An Out-of-Control Medicare Audit

What happened to Eastern Carolina internal Medicine (ECIM) in Pollocksville, North Carolina is a provider’s nightmare about government oversight run amok.

A Medicare audit began as a medical records request. The auditor alleged minor errors in the medical charts and then extrapolated an overpayment amount. A demand for $40,000 in alleged overpayments from Medicare quickly escalated to more than $1 million. To be paid immediately.

“The federal government said to us, ‘You are a crook. You’ve overcharged. You owe us this amount of money,” said practice founder Dr. Neil Bender.

After two years of fighting the charges, ECIM prevailed. To achieve the victory, ECIM physicians and staff reviewed each questioned claim in court, which consumed three days. An administrative law judge ruled that ECIM documentation was correct on more than 90 percent of the disputed claims, and lowered the fine to just over $3,500. The defense cost $300,000 in legal and other fees, thousands of hours of lost patient care, and interest paid on $700,000 the practice had borrowed to pay the alleged CMS fine up to that point.

Dr. Robert Monteiro, an ECIM internist, said the payments were “tantamount to paying a full practice partner who does not bring in any revenue. It killed cash flow and put us in a tough position. The event was extremely traumatic.”

Even after the ruling, CMS continued to demand payments until ECIM supplied the agency with a copy of the judge’s ruling. The practice required the intervention of Sen. Richard Burr, R-N.C., to recover the unwarranted payments it had already made to the government. The interest that the government paid back on those funds was less than the interest rate the practice had paid on the initial loan.

Monteiro said ECIM was not an isolated case. He said he had heard of other North Carolina practices that received the same harsh treatment.

“Some gave up and paid, some closed their practices, and others fought like we did,” he said.

Monteiro said the financial stress of the audit fight eventually led to ECIM’s selling its practice to CarolinaEast Medical Center in nearby New Bern. It became CarolinaEast Internal Medicine.

“What happened to this rural North Carolina medical practice is unacceptable,” Burr said. “While oversight systems can play an appropriate role in helping to root out fraud and waste, it should be done in a consistent and predictable process to ensure medical practices such as ECIM are not inappropriately targeted and unfairly burdened in the future.”

The North Carolina Medical Society produced a documentary about the saga, Guilty Until Proven Innocent: When Medicare Audits Cause Casualties.

“This documentary offers an example of the real-life consequences of a federal government audit program that is out of control,” said Robert Seligson, executive vice president and CEO of the medical society.

This article is an excerpt from the book “So Long Marcus Welby, MD, An Out-of-Control Medicare Audit”. Buy The Book

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Government is the bigger villain

Insurance companies used to be the prime source of administrative burden. They have been supplanted by government, according to physicians and their advocates.

“It used to be the insurance companies (that imposed more burden), but commercial insurers are trying to make things simpler. With the government, there’s meaningful use, HIPAA, PQRS, ICD-10 … the list goes on and on,” said Louis Goodman, Texas Medical Association chief executive officer and president of the Physicians Foundation

Robert Seligson, chief executive officer of the North Carolina Medical Society, quipped, “What insurance misses (in administrative burden), the government makes sure it fills the void.”

Todd Atwater, chief executive officer of the South Carolina Medical Association and a member of the South Carolina state legislature, said his association and MGMA have funded a grant to identify specific physician administrative burdens that they can reduce.

Atwater said insurance companies were the focus a few years ago, but physicians have gotten used to the game and learned to live with the hassle. The ACA imposes a new set of burdens, and physicians are trying to get in front of them.

Four of the top five financial challenges facing physician practices are government-related, according to a survey by CareCloud and Quantia MD. The top challenge is declining reimbursements, which physicians blamed largely on government insurance programs. They also point to ACA reporting and care requirements, coding and documentation changes, including ICD-10, and costs related to adoption of electronic health records.

CMS has been aggressive in pursuing fraud and abuse in Medicare and Medicaid programs. However, some physicians have become victims of overzealous investigators focused on technical details rather than obvious wrongdoing. Providers complain that government auditors have been too quick to declare paid claims improper, requiring providers to spend up to two years and untold expense to pursue appeals.

Physicians have to wade through a thicket of audit-program acronyms to be law-abiding: National Correct Coding Initiative (NCCI), Medically Unlikely Edits (MUEs), Comprehensive Error Rate Testing (CERT), Recovery Audit Contractors (RACs), Limited Coverage Determination (LCD) and National Coverage Determination (NCD). Each program has its own rules and regulations.

In a move considered uncharacteristic of the Obama administration, it proposed eliminating some Medicare regulations, a move that it said would save hospitals and other health-care providers an estimated $676 million annually.

“We are committed to cutting the red tape for health-care facilities, including rural providers. By eliminating outdated or overly burdensome requirements, hospitals and health-care professionals can focus on treating patients,” former U.S. Health and Human Services Secretary Kathleen Sebelius said in a statement.

However, unfunded Medicare mandates hamper already struggling physician practices with expenses and time-sapping tasks they can ill afford, regardless of how well-meaning the regulations. Medicare regulations take up 125,000 pages. If laid out vertically page by page, they would extend for more than 21 miles.

Physician practices have been required since 2000 to provide translators at $150 or more for Medicare and Medicaid patients not proficient in English. Medicare will not reimburse practices for that or other services required to communicate better with patients.

Physicians will be required to submit quality-reporting-system measures to CMS even after quality bonus payments end in 2014, or else be penalized. Paying the penalty may be cheaper than absorbing the reporting costs.

The ACA has come to symbolize government regulation at its worst. Congressional Republicans constructed a “Red Tape Tower” by printing every ACA regulation. The tower is a 7-foot, 300-pound stack of paper that is pushed on a dolly to congressional offices and committee hearing rooms as Exhibit A of Washington over-regulation.

Republicans claim the estimated 20,000 pages comprise nearly 190 million paperwork-burden hours that will be borne by the healthcare industry, according to the Obamacare Burden Tracker, a report compiled by House GOP committee staff.

Unwarranted government intrusion

Physicians shudder when they see prospective lawmakers who want to meddle in medical affairs. U.S. Senate candidate Todd Akin sank his 2012 campaign when he minimized the threat of pregnancy by rape.

“If it’s a legitimate rape, the female body has ways to try to shut that whole thing down,” said Akin, a Missouri Republican and former member of Congress.

Senate candidate Richard Mourdock, an Indiana Republican, did the same thing when he described pregnancies from rape as “something God intended to happen.”

The American College of Physicians (ACP) finally had enough. It drafted guidelines aimed at legislators who are creating bills to regulate clinical decision-making. The principles seek to protect the doctor-patient relationship.

The document—called “Statement of Principles on the Role of Governments in Regulating the Patient-Physician Relationship”—opposes laws that supersede physicians’ orders, establish mandates for specific health services and limitations on physician-patient discussions.

In a statement, ACP then-President Dr. David Bronson said, “Some recent laws and proposed legislation appear to inappropriately infringe on clinical medical practice and patient-physician relationships, crossing traditional boundaries and intruding into the realm of medical professionalism.”

In other words, stay out of the exam room if you can’t back it up with medical evidence. Don’t tell us what to do or say.

The document cited several examples of state laws that are more about politics than medicine. For example, a Florida law prohibits physicians from asking questions about gun safety. Pediatricians especially consider guns a health issue because firearms are a leading cause of death and injury for young people. Pennsylvania physicians can access trade-secret chemicals used in a natural-gas extraction method called fracking, but they are prohibited by law from discussing their findings with patients who may be suffering subsequent harm.

President Obama had to backtrack on an obscure provision of the ACA that barred physicians from asking patients about the presence of guns in the household. He signed an executive order in January 2013 to “clarify that the (ACA) does not prohibit doctors asking their patients about guns in their homes.”

The American Academy of Pediatrics had sent a strongly worded letter to the Obama administration saying that pediatric advocates “vehemently reject” the gun provision in the healthcare law.

The provision was pushed by the National Rifle Association (NRA) toward the end of the ACA debate in 2010. It was unearthed in the wake of the December 2012 schoolhouse massacre of 20 children and 6 educators in Newtown, Connecticut.

NRA officials said they had requested the provision because they feared insurance companies could use such data to raise premiums on gun owners. However, physician groups and researchers suspected that the provision was part of a long-term strategy to foreclose federal support for studies of firearms violence.

Florida lawmakers in 2011 proposed jail time for physicians who asked about their patients’ gun ownership. Gov. Rick Scott signed a watered-down version that required health-care workers to “refrain” from asking about firearms unless the providers believe “in good faith” that such information would be relevant. A federal judge in 2012 struck down the law as unconstitutional and blocked its enforcement. The ruling has been appealed.

Questions lawmakers should ask themselves

The American College of Physicians recommends that lawmakers ask themselves the following questions when drafting health-care legislation, in order to weigh its appropriateness and potential impact on the physician-patient relationship:

Is the content and information or care consistent with the best available medical evidence on clinical effectiveness and professional standards of care?
Is the proposed law or regulation necessary to achieve public health objectives and, if so, is there any other reasonable way to achieve the same objectives?
Could the presumed basis for a government role be better addressed through advisory clinical guidelines developed by professional societies?
Does the content and information or care allow for flexibility based on individual patient circumstances and on the most appropriate time, setting and means of delivering such information or care?
Is the proposed law or regulation required to achieve a public policy goal without preventing physicians from addressing the health care needs of individual patients?
Does the content and information to be provided facilitate shared decision-making between patients and their physicians based on the best medical evidence and the physician’s clinical judgment, or would it undermine shared decision-making?
Is there a process for appeal to accommodate for specific circumstances or changes in medical standards of care?

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