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Fighting Fraud

Understanding Fraud vs. Abuse

Fraud, the other "F" word and its cousin, abuse, have crossed my path on more than one occasion. In the case of abuse, it generally involves an "innocent" mistake that the physicians were not aware of, or the billing/coding staff were not aware that the actions were inappropriate. Fraud, however, almost always involves some sort of erroneous coding and/or billing practices that certain parties have intimate knowledge of. The main difference between the two is the intent of the actions. The following definition is how the Centers for Medicare and Medicaid Services (CMS) and the Office of Inspector General (OIG) define health care fraud:

"To knowingly and willfully execute (or attempt to execute) a scheme to defraud any health care benefit program or to obtain money/property from a health care benefit program through false representations."

 The penalty may include fines, imprisonment for at least 10 years or both.

The OIG Web site defines fraud, false statements, theft/embezzlement and the obstruction of criminal investigations of health care offenses as follows:

"False statements relating to health care matters:
To knowingly and willfully conceal a material fact, make materially false statements or use false documents and writings in connection with the delivery of or payment for health care benefits, items or services. The penalty for concealing a material fact or for making false statements is a fine, imprisonment for at least 5 years or both.

Example: A doctor certifies on a claim form that he performed laser surgery on a Medicare beneficiary when he knows the surgery did not actually occur.

Theft or embezzlement in connection with health care:
To knowingly and willfully embezzle, steal or intentionally misapply any of the assets of a health care benefit program. The penalty may include a fine, imprisonment for at least 10 years or both.

Example: An office manager knowingly embezzles money from the practice's bank account. The bank account holds reimbursement received from the Medicare program.

Obstruction of criminal investigations of health care offenses:
To willfully prevent, obstruct, mislead, delay or attempt to prevent, obstruct, mislead or delay the communication of records relating to a federal health care offense to a criminal investigator. The penalty can include a fine, imprisonment for at least 5 years or both.

Example: A physician instructs his employees to tell OIG investigators that he performs all treatments when, in fact, medical technicians perform the majority of the treatment."

As coding professionals, it is imperative we have a full understanding of fraud and abuse, as well as what we are bound to via the American Association of Professional Coders (AAPC) and the American Health Information Management Association (AHIMA) Code of Ethics.

This topic has come up on several occasions, especially during lectures and seminars that I have presented. Unfortunately, many coders don't have a firm grasp on what the AAPC's or AHIMA's Code of Ethics actually binds them to when they choose this profession.

As a coding professional, whether you are credentialed through the AAPC or AHIMA, you have to abide by the professional association's Code of Ethics first and foremost, which should guide you on knowing what is right and wrong in your workplace.

The AAPC's Code of Ethics includes the following statements:

"Professional and personal behavior of AAPC members must be exemplary. Members shall use only legal and ethical means in all professional dealings and shall refuse to cooperate with, or condone by silence, the actions of those who engage in fraudulent, deceptive, or illegal acts."

AHIMA's Code of Ethics features five sections, the first of which is on Ethical Coding and includes the following:

"The AHIMA Standards of Ethical Coding are intended to:

  • assist coding professionals and managers in decision-making
  • outline expectations for making ethical decisions in the workplace
  • demonstrate coding professionals' commitment to integrity during the coding process, regardless of the purpose for which codes are being reported."

The standards are relevant to all coding professionals and those managing the coding function, regardless of health care setting or AHIMA membership status.

Because fraud and abuse presents in many forms, it can be difficult to spot. The main criteria for establishing if you have an issue in your workplace is to review and audit a sampling of claims and start by checking for Medical Necessity of the services rendered.

One key area that should always be established prior to bringing an issue to your employer/physicians is verifying that the following has not been met: Medical Necessity.

When one is coding or auditing claims, Medical Necessity must be appropriately established in the provider's documentation. If Medical Necessity can't be supported for the services rendered, then you must exercise due diligence and address it with your employer accordingly.

Coding professional's play a vital role in ensuring medical necessity because they assign the codes that capture the provider's clinical impression. It is of the utmost importance that coders adhere to the guidelines that govern medical necessity in E/M code assignment and all coding arenas, depending on your contracts in your state.

For example, The Medicare Claims Processing Manual, Chapter 12, Sections 30.6 and 30.6.10, states the following:

Medical necessity of a service is the overarching criterion for payment in addition to the individual requirements of a CPT code. It would not be medically necessary or appropriate to bill a higher level of evaluation and management service when a lower level of service is warranted.

In my next article we will explore more types of fraud and abuse and how to put together an appropriate audit.

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 has written several articles and is the coder and physician educator for the emergency room physicians at the Cleveland Clinic Florida. You can reach her at

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