In the Trenches Fighting Fraud and Abuse – Case Study

I’ve been a local prosecutor, a federal prosecutor, a managing attorney at the Inspector General’s Office for the New York State Workers’ Compensation Board, and finally head of the Workers’ Compensation Division at New York City Transit. I’ve had opportunity to investigate all forms of medical fraud and share some of what I saw now, providing information on one case study.

Current Procedural Terminology (CPT) code violations

A matter on which I’ve spent a great deal of time during my tenure with governmental and quasi-agencies is CPT code billing gamesmanship. I’ll share a case study which involved many claims payers in New York State, and can happen anywhere.

By way of background, the CPT codes are an alphanumeric system created by the American Medical Association (AMA) for uniformity of billing by all medical providers for all types of services, whether rendered in the general health or workers’ compensation arena. The codes are used by medical professionals to identify what procedure/type of office visit has been provided to any patient, for any visit across the country. This allows the insurance carrier to know how to pay the provider. It stands to reason that if a provider has a greater interest in economic gain than in patient care, he might be inclined to change the service code to increase the reimbursement rate.

How do stakeholders in the workers’ compensation process detect this is occurring? The claimant won’t know because she never sees any of the medical bills for workers’ compensation treatment. An attentive claims examiner might notice a problem if she sees that one medical provider appears to be billing for expensive procedures at a higher than expected percentage of the time and is noting these unusual billing patterns. Carriers should also be on the lookout for this. Optimally, they should be studying billing patterns for all providers with bills over a specified dollar amount in a specified period of time. Each carrier should select what the dollar amount and time period should be.

In one instance of particular interest it became apparent to various insurance carriers that a particular provider was using an “unspecified” CPT code at what appeared to be a suspiciously high rate of frequency. Almost all codes are specific, e.g., there are different CPT codes for office visits of different lengths and complexity, as well as specific codes for different physical therapy modalities. That said, there are a few codes buried in different places throughout the CPT code that are used for general purposes to allow for the possibility that not every procedure can be captured by the codes. A carrier noted that a provider was trying to capitalize on billing for transcutaneous electrical nerve stimulation (TENS) therapy. Reimbursement rates were particularly low for this therapy under the New York State workers’ compensation/no-fault medical fee schedule (reimbursement rates have increased as of January 1, 2019) so the theory was the provider needed a run-around tactic in order to make this a more profitable medical treatment. 

For years this provider offered something like electric nerve therapy, but it’s unclear what it really was because, as far as the investigators looking at this matter could determine based on interviews with technicians no longer with the practice, the machine used for the therapy was not one with which there was familiarity, nor was the machine familiar to others who were in the medical profession. (As an aside, highly distinguished doctors at major hospitals will provide guidance, especially to government agencies, because they are concerned about the integrity of the profession). The provider was billing for this service under an unspecified surgical code, which has a much higher reimbursement rate than one for TENS therapy.

How was this investigated? There were a variety of investigative tactics employed.  Provider data was collected in Excel format from the Workers’ Compensation Board for an extensive period of time (over five years of records) to capture billing patterns. The information included the following data points:  Dates of service, CPT code billed for the service, diagnosis code, name of the claimant receiving the treatment, and the amount that the provider billed and the amount the carrier actually paid. This allowed for a comprehensive picture of the scope of the problem, and the ability to assess, for any particular date, how many times the provider has billed under one unusual code.

Governmental agencies will often have the ability to look at a complete billing data set whereas one individual carrier can only see the billing for its entity. Our data showed that many claims payers were affected.  If an investigator in the Special Investigation Unit (SIU) for a carrier notes unusual patterns, then reaching out to the National Insurance Crime Bureau or to a state oversight entity, such as a state Inspector General’s office with the concerns can be helpful. That said, even these agencies can be overwhelmed and may not have the bandwidth to do a deep dive, in which case hiring a fraud expert becomes imperative.

What other investigative techniques were employed? After collecting the data, and understanding the patterns, the next step was reaching out to some of the claimants to determine what services had been rendered and if it appeared that they were receiving treatments consistent with typical TENS treatment or something more specialized. Note: If claimants are represented by counsel, then this must be considered. It’s important to discuss this fact with an attorney. The claimants reached described treatment consistent with ordinary TENS treatment and nothing extraordinary that could be defined as a surgical procedure.

This matter was eventually referred to a prosecutor but stalled. So why did it stall? A number of reasons: First, the case was complex, and time-consuming, and the financial victims (the carriers) not as compelling for the particular office to which the case was brought. This is an important point: Prosecutorial agencies seek out cases with victims who are clearly within their purview, and appealing to their superiors, not just victims over which they can assert authority because of the way that the statutes have been drafted.

The Board eventually closed this loophole making it more difficult to bill for this service under an unspecified code. So, to some extent, there was a partial victory, which serves both the unwitting claimants as well as the carriers.

Conclusion

This is just one way that CPT codes can be manipulated. There are other ways to code that are equally unscrupulous, and attention should be paid to billing practices of high volume medical providers.

Pamela Davis is an attorney and owner of Veriten Consulting LLC, a risk management entity with strengths in fraud identification and remedy. She can be contacted at info@veritenllc.com

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