The 10 Biggest Legal Mistakes Physicians Make When Responding to a Medicare Inquiry

Excerpted from The Biggest Legal Mistakes Physicians Make: And How to Avoid Them

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Executive Summary

As the single largest payer for health care services, the Medicare program represents a significant source of income for the vast majority of physicians in the United States. Not surprisingly, health care fraud is one of the top enforcement initiatives for the U.S. Department of Justice (DOJ) and is also enforced by a host of other agencies, including the U.S. Postal Service and the Office of Inspector General of the Department of Health and Human Services (OIG). While most physicians are not engaging in health care fraud, billing mistakes when dealing with the Medicare program can have costly consequences. If handled improperly, mistakes can result in intense scrutiny and even prosecution by enforcement authorities. Because dealing with the Medicare program and Medicare officials is a routine part of most medical practices, physicians may mistakenly also treat as routine inquiries by their Medicare carrier or by the federal Centers for Medicare & Medicaid Services (CMS). However, no inquiry from Medicare should be treated as routine.

Mistake 1 Failing to Take Medicare Inquiries Seriously

Medicare “inquiries” may take a variety of forms, ranging from payment denials and notices of unusual utilization patterns to specific audit inquiries. While all of these may be routine functions of the local Medicare carrier or even CMS’s national office, physicians must be aware that any one of them can be an indication that their practice activities are under scrutiny. For example, routine denials of particular services may indicate a problem in the way the service is being rendered, billed, or both. When the carrier identifies a practice as routinely billing for services that are not covered or not billed properly, the carrier may initiate an audit of that provider’s activities. Similarly, when routine utilization monitoring by the carrier identifies physicians who are outliers in a particular area, they will often send a notice to the physician of that finding. Physicians should take these notices as a red flag and promptly identify why their utilization statistics are abnormal and take action to correct any inappropriate or incorrect practices leading to the unusual utilization patterns. Finally, Medicare carriers are charged with routine auditing of physician billing practices, but physicians should not assume that any Medicare audit is routine. Carrier audit initiatives may be based on directives from enforcement authorities all the way up to the OIG. Moreover, the audit may not be routine at all, but rather it could be based on the fact that a physician or practice is the target of an investigation. Generally, there is no way to know whether an audit is routine or a sign of something more serious, so physicians must assume the worst.

Action Step Physicians must treat every inquiry or communication from Medicare seriously and should investigate the basis for the inquiry and take corrective action.

Mistake 2 Assuming Medicare Will Never Look at One’s Practice Activities

The Medicare billing, coding, and documentation rules are extremely complex. Given the administrative burden that these regulations impose, physicians may be tempted to cut corners in their coding and documentation under the mistaken belief that their carrier, CMS, or both will never find out. However, physicians must understand that their claims are constantly under scrutiny by the carrier and that they may be targeted for audit at any time. Once a physician has been notified that he or she is the subject of an audit inquiry, it is generally too late to correct errors in coding and documentation.

Action Step Physicians should prepare coding and documentation under the assumption that the records will potentially be reviewed by the carrier or other enforcement authorities.

Mistake 3 Failing to Research Medicare Coverage Requirements

Medicare carriers are charged with implementing national Medicare policies at the local level. Carriers have authority to develop policies (known as local medical review policies) that implement national policy, provided the local policies are not more restrictive than the national policies they implement. Physicians often receive notices of new local medical review policies from their carrier notifying them of the way in which services must be billed and if and when particular services are covered by Medicare. Physicians may also receive notices from Medicare that the way in which services are billed or coded does not comport with the carriers’ local medical review policy. Physicians should not, however, necessarily take these notices as the law. Rather, they should independently investigate whether the local medical review policy comports with national policy and, if the local policy is more restrictive than national policy, seek a determination from CMS’s national office as to the legitimacy of the policy. Working with experienced health law counsel throughout this research and inquiry process will help physicians ensure that they obtain guidance on which they can rely in dealing with their carriers.

Action Step Physicians should independently research coverage policies and procedures to ensure that local carriers are not overstepping their authority.

Mistake 4 Failing to Document Communications with Medicare Officials

It is not uncommon for physicians to rely on verbal guidance from their carrier representative on how to properly bill and code their services. However, physicians are often surprised when they receive an audit inquiry suggesting that those services were billed incorrectly. When they are faced with repayment obligations or penalties, physicians often protest that they were simply billing for the services as they were told to by their carrier representative, who at that point may no longer even work for the carrier. Because the guidance was given to them verbally rather than in writing, the physicians have no evidence to support their claims. Similarly, when faced with a deadline to submit records for audits, physicians may request an extension. When that extension is given verbally and the physician fails to meet the written deadline in the audit inquiry letter, enforcement authorities may view this noncompliance as bad faith on the part of the physician. It is important therefore that communications with CMS officials, including local carrier officials, be committed to writing. When conversations are conducted over the telephone, physicians should send follow-up correspondence (using legal counsel as appropriate) and should request written guidance from the carrier when seeking billing and coding guidance. (As discussed in Mistake 5, inquiries to the carrier should generally be made on an anonymous basis.)

Action Step Communications to and from Medicare officials should be committed to writing to create a record of those communications.

Mistake 5 Contacting Medicare Directly

Physicians may receive general notices from Medicare that prompt them to seek guidance from their local carrier. Physicians must be mindful of the fact that carriers may initiate investigations of physicians based on physician inquiries. So, when a physician contacts a carrier to discuss the coverage requirements for a particular service, or billing and/or coding practices, the carrier may use that inquiry as the basis of an audit of the physician. It is advisable, therefore, to have legal counsel make such inquiries on an anonymous basis so that the physician may obtain accurate written guidance from the carrier without fear of implicating his or her own activities. The same applies with regard to inquiries made to CMS’s national office. Legal counsel can also assist physicians to structure their inquiries to obtain the most useful answer.

Action Step Physicians should avoid contacting CMS officials directly, but should rather use legal counsel to make inquiries on an anonymous basis.

Mistake 6 Failing to Comply With Information Request Deadlines

Typically, when initiating an audit, the carrier or CMS sends the physician a letter describing its authority to conduct the audit, identifying the specific records it wishes to review, and specifying deadlines for the physician to submit the requested records. Often the information requested is extensive and may cover several years. When faced with the burden of producing these records, physicians can easily become overwhelmed and may find that the deadlines imposed are too restrictive. However, failing to meet a deadline established in an information request letter may be taken by the carrier and other enforcement authorities as an indication that the physician is not cooperating or is otherwise acting in bad faith. This in turn may escalate the seriousness of the audit from an enforcement perspective and may be an aggregating factor in determining the final action taken against the physician. When faced with an inadequate deadline, physicians are far better off seeking an extension. In most cases, auditors grant such a request. However, as discussed in Mistake 4, such requests and the responses from the carrier should be committed to writing so that there is a record of the hardship imposed on the physician as well as the auditor’s response to the request.

Action Step Physicians should follow information request deadlines closely and seek extensions of those deadlines if necessary.

Mistake 7 Altering Records Subject to a Medicare Audit

When they receive an audit inquiry letter from the carrier, physicians may be tempted to alter the records that are the subject of the audit before submitting them in an attempt to remedy poor documentation or incorrect coding. If discovered, altering medical records may raise mere billing mistakes to the level of health care fraud, the consequences of which are not only potential repayment of funds, but penalties and even criminal prosecution. When reviewing records to be submitted as part of an audit, physicians should document any discrepancies or shortcomings identified and, in a cover letter accompanying the records to be submitted, include an explanation, if there is one, of those discrepancies and deficiencies. In addition, when the physician regularly uses abbreviations in his or her records, it is advisable to include a glossary of those abbreviations so that auditors can interpret the records. Finally, when documentation is illegible, it is advisable for physicians to transcribe the records in dictation and include both the original records and the dictated records as part of the information submitted for the audit with an explanation as to why both are being submitted. Physicians should never alter original medical records. If necessary, they may include addendums to the medical records, but those addendums should be signed and dated as of the date they were made and should not be backdated.

Action Step Physicians should never alter medical records, but should instead include explanatory comments with records submitted to Medicare for audit.

Mistake 8 Failing to Keep Accurate Records of Information Submitted to Medicare in Connection with an Audit Inquiry

Information requested by a Medicare carrier or CMS in connection with a physician audit may be extensive, often requiring the submission of boxes of records. Given the tremendous administrative burden of submitting records for audit, physicians may elect to forego copying the information submitted. However, unless the physician makes an exact copy of each piece of information submitted pursuant to the audit, the physician will be at a disadvantage if he or she is asked later to explain certain pieces of information submitted or if the physician is forced to challenge the carrier’s audit determination in a hearing or in court. When copying the records submitted would be administratively unfeasible, physicians should at least make a detailed list describing each piece of information submitted for later reference. While even this will be administratively burdensome, failing to do so could put the physician at a disadvantage later.

Action Step Physicians should keep accurate records of all information submitted to Medicare authorities.

Mistake 9 Failing to Take Corrective Measures When Instructed to Do So by Medicare Officials

If, after an audit, a Medicare carrier or CMS identifies problems or deficiencies in the way a physician has billed for services, the carrier, representative, or Medicare will provide the physician with guidance on how the services should be billed, documented, and/or coded going forward. Physicians may be reluctant, whether intentionally or unintentionally, to implement the revised billing, coding, and/or documentation recommendations. Worse yet, some physicians make the incorrect assumption that because they have been audited once, they will not be audited again. In fact, physicians who have been audited by the carrier are often flagged for continuing scrutiny and may be audited for the same or different problems again. Moreover, failing to take corrective action when instructed to do so by Medicare officials may, upon subsequent audit, indicate a disregard for the law, raising what would otherwise be billing mistakes to the level of health care fraud.

Action Step Physicians should take guidance from their carrier, CMS officials, or both seriously and implement corrective action within their practice when problems are identified.

Mistake 10 Failing to Consult with Experienced Health Care Counsel

With rising overhead costs and shrinking reimbursements, physicians are often tempted to save money by foregoing legal advice. Physicians should be aware however, that inquiries from CMS, their carriers, or both may be precursors to audits and even full-blown investigations that can result in the repayment of significant sums of money, civil penalties equal to three times the incorrectly billed amounts, and even criminal prosecution. Therefore, avoiding involving legal counsel when physicians receive Medicare inquiries may be pennywise but pound foolish. Physicians are advised to consult with legal counsel in advance of receiving Medicare inquiries to establish a protocol for receiving, investigating, and responding to Medicare inquiries. Legal counsel should generally be made aware of any such inquiries and should be consulted as to how best to respond to them.

Action Step Physicians should consult with experienced health care counsel before, during, and after receiving any Medicare inquiry.

Conclusion

Physicians must be cognizant of the seriousness of Medicare inquiries and should develop compliance policies and procedures for receiving, investigating, and responding to them. Doing so will help to avoid costly audits, repayments, fines, and penalties.

Written by:

Todd A. Rodriguez, Esq.

Peer reviewed by:

Jessica C. Milner, Esq.