Upcoding of Medicare patient treatment appears to be a serious and widespread problem with hospital billing, a recent government report says, providing new urgency for whistleblowers to report fraudulent billing practices.
An analysis by the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) found that hospitals have been billing Medicare for the most complex treatment of severe conditions at an increased rate, even though data indicates that patients were not any sicker during that time.
“Although the complications billed suggest sicker beneficiaries, the shorter lengths of stay point to beneficiaries who are less sick,” said HHS-OIG.
Upcoding is a common type of healthcare fraud in which a healthcare provider submits codes that indicate more serious and more expensive services or treatment were provided than warranted or performed.
HHS-OIG stated that hospitals billing Medicare for inpatient stays at the highest severity codes increased by 20% from fiscal years 2014 through 2019. Simultaneously, the average length of hospital stays at the highest severity level decreased.
HHS-OIG said that this pattern is strongly indicative of upcoding. Patients with severe health conditions typically require longer, more intensive treatment.
Medicare reimburses hospitals more for patients who have severe conditions because these patients typically require costlier treatment. For example, HHS-OIG says, pneumonia treatment without a secondary diagnosis of complications would be reimbursed at less than half the amount that a secondary diagnosis of a major complication with pneumonia would be.
The amounts of medical resources and taxpayer funds at stake are immense. Just one diagnosis, severe sepsis with major complications – which was the most frequently billed primary diagnosis in FY 2019 – cost Medicare $7.4 billion to cover 581,000 of those stays that year.
HHS-OIG recommends that the Centers for Medicare and Medicaid Services conduct targeted reviews of hospital stays that are vulnerable to upcoding, as well as the hospitals that have patterns of upcoding.
The data used in the HHS-OIG analysis pre-dates the beginning of the ongoing coronavirus pandemic, which has itself fueled a wide range of related fraud.
How whistleblowers can report upcoding fraud
Under the False Claims Act, anyone with specific information about upcoding can file a whistleblower lawsuit – known as a “qui tam” lawsuit – on behalf of the government to recover Medicare funds that would otherwise be lost.
Once a qui tam lawsuit is filed, the government investigates the whistleblower’s allegations and must decide whether to join the case and pursue the litigation.
When qui tam lawsuits are successful, whistleblowers are awarded 15% to 30% of the amount recovered as a result of their case.
The False Claims Act also protects whistleblowers from retaliation. Those who suffer demotion, job termination and other forms of retaliation for efforts to stop violations of the False Claims Act may sue and collect compensation for the harm they suffered and attorneys’ fees.
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