidance. On the commercial side, manuals are regularly published, and updated versions are often available online or through payor portals. Close communication with your payer rep will be invaluable. 

Skip this step and you might find yourself hiring a lawyer or consultant to support your defense, or you might end up paying penalties for documentation errors. You might even end up paying back a large portion of your reimbursement. 

Don’t Ask Your Colleagues

Yes, other practices are facing the same billing challenges you are, but ultimately they aren’t the final authority on billing. Other physicians or sales people might have good advice, and your staff might have even heard information that sounds credible at a conference but it’s critical to go to the source.

The payer’s billing requirements should always be your source of truth. If not, you risk overpayments, penalties, and returning funds — and “the practice next door does the same thing” won’t be a reliable defense. 

Get a Compliance Program Going

If you don’t have a billing compliance initiative up and running now is a great time to start. Yes, they’re an added cost, especially if they’re robust enough to stay on top of overpayments, but an ounce of prevention is worth a pound of cure. The cost of proactive compliance initiatives will typically be significantly lower than the cost of defending and appealing overpayment accusations. 

Determining how to start your compliance program will depend on your needs and overpayment challenges. You might need to focus on registration or possibly put most of your efforts into correcting issues on the billing side. However you do it, make sure that your program encourages learning and improvement and that your staff doesn’t feel intimidated to speak out on issues they see. The less comfortable they feel, the less insight you’ll have into improving your overpayment problems. 

If you don’t feel you have the internal knowledge to address your overpayment concerns, consider bringing on a partner who has seen overpayment issues in multiple other practices as part of your initiative. Contact us to learn more.