Congress left unanswered when the overpayment is “identified” so as to start the sixty day clock. Now the answer is in and it is not good for healthcare providers. In the case of U.S. v. Continuum Health Partners, Inc., the judge ruled that the sixty day period began to run as soon as the provider had notice of a potential overpayment, not actual knowledge of an overpayment. It would not take much to satisfy this standard. For example, an unexplained credit balance or the inability to post a payment to a particular account could constitute notice of a potential overpayment. While this judge’s decision is not binding outside of the Continuum case, CMS is likely to adopt it in its forthcoming final rule since the Continuum court adopted the government’s position. It also will be influential for other judges considering the same issue.
So what does the Continuum case have to do with ICD-10? ICD-10 took effect on October 1, 2015. It increased the number of diagnoses codes from 16,000 to 68,000. CMS guidelines require a provider to code diagnoses with the highest possible level of specificity. That means physicians now will spend more time than ever choosing the most accurate code out of 68,000 to describe the condition they are treating to support the medical necessity of the services they, and perhaps others, provide. That investment of time and effort will make it easier for a whistle-blower or the government to prove the knowledge requirement for a False Claims Act violation. Under the FCA, knowledge exists if the submitter knew the information on the claim was false, was deliberately ignorant of the truth of the information or acted in reckless disregard of the truth of the information. Intent to submit a false claim is not required for FCA liability. Given the time and knowledge required to select a code, it is highly likely the physician “had actual knowledge of the information” or at least acted in “reckless disregard of the truth or falsity of the information” when selecting an erroneous code.
While physicians frequently are involved in coding claims, they typically do not perform post-payment audits. Their reliance on post-payment review may pose a significantly increased risk under the FCA for retention of any overpayment. ICD-10 confuses and complicates post-payment review just like the original coding. Post-payment review under the new coding regime (at least initially) is likely to produce a number of false positives, each of which would meet the relatively low bar for notice of a potential overpayment, and trigger a sixty day period to investigate and repay.
Unfortunately, ICD-10 coincides with DOJ’s stated intention to continue criminalizing medical necessity certifications. Moreover, new DOJ guidelines require all civil FCA complaints be reviewed for parallel criminal proceedings and that investigations on both the civil side and criminal side of DOJ focus on responsible individuals from the outset, not just the companies they work for. (The focus on individuals is a direct response to criticisms that the government failed to prosecute individuals in addition to companies involved in the sub-prime mortgage crisis of 2008).
The take-away for providers is that they must act quickly upon detecting information suggesting the existence of an overpayment. They should immediately investigate, and report and return an overpayment found within sixty days, even if the provider is blameless in its receipt. Many times it is impossible to investigate and repay within the sixty day deadline, depending on the volume of claims, access to necessary records, or for other reasons. Providers that find themselves in that situation should not count on an impossibility of compliance defense or prosecutorial discretion after the fact to prevent FCA liability. If an audit is still underway by the sixtieth day, protect yourself as best you can. Alert the Medicare carrier, intermediary or other governmental payor to the investigation and that a report and, if appropriate, a refund will be forthcoming.
Cavender C. “Chris” Kimble is a partner in the Birmingham office of Balch & Bingham, and serves as Co-chair of is Health Law Practice Group
