June 15, 2002
8 min read

Evaluation, resolution of a coding error

Nobody does it right all the time. An effective compliance program will reveal that. So, what do you do when you find an error?

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A note from the editors: This article is a summary of a presentation given by Alan E. Reider, JD, at Hawaii 2002, the Royal Hawaiian Eye Meeting.

If you implement and use a comprehensive compliance program, chances are you are going to find a problem. Nobody does it right all the time. So the question is, what do you do if you find a problem?

A compliance program often includes an audit of the practice, identification of procedures deemed improper, the development of a code of conduct for physicians and staff, establishment of a hotline, a training program for staff, a plan for continued compliance and periodic audits.

Why do you need a compliance plan? According to the federal government, a compliance plan is the single most important factor in determining whether to bring a criminal action or impose a civil penalty when a problem has been found. A practice that has an effective compliance program in place may be given extra consideration by the government because the presence of a compliance program creates an inference of good faith.

However, the only thing worse than not having an effective compliance program in place is claiming you have one and not taking it seriously. Unfortunately, that is a big problem in the medical community. So if you have a compliance program, follow it. It will be your best friend should you ever have a problem.

Problem found

What do you do if a problem is found? First, let’s discuss what not to do. Don’t panic. Don’t be surprised, because nobody does it right all the time. Don’t ignore the problem. Don’t try to hide it.

But what do you do? There are four essential things to do.

Investigate. You, someone in the practice or someone calling in to the hotline identifies that there is a problem. Do you know for a fact that it is a problem? An investigation will reveal whether the situation is in fact an error.

Disclose. If you do have an error, you may be under an obligation to disclose that error. That may be a frightening thought, but it is better to disclose than not to disclose.

Remediate. In other words, solve the problem.

Inform. Let staff know that an error was found and now has been remediated.


Confirm that a problem exists. Often a source, whether a staff member or someone calling in to the hotline, believes there is an ongoing problem at the practice.

For example, presume there is a concern expressed about billing, regarding the level of required supervision. The source may feel that the practice is filing false claims. Sometimes the source has good intentions but is wrong, perhaps because of inadequate knowledge of the law. An investigation may reveal that there is no problem.

However, an investigation will often confirm an error. If an error is confirmed, the next step is to determine the extent of the problem. Is it a small overpayment? A huge overpayment? An improper referral relationship that may or may not involve any money at all?

You may want to conduct the investigation under the attorney work product privilege. The advantage of conducting the investigation under this privilege is that if there is an investigation or inquiry and you are asked for records, you can argue that those records are privileged, and neither the federal government nor a third party can access them. However, this is not an absolute, ironclad guarantee that all records will be protected.


What determines whether to disclose? The problem may have been solved and remediated and the practice staff informed, but the idea of telling someone outside the practice, namely the federal government, is a frightening thought.

The Office of the Inspector General (OIG) has published a Voluntary Disclosure Guideline. If you follow that guideline, you will disclose everything. Therefore, it is important to weigh two principal considerations.

The first issue is that, if you become aware that you have been overpaid and you do not repay, a potential civil violation becomes criminal fraud. It is a criminal violation to hold federal dollars to which you know you are not entitled. It is important to consider this as a strong argument for disclosure.

The second consideration is the Fifth Amendment privilege not to incriminate yourself, which means you do not have to go running to the government saying, “I have broken the law.”

These two considerations are directly opposed, and most cases will fall somewhere in between. Your attorney should consider these issues when advising you as a client whether to disclose.

Here are some examples of errors with discussion of possible ramifications of these principles prior to making a decision.

First, let us focus on clear-cut coding errors, such as using the wrong code or unbundling services when there is a clear instruction that the services should be bundled. When you have clearly been overpaid, you must disclose and quickly pay that money back.

What about coding issues that are not so clear? What if you have a bona fide defense, where you think you would say, “If Medicare says to me I’ve been overpaid, I’d say, ‘No, I haven’t,’ and I’m going to challenge that.” It doesn’t make a lot of sense to repay that money if you can take that position.

In that case you must assess whether you have a defensible position to say, “I know that Medicare says this is the right way, but I think they are wrong.” If your position is reasonable, then you do not make the disclosure, you do not make the repayment.

But be forewarned. If the government comes crashing down on you and says, “We’re going to prosecute you for civil false claims unless you pay the money back at a certain multiplier,” chances are good you’ll never have the chance to make that appeal.

Talk to your coding experts to determine how strong your position is. If you are the only person who thinks you are right, chances are you are not.

Medical necessity issue

The government is trying hard to make medical necessity cases into false claims. They are getting there, but they have a difficult, uphill battle. If a reviewer says that the charts do not substantiate the medical necessity of the service performed, then I go back to the physician and ask, “Was the service you rendered to this patient medically necessary or not?” If the physician believes the service performed was medically necessary, the physician has nothing to disclose.

However, the physician should make a disclosure if there is absolute certainty that the case cannot be supported, or if the Medicare program has published clear guidelines relating to the diagnoses it will recognize to support the medical necessity of the service but the physician uses a diagnosis not consistent with the carrier’s policy.

If the FBI or the OIG contends you are submitting false claims, you will be in a more difficult position.

The Stark Law, which prohibits physician self-referral, is a relatively modest issue with respect to ophthalmology. The Stark Law is not a criminal law but a civil law with big penalties.

If you have a clear-cut Stark Law violation, you have an obligation to refund any funds paid inappropriately.

You have a right against self-incrimination. Therefore, seriously consider not disclosing if you find an Anti-kickback Law violation. But do immediately change your conduct.

To whom do you disclose?

Whenever possible, disclose to the carrier. If you can keep it at the level of a carrier, it is likely that you only have to pay back the overpayment. A carrier cannot collect penalties or impose interest retrospectively.

Be aware, however, that the government has guidelines in place that encourage the carrier to report overpayments to the OIG or the U.S. Attorney’s Office.

To disclose, you must send the carrier a letter that basically says, “In the course of implementing our compliance program, we identified an error in which we believe we were overpaid.” Then you outline how long the error has been going on and inform them that you have done an analysis (a random sample or a 100% review). A 100% review is safer because it may reduce the chance that the carrier will come back with more questions. Carriers may ask for a description of your review methodology or documentation of all patients.

The OIG’s Voluntary Disclosure Guidelines make it clear that the OIG wants to be the focal point for voluntary disclosures. The OIG has the authority to impose sanctions; it can impose civil money penalties and take exclusion actions. The OIG will be more rigorous in its review of the error. Consider disclosing to the OIG in more serious matters, such as if there is no way to defend yourself, or if the government has issued a carrier bulletin on the specific error you have made and you continued to make the error.

For the truly egregious cases, disclose to the Department of Justice, that is, your local U.S. Attorney’s Office. If you disclose to this body, you are almost guaranteed to be hit with a civil false claims act settlement. You likely will pay at least double damages, because that’s the minimum allowed under the statute. And it is designed for those who come forward and make voluntary disclosures.

Make the assessment of where to disclose in consultation with your counsel.

What happens if you disclose?

The first possibility is repayment, which is the one you want.

The second possibility is “repayment plus.” Repayment plus means you are responsible for more than just repayment. A carrier cannot impose more than repayment; only the OIG or the Department of Justice have authority to impose additional assessments or penalties. How much repayment plus is will depend on the severity of your conduct.

Another possibility is a civil penalty, which can be imposed by the OIG or Department of Justice. In addition, there is the possibility of a criminal prosecution if another party is guilty.

It is highly unlikely that a criminal prosecution will be made against someone who made a voluntary disclosure. There is a possibility if someone else was responsible for the egregious act; the government may pursue a prosecution against that individual. An example of this is if one company purchases another company and discovers that the acquired company had been overpaid for years. If the purchasing company makes a disclosure, the government may investigate and pursue criminal prosecution of members of the purchased company.

What happens if you don’t disclose?

Nothing, unless you get caught. That is the dilemma. If you knew you were never going to get caught, there would be no coding consultants or health law attorneys dealing with compliance programs. The potential for making an error and getting caught is the real motivation behind compliance programs.

Coding consultants can do two things for you: identify problems and identify underpayments. Health law attorneys dealing with compliance programs offer preventive maintenance.

If you get caught, simple repayment is rarely an option. What is possible is repayment plus, a civil penalty and perhaps other damages, such as possible exclusion from Medicare or Medicaid. And if you fail to repay once you discover an overpayment, criminal prosecution is a possibility.

Furthermore, the chances of getting caught have been increasing. The government is spending more money on investigations and prosecutions and as a result is recovering more money. There are more whistleblowers than ever before, and they are getting rich as a result of their coming forward. Many whistleblowers are practice employees.


Finally, you want to correct the problem, but how?

Identify the source of the problem. If it is a billing problem, determine whether the problem is because of your staff’s inadequate knowledge of the complicated rules, because of inadequate training for the billers or because somebody got lazy and did not do the right thing. Identifying the source of the problem will determine how you remediate.

Educate your staff more extensively. Also, educate the staff if you find an error. Explain to them that there has been confusion in the rules, then fully explain the rule.

Train your billers. Make sure they understand the rules and that they read the Medicare bulletins when they come out. Make sure they contact your consultants when you need help.

Discipline the staff, if it is appropriate. Based on the significance of the problem, you may have to reprimand, suspend or fire the person who put you in harm’s way. Without an adequate disciplinary program, the government may perceive that you do not have an adequate compliance program.

Develop new policies, if needed.

Educate the source of the complaint, particularly if it turns out there is no problem at all. Thank the employee for bringing what he or she deemed a problem to the attention of the practice. Then educate the employee on why the issue was not an error. Consider holding meetings to educate the staff on an issue, as most anonymous hotline callers are staff members. Make sure the staff is aware that the practice has taken the appropriate steps to investigate, disclose, remediate and inform. Reinforce that the practice compliance program is effective. Encourage employees to continue to raise issues in the effort to stay compliant.

If the source is an anonymous hotline caller, it is difficult to go back and inform the person of the results of the investigation.

Finally, remember that the only thing worse than not having an effective compliance plan in place is having a plan that does not work.

For Your Information:
  • Alan E. Reider, JD, writes a monthly column, Compliance Case Studies, that appears in Ocular Surgery News. He can be reached at Arent Fox Kintner Plotkin & Kahn, PLLC, 1050 Connecticut Ave. NW, Washington, DC 20036; (202) 857-6462; fax: (202) 857-6395; email: reidera@arent fox.com.