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The ABCs of Medicare and Medicaid Audits

by Steve Adams, CPC, CPC-H, CPC-I, PCS, FCS, COA


Just when you thought participating with Medicare and Medicaid couldn’t get any more difficult they roll out their enforcement arm(s) to help recoup potential overpayments and reduce waste in the system.

This article will simply introduce you to the major players and offer you some links to their web sites so that you can become more familiar with the issues they are addressing.  The key to avoiding problems is to know your audience and follow their rules – time is not on your side.

First we’ll take a look at Medicare and its $550 billion per year program – we’ll use Georgia as the example.

MAC – The Medicare Area Contractor

The first major step Medicare took to help reduce the amount of fraud and abuse in their system was to consolidate their Fiscal Intermediaries (FI) and Carriers into to Medicare Administrative Contractors (MACs).  In the past, Part A claims and Part B claims were processed by two separate entities.  Now, each jurisdiction has one MAC that processes both Part A and Part B claims.  Georgia is in jurisdiction 10 and our MAC is Cahaba GBA.  Their web site is:

RAC – Recovery Audit Contractor

To further the recoupment activity of the federal government, Recovery Audit Contractors (RACs) were put into place in order to research and recoup potential overpayments for both Part A and Part B services.  Georgia is in Region C and our RAC auditor is known as Connolly Healthcare.  Their web site is:  Connolly healthcare has recently started sending out overpayment letters to providers all over the South East.  It’s suggested that you go to the aforementioned link to review the approved issues they are auditing at this time.

ZPIC – Zone Program Integrity Contractor

Zone Program Integrity Contractors (ZPICs) will continue the work of the Program Safeguard Contractors (PSCs) and focus mainly on fraud.  In Georgia we are in Zone 5 and our ZPIC contractor is NCI / Advance Med.  Their web site is:

Now let’s take a look at the Medicaid program:

Medicaid Integrity Program (MIP)

In February 2006, the Deficit Reduction Act (DRA) of 2005 was signed into law and created the Medicaid Integrity Program (MIP) under section 1936 of the Social Security Act (the Act).  The MIP is the first comprehensive Federal strategy to prevent and reduce provider fraud, waste, and abuse in the $300 billion per year Medicaid program

CMS has two broad responsibilities under the MIP:

  • Hire contractors to review Medicaid provider activities, audit claims, identify overpayments, and educate providers and others on Medicaid program integrity issues
  • Provide effective support and assistance to States in their efforts to combat Medicaid provider fraud and abuse

Along with these responsibilities, the Act also requires that CMS develop a five-year Comprehensive Medicaid Integrity Plan (CMIP) in consultation with internal and external partners to outline the efforts to reduce overpayments, fraud and waste.

For more information on the MIP:

The Medicaid Fraud Control Unit

Another way to fight waste in the Medicaid program is through the Medicaid Fraud Control Unit (MFCU).  It is a single identifiable entity of state government, annually certified by the Secretary of the U.S. Department of Health and Human Services (HHS).  The Unit has either statewide criminal prosecution authority or formal procedures for referring cases to local prosecutorial authorities with respect to the detection, investigation and prosecution of suspected criminal violations of the Medicaid program.  You can find out more about MFCU here:

What to Do?

I think the best piece of advice I can give you is to not take inquires from these agencies lightly.

  • Visit the above web sites and stay abreast on all approved audit issues.
  • Make sure you have the telephone number/e-mail/fax of your consultant and/or practice attorney in the event you are audited by any outside agency whether commercial or federal.
  • Consider having an prospective review of the services you provide to see if you have any potential audit liabilities that need to be addressed now.
  • Please make sure your staff reviews all requests for your records carefully to ensure nothing goes out without being first reviewed by the provider and/or your practice consultant/attorney.

If you do receive a letter from a MAC, RAC, ZPIC, MIP, MFCU, MIG or any other entity with Medicare or Medicaid in the letter head, header or footer and you don’t already have a consultant or practice attorney that specializes in these types of requests, feel free to contact me at 770-709-3598.


Steve Adams, CPC, PCS is a Senior Consultant for InGauge Healthcare Solutions, Inc., an InHealth company.   Contact him for consulting and educational services at

This article can be reprinted freely online, as long as the entire article and this resource box are included.

Prolonged Services

By Steve Adams, CPC, CPC-H, CPC-I


The CPT definition of prolonged care varies from that of the Centers for Medicare & Medicaid Services (CMS). Since 2009, CPT recognizes the total duration spent by a physician on a given date, even if the time spent by the physician on that date is not continuous; the time involves both face-to-face time and unit/floor time. CMS only attributes direct face-to-face time between the physician and the patient toward prolonged care billing. Time spent reviewing charts or discussion of a patient with house medical staff, waiting for test results, waiting for changes in the patient’s condition, waiting for end of a therapy session, or waiting for use of facilities cannot be billed as prolonged services.

So, when billing 99233 with a 99356 or 99357 you’d need to first understand the rules associated with billing a prolonged service code along with an EM code when the EM code is based on counseling and coordination of care.

CMS outlines this in section H of the provider manual:

H. Prolonged Services Associated With Evaluation and Management Services Based on Counseling and/or Coordination of Care (Time-Based)

When an evaluation and management service is dominated by counseling and/or coordination of care (the counseling and/or coordination of care represents more than 50% of the total time with the patient) in a face-to-face encounter between the physician or qualified NPP and the patient in the office/clinic or the floor time (in the scenario of an inpatient service), then the evaluation and management code is selected based on the typical/average time associated with the code levels. The time approximation must meet or exceed the specific CPT code billed (determined by the typical/average time associated with the evaluation and management code) and should not be “rounded” to the next higher level.

In those evaluation and management services in which the code level is selected based on time, prolonged services may only be reported with the highest code level in that family of codes as the companion code.

In other words, you have to bill the prolonged service codes with the highest code in that particular family of codes, like 99223 or 99233.



by Scott R. Grubman[i], Rogers & Hardin, LLP

Healthcare providers are at risk of potential liability through a lesser-known provision of the False Claims Act (“FCA”).  Providers who receive too much money from Medicare or Medicaid, even if through no fault of their own, are at risk of substantial FCA liability, as well as civil penalties and exclusion.

Given the increased prevalence of FCA investigations and litigation, particularly in the healthcare industry,  by now most are familiar with the general provisions of the FCA—the imposition of treble damages and per claim penalties for any individual or entity that knowingly presents false or fraudulent claims for payment or approval to the government or knowingly makes or uses a false record or statement material to a false or fraudulent claim.[ii]  A lesser-known provision of the FCA, but one that is perhaps even more concerning for healthcare providers, is the “reverse false claim” provision.  That provision makes it unlawful to make, use, or cause to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the government, and to “knowingly conceal or knowingly and improperly avoid[] or decrease[] an obligation to pay or transmit money or property” to the government.[iii]  It is the latter part of the provision in particular, making it unlawful to avoid or decrease an obligation to pay or transmit money or property to the government, that healthcare providers must understand in order to avoid the potential for tremendous liability under the FCA.

Two relatively recent statutes—the Fraud Enforcement Recovery Act of 2009 (“FERA”)[iv] and the Patient Protection and Affordable Care Act of 2010 (“PPACA”)[v]—have amended and supplemented the FCA’s reverse false claims provision.  FERA, enacted in 2009, amended the FCA in relevant part by defining the term “obligation” to include, among other things, the retention of any overpayment.  After FERA, the knowing retention of an overpayment can form the basis for FCA liability, even if the provider was not responsible for causing the overpayment in the first place.

Although it was its provisions establishing the individual and employer mandates and health insurance exchanges that made the headlines, the PPACA also contained a provision related to overpayments that, while certainly lesser-known, is no less important.  Under the PPACA, an overpayment (which is defined by the PPACA as “any funds that a person receives or retains . . . to which the person . . . is not entitled”) must be reported and returned within 60 days from the date the overpayment is identified or by the date any corresponding cost report is due, whichever is later.[vi]  The PPACA clarifies that any overpayment retained by a person after the deadline for reporting and returning is an obligation for purposes of the FCA.[vii]  After the PPACA, if a healthcare provider retains an overpayment for more than 60 days after it is identified, that provider is subject to treble damages and per-claim penalties under the FCA.  The PPACA also allows the Department of Health and Human Service’s Office of Inspector General (“OIG”) to exclude the provider from participating in any federal healthcare program (often referred to as the “death penalty” for healthcare providers) and impose a civil penalty of up to $10,000 per day for each overpayment that is not reported and returned.[viii]


The Affordable Care Act & Qui Tam Whistleblower Claims

by Jay Brownstein and Kevin Little

Controlling healthcare costs is essential to the economic security of the United States. Total healthcare spending in the U.S., already an astronomical $3 trillion dollars in 2013, is expected to grow almost 6% annually through 2022.1  Spiraling healthcare costs is an obvious problem on many levels, including the fact that, through Medicare, the federal government is the single largest purchaser of healthcare in our third party payer system. Total Medicare spending is expected to increase from $523 billion in 2010 to $932 billion by 2020.2

The Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA) or “Obamacare,” has frequently been in the spotlight for website issues and intense political debate over the law. However, a less publicized – but critical – aspect of the ACA is its intended role of curbing the rise in our nation’s healthcare costs.3

There are several ways the ACA is designed to control healthcare costs including, for example, excise taxes on Cadillac health plans, provider incentives to control costs, promotion of prevention and wellness, and many others.4 But one of the more significant and effective means by which the ACA targets reduction in government healthcare expenditures is enhancement of the False Claims Act (FCA) and its mechanisms for financial recoveries based on fraud and abuse. The FCA5 imposes civil liability for fraud in government programs including Medicare and Medicaid, and allows private citizens to file “qui tam” or whistleblower lawsuits on behalf of the government. From 1987 through 2013, the U.S. government and taxpayers recovered over $24 billion from FCA actions.6 Last year alone, the government recovered over $3.8 billion in FCA cases, $2.6 billion coming from healthcare fraud cases.7

Over the years, the FCA has been amended to implement policy initiatives. In 1986, due to concerns about the rising national debt the FCA was strengthened to curb government spending caused by waste and fraud. At that time, the law was principally used against defense contractors who defrauded the government. By the late 1990s, however, the FCA’s focus had become, and now remains, healthcare fraud.


ICD-9 coding for Pain Control

by Steve Adams

Effective October 1, 2006, ICD-9-CM category 338 was created for pain. With the creation of the new codes in this section, guidelines related to these codes were also added to the ICD-9-CM Official Guidelines for Coding and Reporting – effective November 15, 2006

A review of these guidelines (section I. C. 6) is important for correct code assignment. Several established guidelines also provide guidance on the proper use of these codes. Examples of these established guidelines are:

  • Signs and symptoms—codes that describe symptoms and signs, as opposed to diagnoses, are acceptable for  reporting purposes when a related definitive diagnosis has not been established (confirmed) by the provider (I. B. 6).
  • Conditions that are an integral part of a disease process—signs and symptoms that are integral to the disease process should not be assigned as additional codes, unless otherwise instructed by the classification (I. B. 7).


When the Pain Code is the Principal Diagnosis

Category 338 codes are acceptable as the principal diagnosis for reporting purposes in two instances:

  • When pain control or pain management is the reason for the admission or encounter; or
  • When the related definitive diagnosis has not been established (confirmed)

Take for example a patient who has a displaced lumbar intervertebral disc and acute back pain and presents for injection of steroid into the spinal canal. This encounter would be coded to 338.19 (Other acute pain) and 722.10 (Lumbar intervertebral disc without myelopathy).

Another example – an encounter for pain management for acute neck pain from trauma would be coded to 338.11 (Acute pain due to trauma) and 723.1 (Cervicalgia).


Sounds Crazy but… Distributing Free Prescription Discount Cards to Your Patients Can Build Goodwill and Brand Loyalty

by Bob Healy

Consumers, Medical Practices, Health Systems and Pharmacies Can Benefit

Think about it. When was the last time that you went to a doctor or hospital and they gave you something for free? What would you think if they provided you with an opportunity to reduce your healthcare costs? Chances are you’d have a pretty positive feeling about them.

Medical practices and health systems can generate substantial goodwill and loyalty by distributing free branded prescription discount cards to their patients as well as to those that they touch in their service area through corporate, community and congregational outreach initiatives and educational presentations. Every time a consumer uses your branded discount card and realizes a prescription savings, it will continue to reinforce in their mind the benefit of having you as their healthcare provider.

There are over 200 prescription discount card providers in the market, all of which are geared to helping the uninsured save money on their prescription medications. One company has taken it several steps further, providing savings to not only those that are uninsured but also to those that are underinsured with high deductibles, limitations or exclusions as well as to those with prescription drug coverage and a generic co-pay of $10.00 or more.

Free For All, Inc. launched its Equalizer Program in 2011 to assist consumers being disadvantaged by their insurance programs. The Equalizer got its name because it acts as a gatekeeper for all pharmacy transactions. This “free for all” RxCut Equalizer card guarantees that card users receive the lowest price possible on their prescriptions. Whether it’s their insurance co-payment, the pharmacy retail price, or the RxCut discounted price, card users will always pay the lowest price.

Primer on Whistleblowing in Healthcare

What are whistleblower lawsuits?

Whistleblower lawsuits and settlements are on the rise and in the news. From January 2009 through September 2013, the federal government recovered $17 billion in false claims alone.  Of course, most healthcare providers are honest and work diligently to improve the health of their patients and contribute to the lawful operation of a healthcare business.  It is in the best financial interests of physicians and other healthcare providers who comply with the law that fraudulent schemes to unlawfully obtain government funds be deterred and remedied. The federal and many state governments have determined that a crucial means of combatting healthcare fraud is by incentivizing those who are aware of fraud to report it as a “whistleblower.”[1] In light of spiraling healthcare costs and with state and federal governments’ roles as third party payors, healthcare whistleblowing protects law-abiding taxpayers, healthcare professionals and consumers.

As this article explains, many federal and state whistleblower laws provide legal causes of actions for employees, officials and others who suspect or discover violations of law, waste or abuse within government or fraudulent practices by companies doing business with government. A person with knowledge of a violation or fraud, known as a whistleblower or “relator,” may bring a lawsuit to expose the fraud or abuse and recover damages on the government’s behalf. In many cases, whistleblowers are entitled to a percentage of the recovery for their efforts in uncovering fraud and assisting in the recovery.

Many whistleblower lawsuits must be filed under seal and remain sealed until the government has had an opportunity to review the case and decide if it will intervene, or join in, the case. If the government does intervene, it will typically take the lead in prosecuting the case with the aid of the whistleblower (and her counsel). Whether the government intervenes or not, if a whistleblower lawsuit is successful and results in a recovery the whistleblower may be entitled to receive a percentage of the recovery depending upon her contributions to the case.

HIPAA and the Feds: Be “Proactive” not “Reactive” – It may Save Your Practice or Business


One sure fire way to get your business or practice audited and in big financial (if not criminal) trouble is to take a reactive instead of a proactive approach. What do I mean by this? Let’s take for example a situation I encountered earlier in the year. A practice had a breach of private health information occur (called in anonymously by an employee) and was sent a letter from the Health and Human Services (HHS), Office of Civil Rights (OCR) demanding that the practice turn over the following information:

1. Documentation and outcome of any investigation the practice had done regarding the matter, including a description of the breach, number of affected individuals, incident report, corrective actions taken, and mitigation. OCR WILL WANT TO SEE EVERYTHING THAT WAS DONE PRIOR AND AFTER THE BREACH
2. Policies and procedures to identify, document, respond to, and mitigate any security incidents involving ePHI. DO YOU HAVE POLICIES IN PLACE CURRENTLY?
3. The risk analysis performed for or by practice before or after EMR denial in January 2013. HAVE YOU CONDUCTED A RISK ASSESSMENT?
4. Evidence of the security measures implemented to reduce risks and vulnerabilities to a reasonable and appropriate level, based on risk analysis before and after DMC’s EMR denial in January 2013. WAS YOUR PRACTICE ADEQUATELY PROTECTED PRIOR?

Financial Ramifications for Physician Practices of ACA Deductibles: Getting Paid for “Affordable Care”

by Kevin S. Little, JD

Absent from the noisy political rhetoric for and against The Patient Protection and Affordable Care Act (ACA),[1]popularly known as “Obamacare,” is analysis of the potential financial impact of the ACA’s significantly high deductibles upon physician practices.  In a third-party payer system where consumers are inclined to think that if covered by insurance the doctor’s bill is paid by the insurer, adapting to high ACA deductibles may be painful for patients and treating doctors alike.

The New Day: Shifting Health Care Costs From Payer to Patient

Laudable objectives of the ACA include slowing the growth of healthcare costs, improving quality of healthcare and, perhaps the law’s hallmark feature, expanding health insurance to cover everyone.  Proponents of the ACA tout new “access” to healthcare by way of health insurance coverage for all, irrespective of pre-existing health conditions. This policy objective is advanced in part by the ACA’s play-or-pay mandates.  So insurers are not left insuring only high-cost patients, the ACA mandates that everyone(including, notably, the young and healthy)obtain coverage and pay insurance premiums if not covered under an employer or government insurance plan.  The alternative — a penalty tax to the government – is intended to incentivize a decision to pay insurance premiums. To deter wide-spread abandonment of employer-sponsored health insurance by businesses that want to avoid the new costs of providing ACA health insurance with “essential benefits,” employers with fifty or more employees that decide against offering approved coverage are required to pay significant penalty taxes.

Even with the government’s much publicized website problems, multiple delays in implementing certain ACA provisions and ongoing political wrangling about whether the ACA is good or bad, millions of Americans have already enrolled via the ACA’s Health Insurance Exchange and are now covered by ACA health insurance plans. Millions more will. In an industry where medical practice models heavily depend upon third-party payer revenue, more insured patients should be all good for doctors — right?

The economic reality is that there is no free lunch for those insured under the ACA and this reality will impact physician practices. The significant new costs of insuring greater risks(pre-existing health conditions, no life time limits or annual caps, required essential benefits, etc.)of course must be passed on to consumers.  One way insured individuals and families will shoulder the increased costs is by high deductibles. The ACA strongly advances an existing trend toward high deductible insurance plans.[2]It authorizes deductibles of up to $6,350 for an individual and $12,700 for a family.  The ACA’s online marketplace,, presents bronze, silver, gold or platinum plan options, which, in addition to some differences in benefits, involves choice of higher premiums or higher deductibles. Due to the impression conveyed by the ACA that all plans now must include “essential” health benefits, many consumers are expected to shop based on premium alone.  To avoid higher premiums, consumers are expected to gravitate toward the higher deductible bronze plans.

Still Getting Ready for ICD-10-CM

by Steve Adams, MCS, CPC, CPC-H, CPC-I

The go live date with the International Classification of Diseases, 10th Edition Procedure Coding and Clinical Modification (ICD-10CM) in offices, hospitals, and medical centers across America is October 1, 2014

Even though almost every other country in the world has been using the latest version of the International Statistical Classification of Diseases-ICD-10 for more than 20 years, the United States has been slow to transition from the previous version, ICD-9. ICD-9CM is more than 30 years old, it’s outdated, and some of the terminology associated with it has become obsolete. It is important to mention that these changes will not have an impact on CPT coding; those codes will remain the same.

ICD-9CM has technically “run out of room” and has nowhere else to grow and no room for appropriate updates. Since it is based on a scientific organizational grid, each code can consist of three digits and in some cases an alpha code (E or V) and can only have 10 code subcategories, almost all of which have been exhausted with new medical discoveries and technological advancements in medical sciences.

ICD-10CM, on the other hand, is alphanumeric, beginning with a letter and with a mix of numbers and letters thereafter. Valid codes may have three, four, five, six, or seven digits allowing space for over 65,000 codes, whereas ICD-9CM has basically reached its limit at around 16, 500 codes.