Congress, OIG focus on fraudulent health care consultants

GAO goes undercover to find consultants who encourage clients to bilk Medicare

Sen. Charles Grassley (R-IA) may no longer wield the gavel of the Senate Special Committee on Aging. But health care providers can rest assured that the man responsible for reinvigorating the False Claims Act and launching numerous government initiatives against health care fraud still is committed to rooting out fraud and abuse. Grassley’s latest target: health care consultants.

A few months ago, Grassley gave the General Accounting Office’s (GAO) Office of Special Investigations (OSI) reports that some health care consultants were teaching providers how to defraud federal health programs. "What [the GAO] found is astonishing and disturbing," Grassley told the Senate Finance Committee at a special hearing on the subject last week. "Consultants were teaching providers how to upcode and circumvent compliance regulations."

According to Grassley, there is no way of knowing how many consultants are providing bad advice because there is no mandatory accreditation or certification for health care consultants. "Anybody can put out a shingle and call themselves health care consultants," he maintains.

Last week, OSI managing director Robert Hast told the Finance Committee that GAO went undercover and discovered health care consultants who instructed providers not to report or refund overpayments received from insurance companies.

He says consultants also encouraged the performance of medically unnecessary tests and procedures to generate documentation supporting a higher level of complexity than providers actually confronted during the patient’s treatment.

Hast says one consultant suggested that providers discourage patients with low-paying insurance plans, such as Medicaid, from using their services by limiting services provided to them and scheduling appointments for such patients at inconvenient times of the day.

According to Grassley, the Health and Human Services’ Office of Inspector General (OIG) also has been zeroing in on consultants and has discovered large providers being instructed on how to unbundle payments and upcode on large-volume common illnesses such as pneumonia.

Lew Morris, assistant Inspector General for legal affairs at OIG, cited the following examples for the committee:

s Two consultants improperly advised more than 100 hospitals to unbundle clinical laboratory tests into their component parts and bill higher rates for the individual components. The consultants assessed the hospital’s coding and billing procedures and advised them on reimbursement maximization techniques. Some hospitals submitted false claims for unnecessary tests and services as a result.

The two consultants facing civil charges were excluded from the Medicare and Medicaid programs for three years and agreed to cooperate in the government’s effort to investigate the hospitals that benefited improperly from the fraudulent billing scheme. The investigations so far have resulted in civil actions against 36 hospitals and the payment of fines and penalties in excess of $11 million.

s A billing consultant who contracted with physicians to code, bill, and collect for emergency department services was found liable under the False Claims Act and agreed to pay $15.5 million to resolve his civil and administrative monetary liabilities. Employees had been routinely billing Medicare and Medicaid for higher levels of treatment than were provided or supported by medical record documentation. So far, the consultant’s clients have paid $5.8 million to resolve civil liabilities stemming from this fraud scheme.

s A hospital contracted with a coding consultant who claimed he could help maximize Medicare revenues by optimizing the coding of claims associated with pneumonia patients. That hospital agreed to settle allegations that it improperly upcoded Medicare claims, and an additional 26 hospitals also have settled their civil and administrative liabilities for a total of $26.8 million.

Worse yet, Morris says other consultants learned of the pneumonia upcoding scheme and encouraged their hospital clients to falsify Medicare claims for the treatment of pneumonia. The OIG says that as the word spread among consultants, the scheme expanded throughout the hospital industry. The OIG simultaneously released a Special Advisory Bulletin on the practices of business consultants. (See related story, page 3.)

See the next issue of Compliance Hotline for advice on working with consultants, including how to establish effective reporting relationships and accountability.