A recent fraud conviction in Ohio made me think about the subject of medical billing in general. This was a significant case, in which a chiropractor plead guilty to workers' compensation fraud, a felony in Ohio. He was ordered to pay almost $400,000 in restitution. The break-down was about $60,000 in investigative costs and about 335,000 in actual restitution.
Last January, another Ohio chiropractor plead guilty to workers' compensation fraud, this time a misdemeanor charge. He was ordered to pay almost $70,000 in restitution. The $70,000 included about $10,000 in actual restitution and almost $60,000 in investigative costs that the chiropractor must repay.
Notice the similarity, it can be expensive to investigate medical billing issues. There is another interesting similarity between the cases. In each, the investigation began when regular people, patients, complained that they believed charges were being billed for services that were not rendered. The system, it seems, depends on every day people to be alert and communicative.
These are not the biggest fraud cases you would see if you Googled "workers' compensation fraud." That search would include results with million-dollar stories. Such a search would also reveal smaller cases, like the chiropractor who was ordered to pay $1,977 in restitution. These billing challenges seem to know no boundaries and are not easily defined. These particular examples come from the field of chiropractic, but the problems certainly exists across the breadth of American medical care and is by no means limited to any specialty or practice. These are simply examples, and should not be seen as maligning this specialty.
Is such billing manipulation a real problem? Some say it is. Last spring, the Government Accountability Office (GAO) published a report on medical fraud, the focus was Medicare. Their title says much "Progress Made, but More Action Needed to Address Medicare Fraud, Waste, and Abuse." It concludes that Medicare annually spends about $604 billion to care for 51 million people. In 2013 they estimated that $50 billion of those payments were "improper" and "may be fraudulent." Only eight percent, but to paraphrase Everett Dirksen "50 billion here, 50 billion there, pretty soon you are talking about real money."
Look at it another way, what is $50 billion divided by the 51 million people served? Well, it is not quite $1,000 each, exactly $980.39. So, in 2013, the average Medicare recipient was the subject of almost $1,000 in "improper" or "may be fraudulent" charges. That is just the Medicare element. This does not address or consider that similar "improper" charges could have been made against health insurers, workers' compensation insurers, employers, and in many instances injured people who lack coverage and are responsible for their own bills.
In 2010, the Chief Counsel for the U.S. Department of Health and Human Services testified before the House Ways and Means Subcommittee on Health Oversight, regarding reducing "Fraud, Waste, and Abuse." He described that fraud schemes "commonly include billing for services that were not provided or were medically unnecessary." He says that other providers are "purposely billing for a higher level of services than what was provided." Some schemes allegedly misrepresent costs, involve kickbacks, or improperly use stolen identities for billing. He testified with specifics on a variety of improper payments and billing. See generally Fee Schedules, Reimbursements, and Medical Necessity in this blog.
Insurancefraud.org estimates that the United States spends $2 trillion on healthcare annually. They assert that between "$600 billion to $800 billion" is waste and of that "between $125 billion and $175 billion annually" is attributable to fraud. If they are correct, that is thirty to forty percent (30-40%) waste, including six to nine percent (6-9%) fraud. According to the Census Bureau, the U.S. population is 316 million, and 76.7 of those are over 18 years old, which yields about 242.4 million adults. Each American adult's share of the $800 billion waste is therefore about $3,299.
Last January, another Ohio chiropractor plead guilty to workers' compensation fraud, this time a misdemeanor charge. He was ordered to pay almost $70,000 in restitution. The $70,000 included about $10,000 in actual restitution and almost $60,000 in investigative costs that the chiropractor must repay.
Notice the similarity, it can be expensive to investigate medical billing issues. There is another interesting similarity between the cases. In each, the investigation began when regular people, patients, complained that they believed charges were being billed for services that were not rendered. The system, it seems, depends on every day people to be alert and communicative.
These are not the biggest fraud cases you would see if you Googled "workers' compensation fraud." That search would include results with million-dollar stories. Such a search would also reveal smaller cases, like the chiropractor who was ordered to pay $1,977 in restitution. These billing challenges seem to know no boundaries and are not easily defined. These particular examples come from the field of chiropractic, but the problems certainly exists across the breadth of American medical care and is by no means limited to any specialty or practice. These are simply examples, and should not be seen as maligning this specialty.
Is such billing manipulation a real problem? Some say it is. Last spring, the Government Accountability Office (GAO) published a report on medical fraud, the focus was Medicare. Their title says much "Progress Made, but More Action Needed to Address Medicare Fraud, Waste, and Abuse." It concludes that Medicare annually spends about $604 billion to care for 51 million people. In 2013 they estimated that $50 billion of those payments were "improper" and "may be fraudulent." Only eight percent, but to paraphrase Everett Dirksen "50 billion here, 50 billion there, pretty soon you are talking about real money."
Look at it another way, what is $50 billion divided by the 51 million people served? Well, it is not quite $1,000 each, exactly $980.39. So, in 2013, the average Medicare recipient was the subject of almost $1,000 in "improper" or "may be fraudulent" charges. That is just the Medicare element. This does not address or consider that similar "improper" charges could have been made against health insurers, workers' compensation insurers, employers, and in many instances injured people who lack coverage and are responsible for their own bills.
In 2010, the Chief Counsel for the U.S. Department of Health and Human Services testified before the House Ways and Means Subcommittee on Health Oversight, regarding reducing "Fraud, Waste, and Abuse." He described that fraud schemes "commonly include billing for services that were not provided or were medically unnecessary." He says that other providers are "purposely billing for a higher level of services than what was provided." Some schemes allegedly misrepresent costs, involve kickbacks, or improperly use stolen identities for billing. He testified with specifics on a variety of improper payments and billing. See generally Fee Schedules, Reimbursements, and Medical Necessity in this blog.
Insurancefraud.org estimates that the United States spends $2 trillion on healthcare annually. They assert that between "$600 billion to $800 billion" is waste and of that "between $125 billion and $175 billion annually" is attributable to fraud. If they are correct, that is thirty to forty percent (30-40%) waste, including six to nine percent (6-9%) fraud. According to the Census Bureau, the U.S. population is 316 million, and 76.7 of those are over 18 years old, which yields about 242.4 million adults. Each American adult's share of the $800 billion waste is therefore about $3,299.
This week, WorkersCompensation.com published a summary report on the efforts of the Ohio Bureau's Special Investigations Department team that focuses on fraud in the healthcare industry. Their focus included "pill mills and injury mills." They "referred 32 subjects for criminal prosecution, 300 percent more than last year." According to their report, the team identified "$19.5 million in savings for Ohio's workers' compensation system." If each state had similar figures, it would amount to almost one billion dollars per year in workers' compensation savings alone.
Is the current enforcement effort sufficient? Are the perpetrators generally being caught, or is there more out there that should concern us? Insurancefraud.org's website may be supportive of the hypothesis above, that every day people will have to play a role in stopping waste. It recommends that "consumers need to closely read the explanation of benefits (EOB) forms that health insurers sent to policyholders." They lament, however, that these explanations are not easy to read or understand. They cite one source as supporting that almost 70% of these EOB forms "confuse people who receive them." Thus, reliance on the patients may not be a complete solution.
For instances of fraud against federal programs like Medicare and Medicaid, there is a whistleblower statute. Such a law allows private citizens to sue those whom they believe are committing such offenses, and the private citizen who prevails gets to keep some of the recovered money. There are also online reporting tools such as the Medicare website and Florida's Department of Financial Services site which also has an online tool for reporting insurance fraud. These tools may allow and encourage those working in the medical industry to report abusers.
Illinois has a state whistleblower statute as well. Workcompcentral reported this week that a Cook County Judge interpreted that statute as empowering such lawsuits "only for unlawful kickback schemes, not other forms of insurance fraud." The issue is before the Illinois Appellate Court now in State of Illinois ex rel Zolna-Pitts v. ATI Holdings. In that instance, a physical therapist was allegedly instructed by her employer to bill in "15-minute increments" for tasks that she performed "for only five minutes," which "effectively tripled the amount of services provided." More accurately, it seems like this tripled the amount billed and the amount performed remained five minutes.
That instruction reminds me of a defense lawyer I once knew who insisted that unit billing was appropriate and that insurance companies expected to be billed without regard to any efficiency of scale that might be involved. That is, he believed that if you drove an hour to an adjoining county and worked there on three cases, the two hours of total commute time should be billed to each client. He explained to me that the insurance companies were not smart enough to understand if you billed them two hours for the trip this week when they were the only case you were working on and then billed them only 40 minutes for the same commute next week when you worked on three client's needs during a similar trip.
Would state laws enabling whistleblower status for private citizens lead to less "improper" or "may be fraudulent" activity? Would that entice more industry insiders to take a stand against "improper" or "may be fraudulent?" Should it matter if the source or problem is allegedly misrepresented costs, kickbacks, or improper use of stolen identities for billing? Is it really comprehensible that there is an $800 billion problem and something more is not being done? Perhaps it is not the magnitude of the problem that it is being portrayed to be?
Illinois has a state whistleblower statute as well. Workcompcentral reported this week that a Cook County Judge interpreted that statute as empowering such lawsuits "only for unlawful kickback schemes, not other forms of insurance fraud." The issue is before the Illinois Appellate Court now in State of Illinois ex rel Zolna-Pitts v. ATI Holdings. In that instance, a physical therapist was allegedly instructed by her employer to bill in "15-minute increments" for tasks that she performed "for only five minutes," which "effectively tripled the amount of services provided." More accurately, it seems like this tripled the amount billed and the amount performed remained five minutes.
That instruction reminds me of a defense lawyer I once knew who insisted that unit billing was appropriate and that insurance companies expected to be billed without regard to any efficiency of scale that might be involved. That is, he believed that if you drove an hour to an adjoining county and worked there on three cases, the two hours of total commute time should be billed to each client. He explained to me that the insurance companies were not smart enough to understand if you billed them two hours for the trip this week when they were the only case you were working on and then billed them only 40 minutes for the same commute next week when you worked on three client's needs during a similar trip.
Would state laws enabling whistleblower status for private citizens lead to less "improper" or "may be fraudulent" activity? Would that entice more industry insiders to take a stand against "improper" or "may be fraudulent?" Should it matter if the source or problem is allegedly misrepresented costs, kickbacks, or improper use of stolen identities for billing? Is it really comprehensible that there is an $800 billion problem and something more is not being done? Perhaps it is not the magnitude of the problem that it is being portrayed to be?