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Fighting Fraud

Understand the OIG Compliance Program Guidance

As I discussed in my first article, fraud and abuse are an unfortunate part of health care today, and as a coding professional, it is your obligation under your professional affiliation's Code of Ethics to uphold and maintain compliance in your work. Turning a blind eye will not make the situation go away.

The best way to start on a compliance driven path is to actually download and read the Office of Inspector General's (OIG) final "Compliance Program Guidance for Individual and Small Group Physician Practices", which was published on Sept. 25, 2000. It was issued to assist physicians in developing compliance programs for their practices, to prevent fraud and abuse against government health care programs.

Before one can implement an audit plan, one must gain a better understanding of what the OIG expects. When the OIG issued the final "compliance plan," the intent was not to be copied by physician practices and placed on a bookshelf. Rather, it was the OIG's acknowledgement that there is no "one size fits all" compliance program (especially for physician practices). It is a set of "guidelines" that physician practices could consider, if they in fact choose to develop a voluntary compliance program. The OIG notes in the Final Guidance that physician practices are not required to develop and implement compliance programs

The Final Guidance focuses on small physician practices whose financial and staffing resources do not allow them to develop and implement a compliance program similar to ones implemented by larger providers (such as hospitals). Larger practices may need to use guidance published by the OIG for other entities (such as billing companies and clinical laboratories) in conjunction with the Final Guidance to implement a truly useful compliance program.

One area the OIG attempts to explain in the Final Guidance is the difference between "erroneous" and "fraudulent" claims made to federal health care programs.  Because physicians do not want to live under the fear of civil or criminal penalties when they make innocent billing mistakes, the OIG has attempted to respond to these concerns with the following points:

  • Physicians are not subject to criminal, civil or administrative penalties for innocent errors or even negligence.
  • Innocent errors = erroneous claims
  • Reckless or intentional conduct = fraudulent claims
  • The OIG recognizes that occasional billing mistakes and errors will occur through inadvertence or negligence and when such errors are discovered, the physician or practice should refund monies that were erroneously claimed. There will be no penalties to the physician unless there is a violation of civil, criminal or administrative law.

The following is a sampling of different types of fraud and abuse currently in play today:

  • Billing for services, procedures and/or supplies that were not provided.
  • Misrepresentation of what was provided; when it was provided; the condition or diagnosis; the charges involved; and/or the identity of the provider recipient.
  • Providing unnecessary services or ordering unnecessary tests.
  • Unbundling of claims: billing separately for procedures that normally are covered by a single fee
  • Double billing: charging more than once for the same service.
  • Upcoding: charging for a more complex service than was performed. This usually involves billing for longer or more complex office visits (for example, charging for a comprehensive visit when the patient was seen only briefly), but it also can involve charging for a more complex procedure than was performed or for more expensive equipment than was delivered. Medicare documentation guidelines describe what the various levels of service should involve.
  • Miscoding: using a code number that does not apply to the procedure.
  • Kickbacks: receiving payment or other benefit for making a referral.
  • Unnecessary X-rays/tests.
  • Many insurance policies cover a percentage of the physician's "usual" fee. Some physicians charge insured patients more than uninsured ones but represent to the insurance companies that the higher fee is the usual one. This practice is illegal.
  • Waiving co-payments and deductibles. (A co-payment is a fixed dollar amount paid whenever an insured person receives specified health care services. A deductible is the amount that must be paid before the insurance company starts paying.) It is legal to waive a fee for people with a genuine financial hardship, but it is not legal to provide completely free care or discounts to all patients or to collect only from those who have insurance.

To help prevent these practices from occurring, the OIG has delineated Seven Steps in its Final Guidance for physicians and group practices:

  1. Auditing and Monitoring: If it is too burdensome to perform an audit of all payers, the OIG specifically encourages the review of claims paid by federal health care programs as soon as possible.
  2. Establish Practice Standards and Procedures: The OIG asserts that this step can be implemented after an initial audit is done to identify a physician practice's risk areas.
  3. Designation of a Compliance Officer/Contact(s): In the Final Guidance, the OIG continues to assert its flexibility on having different people supply all of the duties that one compliance officer/contact may otherwise supply.
  4. Conducting Appropriate Training and Education: New employees should be trained within 60 days of their start date, now stating that these employees should be trained as soon as possible.
  5. Responding to Detected Offenses and Developing Corrective Action Initiatives: The OIG states that practices may wish to develop their own sets of warning indicators to indicate when billing problems may be present. The OIG recommends self-reporting should be done as soon as possible, upon discovery.
  6. Developing Open Lines of Communication: The OIG continues its "open door" policy for encouraging employees to report compliance program violations and focuses on retaining the anonymity of these individuals where possible. OIG also adds that, where a physician group uses a billing company, communication should be made to coordinate billing and compliance activities of the practice and its billing company.
  7. Enforcing Disciplinary Standards Through Well Publicized Guidelines: The OIG asserts that a physician group must have consequences for an employee's failure to follow the compliance program to add credibility and integrity to the compliance program and to make the compliance program work.

While the OIG has indicated that not all of the seven steps have to be implemented, it appears that in order for a compliance program to be useful, all seven should be implemented in some fashion.

Additionally, it should be noted that the OIG added an additional risk area for physician relationships with hospitals. This risk area involves recruitment or retention incentives provided to physicians by hospitals. The OIG states its concern that the intent behind these incentives may not be merely to recruit or retain physicians, but rather to offer the physicians an inducement to refer services to the hospital.

In my next article, we will expand further on auditing processes and finding out if your practice has a compliance problem and what to do about it.

Holly Cassano has been a certified professional coder for more than 3 years and involved in practice management, coding, auditing, teaching and consulting for multiple specialties for the past 13 years. She served two terms as an AAPC Local Chapter Officer and has written several articles. She is currently the coder and physician educator for the emergency room physicians at the Cleveland Clinic Florida. You can reach her at

Fighting Fraud Archives

Here's another one (a combination of the above):

Offering a 'free diagnostic test' which, of course, reveals the need for a number of procedures which are not free; nor typically covered.

This trick, in my experience, is fairly common among dentists, orthodonists and chiropractors - and national auto repair companies.

"Come in and get your FREE 23 point inspection!"

Ha! Ha? Not really!

Shimmy  SuizFebruary 05, 2010

Hi Barbara,

I would prefer to respond to you offline on this. Please email me at I have a few sensitive questions and I don't want to illuminate that on here.

I would speak to an attorney gratis first about the fact you were let go and also go to unemployment. I will respond to you once you email me at my personal email address.



holly cassanoFebruary 05, 2010

I am unemployed do to my refusing to be part of insurance fraud. It was brought to my attention by a patient who was told that a high noble metal is used to create the crown when in fact the dentest NEVER uses the high noble and uses the most low end mixed metal. I became even more concerned when a claim came back with the payment for the high noble metal and the patient was told to pay a co-pay for it. I also notice a claim for flouride treatment that is never performed. Can you advise me on what I can do to stop this from going on. The patient was in contact with the lab that made the crown confirming that this dentest only orders low -end metal( always )so this could be going on with all of the patients at this practice.

Thank you

Barbara ellisFebruary 04, 2010
Elkins Park, PA


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