One-day stay investigation may herald next federal initiative

Health care attorneys say an ongoing investigation by the U.S. Department of Justice into one-day stays at numerous New Jersey hospitals is showing signs of becoming the government’s next major national initiative in health care fraud enforcement. The government is attempting to identify patients who are admitted and discharged the same day, yet are billed as inpatients, they say.

"The government will get a printout that identifies all of the individuals admitted and discharged on the same day and send that out to various hospitals to say these were inappropriately billed as inpatients," says Robert Salcido, a former trial attorney with the civil division of the U.S. Department of Justice.

"The theory is that those people should have been billed as outpatients because they did not stay overnight," says Salcido, now a partner with Akin Gump in Washington, DC.

Based on the government’s pattern of taking an investigation in one locality and spreading it across the country, he says this could turn out to be the next national initiative. If that happens, it would be consistent with the Department of Health and Human Services’ Office of Inspector General’s Work Plan for FY 2002, which focuses heavily in the area of patient transfers and discharges.

Even as these new investigations emerge, the government still is working on several existing national initiatives, such as pneumonia upcoding and physicians at teaching hospitals, better known as PATH. According to Dan Anderson, an attorney in the civil division at the U.S. Department of Justice, the government still is working on roughly 90 pneumonia upcoding cases nationwide.

Anderson says there have been roughly 25 successful prosecutions to date, mostly in the form of settlements. The common theme in all these cases is the existence of a system that is designed to guarantee the enhancement of revenue rather then the accuracy of codes, he says.

"That is not the end of the investigation by any stretch of the imagination," says Anderson. But he says successful cases tend to share common themes, such as coders with bonuses based on their enhancing revenue, penalties for coders who complain about coding procedures, and instructions to coders that fly in the face of established coding rules.

According to Salcido, the most fruitful tactic for hospitals targeted by these investigations is to hire a clinician and determine their error rate, then look at the hospital’s specific circumstances to determine why a particular code was used. Hospitals then can use that to make a presentation to the Department of Justice that, even if there is an overpayment issue, there is no False Claims Act issue.

Negligence alone cannot create False Claims Act liability, Salcido notes. If the error rate is low, the argument can be made that at worst the conduct was negligent rather than reckless.

Salcido says another defense is the so-called "government-knowledge defense." When there is a continuing dialogue with the government regarding a particular practice, it is difficult for the government to come back and say that it was deceived. "If there is a dialogue taking place with the fiscal intermediary or peer-review organization, that makes the government’s case much more difficult," he explains.

A third defense is that the regulatory guidance is inherently ambiguous or that the party acted with a reasonable interpretation. "In the pneumonia context or DRG creep, you must look at the underlying regulatory guidance and instructions related to those codes and ascertain whether you were appropriately coding," he says.