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Medicare Fraud and Abuse

¹ Department of Radiology, Massachusetts General Hospital and Harvard University School of Medicine, 32 Fruit St., Boston, MA 02114.
² Department of Radiology, Rush North Shore Medical Center, 9600 Gross Point Rd., Skokie, IL 60076, and Rush Medical College, Chicago, IL 60612.

Received August 20, 2002; accepted after revision September 3, 2002.

 
Address correspondence to L. Berlin.

Case summaries are based on actual events and lawsuits, although certain facts have been omitted or modified by the authors, who have supplied and obtained authorization for the reproduction of the radiologic images. All opinions expressed herein are those of the authors and do not necessarily reflect those of the American Journal of Roentgenology or the American Roentgen Ray Society.

The Case

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A 73-year-old man residing in a nursing home presented as scheduled one morning to the interventional section of the radiology department of a university hospital. Having suffered a stroke 3 weeks before and experiencing difficulty when attempting to eat, the patient had recently undergone a modified upper gastrointestinal series that showed considerable aspiration of both liquids and solid food. After discussion among the patient, his wife, and the attending neurologist, the decision had been made to electively place a feeding gastrostomy tube percutaneously using fluoroscopic guidance.

After informed consent was obtained from the patient and his wife, the procedure was performed by a senior radiology resident who was rotating in the interventional section. Initially, the resident identified what he believed to be the gastric air bubble in the patient's left upper quadrant. An 18-gauge needle was then advanced through the abdominal wall and a wire inserted into the region of the stomach. A tract was then dilated over the wire, a locking-loop catheter placed, and its distal tip formed. The resident then injected a small amount of iodinated contrast material into the catheter. Fluoroscopically, the contrast material outlined what appeared to be rugal folds. A spot radiograph was obtained, after which the patient was observed for 1 hr. The patient was then discharged and returned to his nursing home.

In the evening of the following day, the radiology resident received an urgent call from the patient's nursing home. A nurse there reported that the patient had developed severe abdominal discomfort, high fever, and shaking chills after a seemingly uneventful initial gastrostomy tube feeding earlier in the day. The radiology resident immediately informed the attending radiologist covering the interventional service. Suspecting a complication from the gastrostomy tube placement, the attending radiologist told the resident to arrange to have the patient transferred by ambulance to the hospital's emergency department for further evaluation.

After arriving at the emergency department, the patient was noted to be febrile and in severe pain and was found to have tachycardia and marked abdominal tenderness. CT of the abdomen and pelvis was performed immediately and revealed that the gastrostomy tube was lying anterior to be stomach and was surrounded by large heterogeneous densities, presumably food from the feeding. The patient was admitted to the hospital with a diagnosis of peritonitis and was treated with broad-spectrum antibiotics.

The patient's complicated hospital course lasted nearly 6 weeks and involved various open and percutaneous procedures to drain multiple abdominal abscesses. When discharged and returned to the nursing home, the patient had lost nearly 40 lb (18 kg) and was considerably less functional than he had been before the initial placement of the gastrostomy tube.

Medical-Legal Issues

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Six months after the patient's discharge from the hospital, the patient and his wife filed a medical malpractice lawsuit against the attending radiologist who had been covering the interventional service on the day of the gastrostomy tube placement, the radiology resident who had placed the tube, and the hospital. The lawsuit alleged that the defendant radiologists were negligent in placing a gastrostomy tube outside the stomach and that this placement was the proximate cause of the patient's subsequent peritonitis and extended hospital stay. The plaintiff sought compensation for existing medical bills, pain and suffering, and future medical therapy.

The two defendant radiologists and the hospital immediately informed their professional liability companies of the legal action. The companies in turn appointed defense counsel for the defendants, who, together with the hospital's risk management department, undertook a thorough investigation of the incident.

The investigation revealed that the radiology resident had performed only one documented fluoroscopically guided percutaneous gastrostomy tube placement before the procedure at issue, and that this previous procedure had been conducted under the direct supervision of an experienced attending interventional radiologist. On the day in question, many interventional procedures had been scheduled and only one attending interventional radiologist was available. The senior radiology resident involved in the case, who had started his interventional rotation 6 weeks earlier, stated that he was instructed by the attending interventional radiologist to undertake the tube placement by himself without direct supervision. The attending interventional radiologist whose name appeared on the patient's procedure report vaguely remembered instructing the resident to perform the gastrostomy procedure and admitted that he himself was not present during it, nor could he recall seeing the spot radiograph obtained after the procedure.

An expert interventional radiologist requested by the defense attorney to review the case concluded that the placing of the gastrostomy tube in the peritoneum by an inexperienced resident without attending radiologist supervision or confirmation of proper device placement constituted a clear breach of the standard of radiologic care. In the meantime, legal discovery proceedings began, and depositions of the various parties and experts were taken. At the deposition of the defendant attending interventional radiologist, the plaintiff's attorney presented the defendant radiologist with a copy of the bill that had been sent to the patient's Medicare contractor for professional services related to the gastrostomy tube placement. The statement listed the defendant interventional radiologist as the individual who had performed the procedure. On questioning, the defendant radiologist confirmed that he had not been present for any portion of the procedure, nor could he recall reviewing the spot radiograph obtained after the placement. When asked how a resident could have been allowed to conduct an invasive procedure without any supervision, the defendant interventional radiologist noted that his hospital was "a teaching institution" and that "senior residents sometimes function with little or no supervision from the staff." Pressed further, the defendant radiologist added that it would not be unusual for a bill for professional services to be sent to an insurer for a procedure performed by a resident.

Given the facts and the seriousness of the injuries suffered by the patient, the defense attorneys and the hospital's risk manager believed there would be little chance of a favorable outcome at trial. Concurring with this opinion, the defendant radiologist and hospital agreed that settlement would be their best option. One week before the trial was scheduled to begin, the lawsuit was settled for $400,000.

Four months after the settlement, the hospital, its radiology department chair, and the attending interventional radiologist were shocked to receive notice that the Office of the Inspector General of the United States Department of Health and Human Services was initiating an investigation into potentially fraudulent Medicare billing practices. The hospital's general counsel discovered that the investigation had been triggered by action of the patient and his wife under provisions of the federal False Claims Act and was based on sworn statements made by the defendant interventional radiologist at his deposition concerning his professional billing practices in cases in which residents performed procedures without supervision. With the federal government now actively involved, and faced with what could become a long and complex legal proceeding with an uncertain outcome, senior hospital management and the radiologists retained separate legal counsel experienced in federal fraud and abuse matters to begin outlining their course of action.

Discussion

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Medicare, the federal health insurance program for the nation's elderly and disabled, is an important part of American medicine and virtually every radiology practice [1]. Although Medicare brings valuable resources to the population it serves, it also imposes requirements on radiologists and other Medicare-participating physicians that can generate substantial exposure to legal risk [2]. One such requirement is that submitted claims be valid under applicable Medicare coding and billing regulations. Failure to adhere to these coding and billing regulations may trigger legal action alleging Medicare fraud and abuse.

Despite an explosion of Medicare fraud and abuse actions over the last decade, the courts have provided relatively little guidance as to what actually constitutes fraud and abuse. This is because most physicians and practices faced with such actions elect to settle the matter without trial, preferring a negotiated penalty to an uncertain result before a judge or jury [2]. We know of no reported case addressing fraud and abuse in the radiology setting that has reached an appeals court level. Nonetheless, because the number of health care fraud investigations conducted by the Office of the Inspector General and the Federal Bureau of Investigation and criminal prosecutions by the Department of Justice are constantly increasing, review of applicable federal law will help in understanding the legal exposure involved in such claims.

Most Medicare fraud and abuse actions rely on the federal civil False Claims Act [3], a statute that traces its roots to America's Civil War. The United States Congress passed the False Claims Act at that time to curtail individuals who were attempting to defraud the government by selling defective gun powder [4]. In the 1990s, the government began actively using the statue to combat health care fraud. A number of specific actions may establish liability under the act, including presenting or causing to be presented a false or fraudulent claim to the government for payment or approval, using a false record or statement to get the false or fraudulent claim paid or approved, and conspiring to defraud the government to get a false or fraudulent claim allowed or paid. Under the provisions of the act, a claim does not actually have to be paid to constitute a potential offense, only presented in the form of a bill to the government.

To prevail against a radiologist or other medical provider in a legal action brought under the False Claims Act, the government must prove that at least one of the listed actions has been committed knowingly. The act defines "knowingly" to mean that a person or organization (such as a radiology practice or hospital) has actual knowledge of the information, acts in deliberate ignorance of the truth or falsity of the information, or acts in reckless disregard of the truth or falsity of the information. No proof of specific intent to defraud is required [5].

In recent years, those invoking the False Claims Act have become more aggressive in expanding the definition and the boundaries of what constitutes "knowingly," moving from pursuing individuals only when there is actual knowledge of a false claim to instances in which little more than simple negligence is present. For example, the federal government has contended that absence of a Medicare billing compliance program can be evidence of deliberate ignorance, thereby satisfying the knowledge requirement of the act [4]. The ongoing broadening of the definition of "knowingly," coupled with the fact that it is not necessary to prove that a defendant physician or organization actually intended to defraud Medicare for the defendant to be found in violation of the act, make it exceedingly difficult to defeat a False Claims Act case by simply focusing on the defendant's state of mind [5].

When a violation is established, the False Claims Act provides substantial penalties that, together with numerous indirect consequences, have the potential for considerable negative economic impact on a radiologist or radiology group. Not only might the defendant have to pay the government three times the actual amount that was fraudulently billed and up to $11,000 in civil monetary penalties per claim, but the defendant may also be subject to exclusion from the Medicare program and potential criminal prosecution. Damage to the defendant's reputation would likely occur in any of these scenarios.

A key feature of the False Claims Act is that individuals or organizations outside the government may invoke the act's provisions and may in fact be rewarded for doing so. Under the "qui tam" or so-called whistle-blower provisions, private citizens may bring a false claims action against a radiologist or other health care provider on behalf of the United States government [6]. The term "qui tam" comes from the Latin phrase, "Qui tam pro domino rege quam pro se ipso in hac parte sequiter," which literally means "he who brings the action for the King as well as for himself" [4]. Historically, the qui tam statute provided a monetary incentive for a confederate in a scheme to defraud the government to betray his fellow conspirators. Today, however, most whistle-blowers are not confederates in a scheme but rather individuals who "want to do the right thing," often competitors or former employees of the defendant.

The intention of the qui tam provision is to broaden the government's ability to police fraud by making almost any individual a potential antifraud enforcer. The only real limitation placed on qui tam actions is that the individual making the allegations must be the "original source" of the information supporting the violation—in other words, must have had direct and independent knowledge of the information on which the allegations are based, must have voluntarily provided such information to the government before filing suit, and must have directly or indirectly been a source to the entity that publicly disclosed the allegations on which the suit is based [6]. These requirements prevent an individual or organization who has learned of potentially fraudulent behavior from a public source from pursuing a qui tam action.

When an individual who qualifies as an original source seeks to bring a qui tam action, the federal government has the option of deciding whether it wishes to become part of the action, in effect converting a private action into a government one. Regardless of whether the government elects to participate, an individual who brings valid qui tam action under the False Claims Act stands to collect a handsome reward if monies are recovered from the defendant. Depending on whether the government intervenes and other factors, this award ranges from 10% to 30% of the settlement or judgment, an amount that has the potential of being substantial, considering that false claims actions have been settled out of court for amounts as large as $325 million [4]. Many observers believe that these awards have created a powerful financial incentive for individuals and organizations to pursue Medicare fraud and abuse actions.

Medicare coding and billing regulations that lie at the heart of any fraud and abuse allegations are exceeding complex and require a detailed explanation well beyond the scope of this article. However, an understanding of the broad principles at issue in the case illustrated in this article is more straightforward. The Medicare program is divided into several discrete areas or parts, each of which is focused on certain types of medical services. Payments to medical professionals such as radiologists for their professional services are made under Medicare Part B, and payments to institutions are made under Part A. Generally, it is fraud for a radiologist to bill Medicare Part B for services that he or she did not provide. In the case of radiologists outside the teaching setting, fraud is present when Medicare is billed for services that either were not performed or were performed by another health care provider who is not eligible to bill under Part B, such as a nurse or technologist, without the supervision or active participation of the billing radiologist.

In the teaching setting, Medicare billing is complicated by the presence of trainees such as residents and fellows. Trainees in Accreditation Council for Graduate Medical Education-accredited programs are partially supported by the Medicare program through Medicare Part A payments to their institutions. The federal government views this financial support as payment for the trainees' services to Medicare beneficiaries, making these trainees ineligible to bill Medicare Part B for services provided in the course of activities related to those accredited programs. Therefore, a radiology resident in an accredited program cannot bill Medicare Part B for any procedure or other service that he or she may provide as part of the residency.

Attending radiologists supervising residents in a teaching setting may bill Medicare Part B only for services they personally render to beneficiaries. As clarified in 1995 [7], this provision means that the attending radiologist must be present during "key" or "critical" portions of a service or procedure provided by a trainee in an approved training program. With regard to the diagnostic setting, this provision has been interpreted as requiring that the teaching radiologist either personally interpret the study or review the trainee's interpretation, with the latter requiring more time than merely countersigning an official report [8]. In the setting of surgery or other dangerous or complex procedures, such as an interventional radiology procedure, the teaching physician must be present during all critical portions of the procedure and must be available to immediately furnish services during the entire procedure. Although what constitutes such key or critical portions will depend on the procedure at issue, it is clear that interventional radiologists must be physically present for at least some portion of the procedures for which they bill Part B of Medicare.

In recent years, the federal government has aggressively enforced Medicare billing regulations through Physicians at Teaching Hospitals (PATH) audits [9]. A major focus of these audits has been the determination of whether teaching physicians have actually been present during procedures performed by trainees and subsequently billed under Medicare Part B. Federal audits and investigations of various teaching hospitals have thus far resulted in settlements in excess of $30 million. Those teaching institutions that have been the targets of fraud and abuse investigations have all elected to negotiate settlements with the government rather than risk far greater liability and potential punishment if indicted and brought to trial for criminal violations of the False Claims Act [2].

Despite publicity surrounding PATH audits and considerable negative reaction in the medical community to the government's methods [10], the federal government is continuing to investigate physicians who bill for procedures allegedly performed by trainees. Usually these investigations are resolved short of criminal charges being brought by the Department of Justice, but that is not always the case. One of the most publicized examples of physicians being charged with fraud and abuse was chronicled in some detail by a series of articles in a Seattle newspaper [11, 12, 13, 14, 15, 16, 17]. Three physicians at a university hospital—a neurosurgeon, a nephrologist, and an interventional radiologist—were alleged by the government to have violated the False Claims Act. Most of the public attention was centered on the neurosurgeon, whom the government charged with fraudulent medical billing practices.

A federal grand jury heard allegations that the neurosurgeon billed for procedures performed by residents, some of which occurred while he was on vacation. In addition, there were charges of backdating and shredding medical records. The investigation was triggered by a whistle-blower who once worked at the university hospital and who had filed a civil suit seeking a percentage of whatever funds the government might recover. The federal prosecutors held back an indictment pending a plea bargain settlement with the defendant neurosurgeon. Eventually the neurosurgeon pleaded guilty to obstructing a criminal investigation. He agreed to pay $500,000 to compensate the government for improper billings submitted to Medicare and to perform 1000 hours of community service. The neurosurgeon admitted that he had asked other doctors and employees to lie and not to make incriminating statements about him to investigators and a federal grand jury. The neurosurgeon is the first physician at a medical school anywhere in the nation to be convicted of a federal crime stemming from Medicare billing irregularities. As has been stated before, all previous audits and investigations have been resolved with large civil fines. At the time of the writing of this article, investigations into the billing practices of the nephrologist and interventional radiologist were continuing.

Summary and Risk Management

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Medicare, providing health care coverage to the nation's elderly and disabled, constitutes a substantial component of most radiology practices. Billing under the program is subject to an extensive series of regulations, a knowing violation of which may trigger liability under the civil False Claims Act. Basic to this potential legal exposure is the simple paradigm that a radiologist must actually perform the procedure or service for which he or she submits a Medicare Part B claim or, in the case of teaching hospitals, supervise physicians in training who perform the procedure or service. Compounding this potential exposure are the qui tam provisions of the act that provide a strong financial incentive for virtually any individual with original knowledge of the potentially fraudulent activity to pursue the claim.

If a bill is submitted under Medicare Part B for payment for a procedure that a radiologist did not perform or supervise, a private party may invoke the qui tam provisions of the federal False Claims Act against the radiologist. The requirement mentioned earlier that the qui tam party must be an original source of information documenting the violation can probably be satisfied if a malpractice plaintiff discovers a billing irregularity during the legal discovery process.

To be convicted at a federal fraud and abuse trial, a defendant physician would have to be shown to have acted knowingly to defraud Medicare. With facts as described in this article, it would likely be difficult for an attending radiologist to establish that the bill was not knowingly submitted, given such a clear-cut violation of the Medicare regulations and the fact that the government need not establish intent to defraud. This would be particularly true if the government could show that the radiologist or radiology group commonly billed for procedures performed by residents without the level of supervision necessary to legally bill under Medicare Part B. Clearly, however, it is likely that a major factor in determining the final outcome of a federal investigation of any physician radiologist is whether the alleged improper billing is an isolated occurrence or a pattern.

Risk management in radiology can help radiologists minimize the likelihood of incurring a medical malpractice lawsuit or a Medicare fraud and abuse claim initiated by the federal government, maximize the chances for a successful defense if such a suit or claim is filed, and at the same time ensure good patient care. The following risk management pointers will help radiologists meet all of these objectives.

• Radiologists and radiology groups must be knowledgeable of and make every effort to comply with Medicare regulations concerning billing procedures and should have a Medicare compliance program in place to provide an affirmative defense should an allegation ever be made that the practice knowingly engaged in fraud.
  
• Compliance programs for teaching hospitals should include provisions designed to ensure that physicians in training routinely receive the supervision required for attending radiologists to legally bill Medicare Part B for any procedure or study.
  
• Procedures performed by physicians in training and other individuals not eligible to bill under Medicare Part B should not be submitted for such payment unless supervision by the attending radiologist meets regulatory requirements for billing under Part B. Should a trainee provide services outside the scope of his or her training program—for example, as a moonlighter—Medicare Part B billing is acceptable.
  
• A radiologist or radiology practice that receives an inquiry or is given any other indication that a government agency is contemplating or launching an investigation into potential Medicare billing irregularities should respond to these inquiries promptly and fully and at the same time consider consulting an attorney experienced in such matters. Often early responses may satisfy an investigator and preempt a full-fledged and costly investigation.
  

Acknowledgments
 
We acknowledge with gratitude the invaluable assistance of Thomas W. Greeson in the preparation of this article.

References

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1. Department of Health and Human Services. National health expenditures by type of service and source of funds: calendar years 1960-2000. Available at http://www.hcfa.gov/stats/nhe-oact/tables/nhe00.csv. Accessed August 9, 2002
2. Cohen JJ, Dickler RM. Auditing the Medicare-billing practices of teaching physicians: welcome accountability, unfair approach. N Engl J Med 1997:336:1317 -1320[Free Full Text]
3. False Claims Act, 31 USC 3729
4. Aussprung L. Fraud and abuse: federal civil health care litigation and settlement. 19 J Legal Med 1, 1998
5. United States of American v NHC Health Care Corp, 163 F Supp 2d 1051 (US Dist LEXIS 15278 2001)
6. United States v New York Medical College, 252 F3d 118 (US App LEXIS 11288 2001)
7. Medicare program: revisions to payment policies and adjustments to the relative value units under the physician fee schedule for the calendar year 1996. 60 Federal Register 63124, 1995
8. Teaching setting requirements for the interpretation of diagnostic radiology and other diagnostic tests. 42 CFR 415.180, 2002
9. Berlin L. Liability of attending physicians when supervising residents. AJR 1998;171 :295-299
10. Martin S. Protests prompt HHS to retool PATH audits of teaching doctors. American Medical News, July 28, 1997. Available at: http://www.ama-assn.org/sci-pubs/amnews/pick_97/pick0728.htm. Accessed August 9, 2002
11. Miletich S. UW orders doctor to temporarily leave key post. Seattle Times, February 22, 2002. Available at: http://archives.seattletimes.nwsource.com/cgibin/texis.cgi/web/vortex/display?slug=uwresign22m&date=20020222&query=richard+winn. Accessed August 9, 2002
12. Miletich S, King W. Pivotal decision nears in probe of UW doctors. Seattle Times, April 8, 2002. Available at: http://archives.seattletimes.nwsource.com/cgibin/texis.cgi/web/vortex/display?slug=uwdocs08&date=20020408&query=richard+winn. Accessed August 9, 2002
13. Miletich S. Immunity deal on tap in overbilling probe at UW. Seattle Times, June 14, 2002. Available at: http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/diplay?slug=uwdocs14&date=20020614&query=richard+winn. Accessed August 9, 2002
14. Miletich S. Doctor, feds near deal in case over UW billing. Seattle Times, July 8, 2002. Available at: http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/diplay?slug=winn08&date=20020708&query=richard+winn. Accessed August 9, 2002
15. Miletich S. UW doctor's indictment delayed for plea deal. Seattle Times, July 10, 2002. Available at: http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/diplay?slug=winn10&date=20020710&query=richard+winn. Accessed August 9, 2002
16. Miletich S. UW doctor pleads guilty to obstructing billing investigation. Seattle Times, July 17, 2002. Available at: http://archives.seattletimes. nwsource.com/cgi-bin/texis.cgi/web/vortex/display?slug=winnplea17&date=20020717&query= richard+winn. Accessed August 9, 2002
17. Miletich S. UW to pay $950,000 for surgeon to leave. Seattle Times, July 27, 2002. Available at: http://archives.seattletimes.nwsource.com/cgi-bin/texis.cgi/web/vortex/diplay?slug=winn27&date=20020727&query=richard+winn. Accessed August 9, 2002

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This Article Full Text (PDF) Alert me when this article is cited Alert me if a correction is posted Services Email this article to a friend Similar articles in this journal Similar articles in PubMed Alert me to new issues of the journal Download to citation manager Citing Articles Citing Articles via HighWire Citing Articles via Google Scholar Google Scholar Articles by Smith, J. J. Articles by Berlin, L. Search for Related Content PubMed PubMed Citation Articles by Smith, J. J. Articles by Berlin, L. Social Bookmarking                      What's this? Hotlight (NEW!) What's Hotlight?