Emerging Compliance Issue: Recent False Claims Act Settlements Based on Improper Billing for Evaluation and Management Services by Physicians
An emerging health care compliance issue for hospitals and health systems is a potential liability under the Federal False Claims Act (FCA) based on billing for evaluation and management (“E & M”) services provided by employed physicians. Although potential liability for billing for E&M services (i.e., office visits) is not new, several recent FCA settlements should remind hospitals and health systems that the government may consider the submission of claims for E&M services under improper codes to result in a false claim.
Specifically, in the past three months, the Department of Justice and Office of Inspector General (OIG) have announced several settlement agreements to resolve allegations under the FCA that false claims were submitted to Medicare using CPT codes for new patient E & M services when CPT codes for E & M services provided to existing patients should have been used. The government alleged that by using the new patient codes as opposed to the existing patient codes, the hospitals or health systems improperly received more reimbursement than they were entitled to under the Medicare program for services by employed physicians.
On August 23, 2017, the U.S. Attorney’s Office for the District of Maryland announced a settlement agreement with St. Agnes Healthcare to pay $122,928 to resolve allegations under the FCA that St. Agnes submitted false claims to Medicare by billing for E & M services at a higher reimbursement rate. In June 2011, St. Agnes had acquired a medical practice of twelve cardiologists who were formerly members of Maryland Cardiovascular Associates. The twelve cardiologists became employees of St. Agnes and continued to provide services to their patients through Maryland Cardiovascular Specialists, which is a specialty practice affiliated with St. Agnes. This case was initially filed under the whistleblower provision of the FCA by a former cardiologist employed by St. Agnes (United States ex reel Jonathan Safrene v. St. Agnes Healthcare, Case No. ELH-16-2537 (D. M.d.)).
According to the settlement agreement, the government contended that the E & M services rendered by the twelve employed cardiologists from June 3, 2011 through June 3, 2014 as employees of St. Agnes were improperly submitted or caused to be submitted to Medicare using CPT codes 99201 – 99205 (new patient E & M codes) when CPT codes 99211 -99215 (existing patient E & M codes) should have been used.
In June 2017, the Office of Inspector General (“OIG”) announced two settlements with hospitals under the voluntary provider self-disclosure protocol resolving allegations that the hospitals submitted claims for “new patient” E & M outpatient clinic visits using Healthcare Common Procedure Coding System (“HCPCS”) 99203-99205 when the patients at issue were actually “established patients” and the hospitals should have submitted the claims using HCPCS 99213-99215. Both of the settlements were announced on June 16, 2017.
The first settlement announced by the OIG on June 16, 2017, involved Boston Medical Center Corporation d/b/a Boston Medical Center, which paid $313,246 pursuant to a settlement agreement with the OIG.
In the other settlement announced on June 16, 2017, the UMass Memorial Medical Center had entered into a $441,047.36 settlement agreement with the OIG based on the same issue of submitting claims for “new patient” E & M outpatient clinic visits when the claims should have been submitted under the codes for providing E & M services to “established patients.”These settlements remind hospitals and health systems to audit and review the documentation and billing for evaluation and management services provided by employed physicians, including newly employed physicians.