Excerpted from The Biggest Legal Mistakes Physicians Make: And How to Avoid Them
Edited by Steven Babitsky, Esq. and James J. Mangraviti, Esq. (©2005 SEAK, Inc.)
Download Free 646 Page E-book: The Biggest Legal Mistakes Physicians Make and How to Avoid Them
Medicaid is the state-administered health care program for welfare recipients, indigent individuals who meet state eligibility requirements, and certain people who meet the federally specified poverty guidelines. Medicaid is financed with state and federal funds and is operated by the individual states in accordance with certain federal laws and regulations. The entity that administers the Medicaid program in a particular state is commonly known as “the single state agency,” which is a state government entity. Typically, the single state agency will contract with a private company, commonly known as a “fiscal agent,” to receive, process, and pay claims received from health care providers who elect to participate in the Medicaid program.
To ensure that there is an adequate number of health care providers available to treat people eligible for the Medicaid program, single state agencies must contract with health care providers interested in participating in a state’s Medicaid program. As a result, health care providers interested in participating in a state’s Medicaid program are required to enter into a contract with the single state agency in order to provide services to Medicaid patients. These contracts typically provide terms and conditions that the health care provider must abide by while participating in the Medicaid program. If the provider breaches one of these conditions, the provider will be deemed by the state agency to be in violation of the contract, resulting in termination of the contract in addition to other sanctions. To avoid such sanctions, physicians who elect to participate in a state Medicaid program should learn to avoid the following mistakes.
Mistake 1 Making Enrollment Errors
As part of the Medicaid provider contracting process, physicians are required to answer questions on Medicaid provider enrollment forms prepared by the single state agency. Due to a lack of attention to detail, physicians often fail to answer or fully respond to questions on these forms, resulting in a rejection of the enrollment packet by the single state agency or its fiscal agent. Also, inaccurate information may result in a subsequent termination of the physician’s contract, in addition to punitive actions by the single state agency based on false statement allegations.
Action Step During the provider enrollment process, it is critical that physicians carefully review the provider enrollment forms and answer all questions completely and accurately. There can be no guessing or conjecture. Before completing the enrollment application, physicians should be sure that their licensure information is current and correct, that they are in compliance with all regulatory requirements for their specialty, and that all licensed personnel employed by the group are properly credentialed, since the enrollment application will likely cover these issues. A properly completed Medicaid provider enrollment application will eliminate significant administrative obstacles and avoid the possibility of subsequent civil or criminal charges stemming from allegations based on false responses to provider enrollment questions.
Mistake 2 Failing to Read the Medicaid Provider Handbooks
After enrolling in the Medicaid program, participating physicians receive a copy of what is typically known as the Medicaid Provider Handbook. This handbook covers issues relating to covered services, proper billing and coding, and (on occasion) standards for treatment.
Action Step It is critical that participating physicians obtain and carefully read the Medicaid Provider Handbook to determine what the program expects of them. They should contact the single state agency if they have any questions about any matter covered in the handbook. Failure to abide by the guidance in the handbook could result in administrative sanctions by the single state agency, including recovery of money previously paid to the physician or termination from the Medicaid program.
Mistake 3 Failing to Check Medicaid Recipient Eligibility
After enrolling in the Medicaid program and beginning to see patients, it is incumbent upon physicians to ensure that the patients they are treating are, in fact, eligible Medicaid recipients. Normally, Medicaid recipients are issued recipient identification cards containing their identification number, which is the number physicians need to submit a claim for payment to Medicaid. When patients present for treatment claiming to be Medicaid-eligible, the physician’s staff should ask for their Medicaid identification card and, if possible, some other form of identification. This is necessary to ensure that the people presenting for treatment are, in fact, who they say they are and are eligible for Medicaid benefits.
Action Step Verifying a patient’s Medicaid eligibility is the best way for physicians to ensure that they are not expending time and effort for services that may not be reimbursed. Treatment rendered to ineligible recipients will not be reimbursed by Medicaid and, in some instances, the single state agency may attempt to recover from the physician funds that were paid for the treatment of ineligible patients. These problems are easily avoided by instituting simple processes to verify patients’ Medicaid eligibility before rendering services, which include asking patients to produce their Medicaid identification card or other item issued by the single state agency establishing eligibility for services.
Mistake 4 Allowing Unqualified or Incompetent People to Handle Coding and Billing
Allowing unqualified or incompetent people to handle their coding and billing is perhaps the most catastrophic mistake that physicians make as participants in the Medicaid, or any other government health care, program. It is absolutely critical that the billing and reimbursement functions, including preparation of the claim forms, be handled by people who are knowledgeable and sufficiently skilled in coding medical claims. At a minimum, claims that are incorrectly coded or lack the necessary supporting documentation will be summarily denied for payment. Moreover, claims that are incorrectly coded and result in a higher level of reimbursement than warranted will expose the physician to sanctions, penalties, and, in some situations, criminal prosecution.
Action Step As participants in a government-funded program, physicians are responsible for ensuring that all claims submitted for payment are medically necessary and properly billed. Accordingly, participating physicians must either employ or contract with people or entities experienced in coding and billing claims, including claims for services rendered to Medicaid recipients. While doing so will result in an investment of additional practice resources, it is a sound investment given the consequences associated with improper billing of services. There simply is no substitute for competent medical coding and billing of claims.
Mistake 5 Assuming That All Government Health Care Laws and Regulations Apply to the Medicaid Program
Although the Medicaid program is administered by single state agencies under guidelines set forth by the federal government, state Medicaid programs are often allowed to fashion their own regulations and guidelines that differ, and in some cases differ materially, from other health care program regulations. For example, a single state agency may define “physician supervision” more stringently than the federal Medicare program for a particular type of service.
Action Step Physicians who participate in Medicaid should never assume that other government laws, regulations, or guidelines automatically apply to Medicaid. This is particularly true for covered services, coding and billing, and reimbursement. It is therefore absolutely critical for participating physicians to become familiar with the Medicaid Provider Handbook for their specialty and provide all services rendered to Medicaid recipients in accordance with those guidelines.
Mistake 6 Failing to Take Immediate Action After Identifying Problems With Claims
Often, upon receiving notice from the Medicaid fiscal agent that a series of similar claims will not be paid, physicians fail to take immediate action to investigate or identify the nature of the problem. Typically, the problem involves a small administrative error that is easily corrected. Some physicians, however, put the problem off until a significant backlog of unpaid claims builds up, compromising their financial position. Moreover, the failure to immediately address this problem may result in untimely resubmission of claims once the problem is identified and corrected.
Action Step When a series of claims is being denied, it is critical that the physician take immediate action. The physician or his or her staff should immediately contact the single state Medicaid agency or fiscal agent to receive a clear and concise explanation as to why the claims are being denied for payment. A participating physician who, in good faith, has been treating Medicaid patients is entitled to receive, and the single state agency is obligated to provide, an explanation of the billing problem. Once the problem has been identified and corrected, the physician may timely resubmit the previously denied claims for payment and avoid having similar errors in the future.
Mistake 7 Failing to Properly Maintain Patient Charts and Related Records as Required
Without exception, state Medicaid programs have requirements for maintaining patient records, including patient medical charts and related billing records. These requirements stem, in part, from the single state agency’s need to conduct periodic audits of participating physicians. If a single state agency conducts an audit and determines that the patient charts do not support the services that were billed, the agency could seek recovery of the payments made for those services. Moreover, the failure to produce records or charts will likely result in program sanctions. The Medicaid agencies routinely conclude that if a service is not properly documented, the Medicaid program should not pay for it.
Action Step Physicians participating in Medicaid must develop a systematic process for retaining patient records that complies with Medicaid’s record retention requirements. If the single state agency initiates an audit, physicians will be expected to produce records and related documents. Accordingly, physicians who enroll in their state’s Medicaid program should, as an initial step, identify the program’s record-retention requirements and set up internal policies and procedures that comply with these requirements.
Mistake 8 Failing to Conduct Periodic Medicaid Billing Reviews
A comprehensive health care compliance program normally requires physicians to conduct periodic claims reviews. These reviews ensure that physicians are billing in a compliant manner or identify any potential billing problems. Ordinarily, such problems are easily and quickly corrected. Left unchecked, however, even the smallest billing error can create a catastrophic financial problem, particularly if the physician typically submits a high volume of claims for payment. Also, physicians may face significant program sanctions if the government later determines that the billing problems were the result of reckless conduct or gross indifference.
Action Step Each physician who elects to participate in Medicaid must have a periodic claims review system. Ideally, such a review would be conducted by an independent organization sufficiently skilled and experienced in government medical coding and billing. Such organizations typically select a random sample of a physician’s paid claims to determine if the physician is correctly coding for the services rendered. If the initial sample of claims demonstrates compliant billing, the review will stop. If the initial random review reveals problems, a more comprehensive review will be required. Under either scenario, billing problems will be identified, thereby allowing the physician to control the process for implementing compliant Medicaid billing.
Mistake 9 Ignoring or Failing to Cooperate in Medicaid Audits
Participating physicians should understand that single state Medicaid agencies typically enjoy significant police powers regarding their program. As part of these policing activities, single state Medicaid agencies often audit the records of individual physicians, especially physicians who receive significant Medicaid dollars in a particular specialty. The initial step in these audits normally involves a written request from the single state agency to a physician requesting the physician to produce records and related information pertaining to Medicaid services that were previously paid. In some cases, the Medicaid single state agency may elect to conduct a review of the physician’s claims at the physician’s office. Even under the best of circumstances, these on-site reviews are disruptive to the physician’s office staff and, if possible, should be avoided if another method of producing the records is available.
Action Step When approached by state Medicaid auditors, physicians should be cooperative, since the agency will eventually obtain the records they are requesting. Accordingly, physicians should be prepared to produce all records related to services rendered to Medicaid recipients. If a physician refuses, without legal justification, to produce records or cooperate in these audits, it is likely that the physician will face program sanctions, including termination of his or her Medicaid contract and recovery of payments made for services. It is therefore important that physicians not ignore any document requests from the Medicaid single state agency, since a simple oversight could lead to harsh sanctions based on a breach of the Medicaid provider contract.
Mistake 10 Seeking a Fight, Not Information, When Audited by the Single State Medicaid Agency
A Medicaid audit exit conference occurs after the audit is completed. During this conference, the physician has an opportunity to be educated about the auditor’s findings. Though there will be a time for the physician to contest the auditor’s findings, the exit conference is neither the time nor the place to do so. Starting a verbal confrontation with the Medicaid auditor will not improve the situation, and will quite likely make the situation worse.
Action Step If presented with an adverse audit result, physicians should use their time with the Medicaid auditor to learn more about the case. For example, what standards did the auditor use to make his or her findings? What laws, regulations, or program guidelines were used as a basis to evaluate the claims? Were these claims reviewed by a peer of the physician? If so, what are the peer physician’s credentials? Again, much more is to be gained from the Medicaid auditors by engaging, as opposed to combating, them. Physicians will always have an opportunity to contest the audit findings, with or without the assistance of legal counsel. The purpose of the Medicaid audit exit interview is to gain as much knowledge as possible.
While many of these mistakes seem simple, the demands of a busy physician’s schedule often result in these problems being overlooked. With the assistance of a good independent review organization and competent office staff, many of these mistakes are easily preventable. Physicians must remember, however, that no matter who handles the coding and billing of services, retention of patient charts, or verification of Medicaid recipient eligibility, it is the physicians who are ultimately responsible for ensuring compliance with Medicaid laws and regulations. With this in mind, physicians should carefully evaluate whether they want to participate in their state’s Medicaid program or, if they are already enrolled as a participating provider, whether they want to remain.
William F. Sutton, Jr., Esq.
Peer reviewed by:
Michael R. Lowe, Esq.
Download Free 646 Page E-book: The Biggest Legal Mistakes Physicians Make and How to Avoid Them