Hospital Executives Indicted - What Can You Learn From This?

On January 30, 2009, the U.S. Attorney's Office (USAO) reported that Robert Bourseau (a former co-owner and executive at City of Angels Medical Center), and Dante Nicholson (a former City of Angels vice-president) were indicted yesterday by a federal grand in Los Angeles. Also named in the indictment was Intercare Health Systems, the company through which Bourseau and his partner, Rudra Sabaratnam, operated City of Angels.

Los Angeles City Attorney Rocky Delgadillo's office has also sued City of Angeles Medical Center and other hospitals in a civil lawsuit, saying they used homeless people as "human pawns."

In a separate criminal case, Rudra Sabaratnam (the former CEO of City of Angeles) pleaded guilty in December 2008 to paying illegal kickbacks as part of a scheme to defraud Medicare and Medi-Cal by recruiting homeless persons from the Skid Row area of downtown Los Angeles. In pleading guilty in her case, Sabaratnam admitted to paying Estill Mitts (his co-defendant who has also plead guilty) and others to refer homeless Medicare and Medi-Cal beneficiaries whom they recruited, primarily from Skid Row, to City of Angels for in-patient hospital stays. As part of the scheme, Sabaratnam admitted they entered into sham contracts intended to conceal the illegal kickbacks.

Throughout the alleged scheme, Mitts operated a facility called the Assessment Center, also known as 7th Street Christian Day Center, located at 431 East Seventh Street, Los Angeles, California, in Skid Row. Mitts' facility apparently had marketing contracts or arrangements with City of Angles. According to Sabaratnam's plea agreement, the total amount of illegal kickbacks that Sabaratnam paid and caused to be paid to Mitts and others was approximately $493,382. In the plea agreement, the City of Angels billed Medicare and Medi-Cal for in-patient services to the recruited homeless beneficiaries, including those for whom in-patient hospitalization was not medically necessary.

The new 12-count indictment alleges that Intercare, Bourseau, Nicholson and others conspired to recruit homeless people to receive unnecessary health services for the purpose of committing health care fraud. The USAO reports that this is part of an ongoing probe into an alleged fraud scheme using thousands of homeless people from skid row as patients.

The investigating agencies in this indictment were: the U.S. Department of Health and Human Services, Office of Inspector General; the Federal Bureau of Investigation; IRS-Criminal Investigation Division; the California Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse; and the Health and Law Enforcement Team (HALT), a multi-agency task force which is operated by the Los Angeles County Health Department.

Please remember that an indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent unless proven guilty in court.

For more: http://www.usdoj.gov/usao/cac/pressroom/pr2009/007.html

or http://latimesblogs.latimes.com/lanow/2009/01/a-hospital-exec.html

Although we do not know all the facts, what are a few things that this indictment can remind all health care providers who engage in marketing or are thinking about marketing?

1. Have all marketing agreements and arrangements reviewed by experienced health care counsel and obtain legal opinions that they do not violate Stark, the anti-kickback statute, or any controlling federal or state statutes or rules. If you obtain a legal opinion, you can rely upon advice of counsel defense, among other things.

2. Look beyond the actual written agreements. Understand these marketing arrangements at every level and look at how they operate in the "real world." Have an attorney, compliance officer or another source who knows the workings of the business understand the marketing and patient flows work. This indictment appears to be based upon a marketing program involving hospitals and low-income patients.

3. Understand that if there are violations of Stark and the anti-kickback statute -- even if not criminal violations -- they automatically can be treated as false claims. In fact, Medicare applications specifically state this above the signature line so that providers cannot claim ignorance of the rules. In other words, it is IMPORTANT for all health care providers to be cautious and compliant with the rules. Don't simply let the marketing department or person in charge assume all responsibility for compliance.

4. Be cognizant of the fact that if you are hiring marketers (outside or inside) they may be tempted to take shortcuts or violate the rules when they have difficulty getting results. They will not tell you when they are violating the rules but you may have trouble later persuading the government that you were not aware of their actions. Conduct internal compliance investigations on a regular basis to determine, among other things, how the patients are coming to your facility, the reputation of referring providers, whether the patients are given anything of value from anyone, who is determining medical necessity, and what the marketers are doing to generate more patients.

5. Medical necessity finding by a referring provider may not save another who relies upon it. The days when a DME, hospital, radiologist or other can blindly rely on another health care provider's finding of medical necessity are gone. It is important to do your own periodic reviews of medical necessity as part of a compliance plan.

Posted by Tracy Green, Esq.  Any questions should be directed to Tracy Green, a very experienced Los Angeles health care fraud lawyer, Medi-Cal fraud lawyer and Los Angeles kick-back attorney. You can email her at tgreen@greenassoc.com or call her at 213-233-2261.  Green and Associates is located in Los Angeles, California.

The firm focuses its practice on the representation of licensed professionals, individuals and businesses in civil, business, administrative and criminal proceedings. They have a specialty in representing health care providers  in health care fraud and other types of fraud, referral and overbilling allegations in California and throughout the country. The health care professionals represented include individual physicians, corporate providers and group practices.Their website is: http://www.greenassoc.com/

Physician Charged With Misdemeanor: Case Study

One of the best teaching tools in law and business is to look at actual case studies. In representing professionals, they may learn more from someone else’s mistakes about what can go wrong when there is not a forward looking and comprehensive strategy. This particular example is an actual case. It illustrates how one or two wrong moves can snowball into a series of problems. The point is to learn from this and even though a client’s case may be very different, some of the same basic principles apply.

Dr. X came to our office. He was a board certified OB-GYN. He came to us with a series of problems that needed to be unwound and solved after making two years of uninformed decisions. His biggest problem was that the hospital wanted to revoke his privileges which would destroy his practice. Here is his story.

The Misdemeanor Vandalism Case
Dr. X got into an altercation over a parking space at an amusement parking lot while he was with his family. After he left his car and went into the park, the other person called the local police and accused Dr. X of vandalizing his car. Dr. X was subsequently charged with the misdemeanor charge of vandalism. Dr. X denied the vandalism and wanted to fight it. Dr. X was very busy and the charges were pending in Orange County far from his office and home. Dr. X hired a criminal attorney from the phone book. This attorney was young and had little experience representing professionals who could be have serious consequences from a misdemeanor conviction.

After failing to have the case dismissed, the case was set for trial. Dr. X did not want to miss several days or a week of work going to court and being in trial so he told the attorney to settle the case. The attorney told Dr. X it was a good deal, there would be no jail time, a small fine and that the case would be expunged after the summary probation was completed. The attorney never tried to settle with the complainant or reach a civil compromise. Instead, Dr. X plead “no contest” to a misdemeanor which has the same force and effect as a guilty plea. Dr. X thought that was the end of it.

The Medical Board Gets Involved
Dr. X did not report the misdemeanor conviction to the Medical Board. He did not think that he had to do so. The court reported the conviction. One day, a Medical Board investigator appeared at Dr. X’s office. Dr. X spoke to the investigator without having an attorney present. The investigator asked about the vandalism incident. The investigator did not believe Dr. X’s version of events and took the "no contest" plea as an admission. The investigator decided that Dr. X was not being honest. The investigator referred the case to the Attorney General’s Office who filed an Accusation against him accusing him of unprofessional conduct including allegations that he lied to the investigator about the criminal case. Dr. X hired an attorney who his insurance carrier chose and with whom he did not have any pre-existing relationship. The insurance company’s attorney told Dr. X to simply accept probation as part of the settlement before the Medical Board and that it would not have any effect on his hospital privileges.

They Forgot About Dr. X's Expired New York License
Dr. X did his residency in New York and had a license there that he had never surrendered. The attorney who represented Dr. X before the Medical Board did not analyze what effect, if any, having a New York license would have or what would happen to that New York license. It was never discussed with Dr. X. If the issue had been analyzed, Dr. X could have surrendered his New York license early on before there was an Accusation filed in California. This obviously was not done.

Once California put Dr. X on probation, New York issued a notice to Dr. X indicating that because his California license was on probation, New York was going to put his New York license on probation. The problem is that because Dr. X was not practicing in New York he could not comply with probation. Dr. X decided, without the advice of counsel, that because he was not going to practice in New York he would agree to have New York suspend his medical license.

How Does This Affect Dr. X's Medi-Cal Provider Number?
Dr. X’s patients were almost entirely private pay. After New York suspended Dr. X’s New York license, Dr. X received a letter from Medi-Cal. Medi-Cal informed him that because another state had suspended his license, they were going to automatically suspend his Medi-Cal provider number. Dr. X discussed this issue with his office manager. Dr. X did not hire an attorney or even call one for a 15-minute quick consultation. Dr. X and his office manager decided that since they didn’t see Medi-Cal patients, it was not worth appealing or spending the time on this issue.

What Happens Now To Dr. X's Hospital Privileges?
After Medi-Cal suspended Dr. X’s provider number, Dr. X received a letter from the hospital. The letter stated that because he had been suspended by a federally funded health care program, its bylaws required that his privileges be suspended. The hospital was very supportive of Dr. X, considered him an excellent practitioner and did not want to take any action against him.

At this point, the hospital referred Dr. X to our office. We filed an appeal from Medi-Cal’s suspension on the ground that the New York suspension was based solely upon the California Medical Board’s imposition of probation – which in itself was not a ground for Medi-Cal to suspend Dr. X’s provider number. In addition, we obtained a stay from the hospital and wrote a detailed letter explaining how these circumstances arose. We further worked with the hospital while they sought to revise the bylaws in order to keep Dr. X on staff. Ultimately, we reached a settlement with Medi-Cal and obtained his reinstatement since on occasion Dr. X might see a Medi-Cal beneficiary in the emergency room when he was on call.

Lessons To Learn
1. There is no such thing as a small criminal case for licensed professionals. Even if a criminal case seems small and completely unrelated to the practice of medicine or your profession, you need to understand that there is a form of double jeopardy when it comes to the licensing boards. “Moral turpitude” is a broad term and it is important to treat even misdemeanor cases aggressively and avoid a conviction at all costs. The cost of an excellent legal defense is small in comparison to the potential lost income over the years.

2. In criminal cases, the license "tail" often wags the dog. Even experienced criminal defense attorneys are not knowledgeable about the collateral consequences that can occur to a professional’s license. A great plea bargain in a criminal case can still be a “bad” deal for a professional if there are elements of fraud in the count. For example in Dr. X’s case, an early attempt to pay a civil settlement and obtain a civil compromise might have resulted in the dismissal of the case. Even if Dr. X did not vandalize the other party’s car, it would have been in his best interest to obtain a certain result that could not have any adverse impact on his license.

3. Analyze all licenses, contracts and privileges and potential effects of a criminal conviction on them. In analyzing the licensed professional’s exposure, the attorney needs a list of all licenses in all states. The licensed professional and the attorney need to work out the goals, prioritize them and consider every possible consequence. It is important to be able to make the best decision at the moment but also look ahead and anticipate what can flow from decisions made in the criminal case.

4. Consider involving the Board at an early stage. This is often an excellent approach in order to have “damage control” and show that the licensed professional is honest and forthcoming. If Dr. X's attorney had contacted the Board, reported the arrest, and sent a letter of representation, an investigator would not have made a surprise visit to Dr. X. Dr. X was not prepared for the interview, he came off as defensive and made a poor first impression. Often a misdemeanor conviction will not result in probation but it needs to be negotiated to the extent possible and seeking the coordination and cooperation of all involved (alleged victim, prosecuting agency, etc.) makes it easier. Often, the licensed professional fails to self-report and this does not lead to a favorable impression.

5. Your provider numbers are important. Anytime a governmental health care program is taking administrative action like a suspension against a licensed provider, it is important. Most hospitals have emergency rooms and take Medicare and Medi-Cal. In addition, Medi-Cal is the insurer of last resort and what appears to be a private patient in a hospital can turn into a Medi-Cal patient if the insurance is cancelled or lapsed.

6. Hire a specialist. Who would hire a surgeon that operates on 3 different body parts? This area of law requires an attorney who specializes. Resist the temptation to use your real estate or family law attorney to handle the licensing board. If you have a relationship with an attorney you trust, let that attorney bring in the specialist attorney to assist him or her. With business and regulatory work becoming increasingly complex it is not unusual to use a team approach. Specialists in these areas also have relationships with the governmental agencies and know best the tactics that work with them. Be prepared to pay for quality and watch out for someone who charges a low flat fee since it may be that they do not plan on doing much work. A lengthy professional board hearing with expert witnesses can be costly. We have worked on cases, however, where the client stood to lose millions of dollars over their lifetime if they lost the licenses and the investment of legal fees which saved or minimized the damage to their licenses was an important and excellent investment.

7. Be prevention-minded. If an issue arises regarding your business or license – even it seems small – call a lawyer. Particularly where there is a judgment call and it involves the government or a disgruntled client, patient or employee. Having objective and expert advice is important. The cost of a consultation will save significant amounts at the end of the day. Clients’ legal bills are significantly higher when they call too late or after the fact. Good lawyers who value their clients – such as our firm – would much rather prevent problems than clean them up. Professionals who know when to make a quick call to their lawyer are the best type of client and they keep their legal fees down in the long run. We seek long-term relationships with clients where we work on keeping them compliant with law, rules and regulations and simultaneously prevent litigation and other costly legal issues. This is simply sound risk management.

Any questions or comments should be directed to: tgreen@greenassoc.com. Tracy Green is a principal at Green and Associates. They focus their practice on the representation of individuals, businesses, and professionals, particularly health care professionals including individual physicians, corporate providers and group practices in criminal, civil and administrative cases.

Health Care Law And Compliance Internet Sites

If you are a health care provider, you are obligated to understand the programs, rules and regulations. In fact, if you review the application you or your company signed for Medicare, Medi-Cal or Medicaid, or a private insurance company you will see language indicating that you agree to follow the rules and regulations of these programs. While these programs can be complicated and an experienced health care lawyer can greatly assist you in complying with these rules, you will be a better provider and a better client the more you and your office are informed and understand the rules and business trends you are facing in health care. This is a fairly comprehensive list of websites that a health care provider can use as a starting point.

As longtime attorneys representing professionals, especially health care providers, we find that it is easier to represent those that are educated and sophisticated about their business and we do our best to educate our clients during the course of our representation. It is much easier to prevent problems than to solve them and education is part of that process. Please feel free to email us if you have any suggestions for websites you think would be helpful to others.


GENERAL BUSINESS OF HEALTH CARE

The health care industry is approximately 12% of the U.S. gross domestic product (GDP) and is a constantly changing business. It is helpful to keep informed of market and business changes since it can ultimately help you stay ahead of the business curve and regulatory trends.

Modern Healthcare (free registration required) A health care business newsletter to keep you informed of recent developments. http://www.modernhealthcare.com/

Modern Physician (free registration required) An e-mail newsletter for "physician executives, leaders and entrepreneurs." http://www.modernphysician.com/


OFFICIAL FEDERAL GOVERNMENT WEBSITES

The government rules, regulations and manuals are online. It takes some research but health care providers must stay informed. An experienced health care attorney can be of great help to keep you understand these complicated rules and remain compliant but the more you know, the easier it will be for you and your office to stay compliant, understand the rules and regulations, minimize your risk for overpayments and other issues and keep your legal bills lower.

U.S. Department of Health & Human Services http://www.hhs.gov/

CMS (Centers for Medicare & Medicaid Services) http://www.cms.hhs.gov/

CMS was formerly known as the Health Care Financing Administration (HCFA). CMS is the federal agency responsible for administering the Medicare, Medicaid, SCHIP (State Children's Health Insurance), HIPAA (Health Insurance Portability and Accountability Act), CLIA (Clinical Laboratory Improvement Amendments), and several other health-related programs. This website has excellent explanations of programs, including MMA, with its provision for Medicare-approved drug discount cards.

HIPAA Educational Materials for Providers
http://www.cms.hhs.gov/EducationMaterials/02_HIPAAMaterials.asp#TopOfPage

The Health Insurance & Portability Act of 1996 (HIPAA) with a series of downloadable papers covering a number of issues. These papers provide information for frequently asked questions regarding the applicability of HIPAA to health care providers' offices and are instructive.

Medicare Internet Manuals http://www.cms.hhs.gov/manuals/

The CMS online system has links to day-to-day operating instructions, policies, and procedures based on statutes and regulations, guidelines, models, and directives. They are used by CMS program components, contractors, and State survey agencies to administer CMS programs. For many others, they are a good source of technical and professional information about the Medicare and Medicaid programs. You can rely on this information and print out any information on which you rely for billing or compliance action.

CMS manuals underwent a transformation from paper to electronic. As CMS updated the manual instructions, they move the updated material into the new Internet-only manuals and eliminated the corresponding material from the outgoing old paper-based manuals. CMS will continue this phase-out/phase-in process until all manual instructions are included in the Internet-only manuals. In the meantime, you should check both sets of manuals for current policy and procedures. The paper manuals are useful for reference as well.

Official Medicare Website for your patients with Medicare: http://www.medicare.gov/

This particular website is meant for patients, but you can use information from this site to help your patients (and government regulators/auditors) understand the program benefits. This has good forms you can give to your patients. Providers are better advised to use the CMS website.

Office of Inspector General (Division of Department of Health and Human Services) http://oig.hhs.gov/index.asp

The mission of the Office of Inspector General (OIG) is to protect the integrity of Department of Health and Human Services (HHS) programs, as well as the health and welfare of the beneficiaries of those programs. The OIG has a responsibility to report both to the Secretary and to the Congress program and management problems and recommendations to correct them. The OIG's duties are carried out through a nationwide network of audits, investigations, inspections and other mission-related functions performed by OIG components. The website has fraud alerts, advisory opinions, information about the exclusion program and other useful information. The Advisory Opinions contain valuable information regarding the anti-kickback statute in particular. The following links are useful:

OIG Advisory Opinions: http://oig.hhs.gov/fraud/advisoryopinions.asp

OIG Safe Harbor Regulations: http://oig.hhs.gov/fraud/safeharborregulations.asp

OIG Corporate Integrity/Compliance Agreements: http://oig.hhs.gov/fraud/cias.asp

U.S. Social Security Administration Homepage: http://www.socialsecurity.gov/


OFFICIAL STATE GOVERNMENT WEBSITES

Department of Health Care Services: http://www.dhcs.ca.gov/Pages/default.apx

Medi-Cal Home Site: http://www.medi-cal.ca.gov/

Medi-Cal Publications and Provider Manuals: http://files.medi-cal.ca.gov/pubsdoco/manuals_menu.asp

Bureau of Medi-Cal Fraud and Elder Abuse: http://caag.state.ca.us/bmfea/index.htm

California Medical Board: http://www.medbd.ca.gov/


LEGAL RESEARCH LINKS--STATUTES, REGULATIONS & RULES

When you are reviewing Medicare and Medi-Cal letters, you will see references to statutes and regulations. These sites will help you find these references for you to review with your legal counsel:

Search the United States Code: http://uscode.house.gov/search/criteria.shtml

Search the Code of Federal Regulations: http://www.access.gpo.gov/nara/cfr/cfr-table-search.html

Search the California Code of Regulations: http://ccr.oal.ca.gov/


OFFICIAL LISTS OF EXCLUDED PROVIDERS

If you bill Medicare and Medi-Cal and are hiring someone as an employee, independent contractor or doing business with them in any capacity, it is very important to determine whether they have been excluded by the Office of Inspector General or Medi-Cal. Save your searches and ask outside counsel or compliance officer to conduct the search and save the research. If you bill for services rendered by an excluded individual or entity, you can face overpayment issues or other administrative or criminal sanctions. With Medi-Cal, the website is not searchable by name and only lists those who have a permanent exclusion or procedure code limitation. Those Medi-Cal providers with "temporary suspensions" are not listed. Ask those providers specifically in writing if they are subject to "temporary suspension." The sites usually allow you to do a search by individual and entity names:

DHHS Office of the Inspector General: http://exclusions.oig.hhs.gov/search.aspx

General Services Administration (GSA) Excluded Parties List System. This site gives exclusion lists for numerous government agencies. This may be another way of ensuring that the business entity or person you are dealing with has not been excluded by another government agency (before they have gone into health care): http://epls.arnet.gov/

Medi-Cal Suspended & Ineligible List: http://files.medi-cal.ca.gov/pubsdoco/manual/man_query.asp?wSearch=%28%23filename+%2A%5F%2Az03%2A%2E%2A%29&wFLogo=Suspended+and+Ineligible+Provider+List&wFLogoH=32&wFLogoW=418&wAlt=Suspended+and+Ineligible+Provider+List&wPath=pubsdoco%2Fpublications%2Fmasters%2DMTP%2FzOnlineOnly%2Fsusp100%2D49%5Fz03%2F

Medi-Cal List Of Procedure Code Limitation List: http://files.medi-cal.ca.gov/pubsdoco/publications/masters-mtp/zOnlineOnly/pdcl/pdcl_home.asp


MEDICAL RESEARCH ON-LINE FROM THE NATIONAL LIBRARY OF MEDICINE

PubMed is a service o fthe U.S. National Library for Physicians. These articles are often useful for showing medical necessity and explaining procedures to auditors and government regulators. http://www.ncbi.nlm.nih.gov/entrez/query.fcgi

MEDLINEplus® for authoritative consumer health information is another resource: http://medlineplus.gov/


ORGANIZATION WEBSITES WITH INFORMATIVE CONTENT

American Association of Homes and Services for the Aging. This association for nonprofit providers of housing and healthcare services for the elderly provides a lot of information for providers, consumers and family caregivers: http://www2.aahsa.org/

American Health Care Association site contains information on long-term care: with consumer guides, resources for caregivers, issue papers, links to U.S. Government reports and databases, and more: http://www.ahcancal.org/Pages/Default.aspx

American Health Lawyers Association is an excellent site with informative and free content, including bulletins of new regulatory developments and key court decisions, often with links to full text on public websites: http://www.healthlawyers.org/Pages/Default.aspx

American Medical Association: http://www.ama-assn.org/


PUBLIC RECORD SEARCHES FOR BACKGROUND CHECKS AND COLLECTIONS

We advise clients to do background checks on potential employees, business partners and other contractors to ensure that you are dealing with honest individuals without an adverse background that could cause problems for your business. Physicians and health care providers are often the victim of embezzlement and fraud because they are busy and delegate significant responsibility to office personnel. You can ask your health care attorney to refer you to a reputable private investigator which is what we do since our investigators provide understandable reports for our clients. You initially can use a public record internet company for basic background checks and then ask the investigator to follow up.

Merlindata: http://www.merlindata.com/

SearchAmerica is a useful site for locating persons and tracing for collections. They also specialize in assisting in health care collections. : http://www.searchamerica.com/

Search your local court directories to see if the contractors, providers or employees have had prior lawsuits that could affect your business. For example, in Los Angeles County, where our office is located you can the Superior Court database for a fee: http://www.lasuperiorcourt.org/


OTHER RESEARCH LINKS

Findlaw Internet Legal Resources http://www.findlaw.com/

Martindale-Hubbell - Resource on legal profession http://www.martindale.com/


OTHER HELPFUL WEBSITES

Official website of Foley and Lardner LLP, a national law firm specializing in health care law. Site has links to their health care newsletters and articles: http://www.foley.com/

Official website of McDermott, Will & Emery, a national law firm specializing in health care law. Site has links to their health care newsletters and articles: http://www.mwe.com/

Website for senior citizens includes information on nursing homes, updated articles on Medicare and Medicaid programs, in addition to relevant legal changes in those programs: http://www.therubins.com/


CONCLUSION

The Internet is a great place to become educated about health care law, rules and regulations. Having an experienced health care attorney to help ensure that you and your office follow these rules, establish proper protocols and is available when questions arise during the course of business is sound business practice. Once you and your office are better educated it helps you understand why sound risk management includes having a health care lawyer on your team.


Posted by Tracy Green, Esq.  The firm focuses its practice on the representation of licensed professionals, particularly health care professionals, individuals and businesses in civil, business, administrative and criminal proceedings. You can email her at tgreen@greenassoc.com or call her at 213-233-2261.  Green and Associates is located in Los Angeles, California.


The firm has a specialty in representing health care providers  in health care fraud and other types of fraud and overbilling allegations in California and throughout the country. Their website is: http://www.greenassoc.com/

 Any questions should be directed to Tracy Green, a very experienced Los Angeles health care attorney, Los Angeles health care fraud attorney, Los Angeles Medi-Cal attorney, Los Angeles Medicare attorney and Los Angeles physician attorney.

Medicare And Medi-Cal Audits - How To Respond

Medicare Audit And Medi-Cal Audit: How To Respond

If you are a health care provider with a Medicare or Medi-Cal provider number -- especially in Southern California --chances are you WILL be audited or have an on-site visit at some point over the years. The audits and on-site visits (sometimes unannounced) have increased dramatically over the past years and will continue to increase as the state and federal governments face budget problems. In addition, the private insurers who administer Medicare are required by their contracts with the government to audit whether they suspect improprieties or not. Your practice may also be subject to audits from insurance companies and health maintenance organizations (HMOs).

The audit must be taken seriously since it can result in an overpayment being assessed and/or adverse administrative history. However, do not panic. Although it can seem like an intimidating event, you can increase your chances of prevailing and not having an unfair overpayment amount assessed if you prepare for any potential audit in advance and handle it properly once the request is made. Here are some strategies and tips for helping you not only survive your audit but being prepared and prevailing to the greatest extent possible:

1. Prepare Your Staff In Advance For Understanding That Audits Are Part Of The Healthcare Business. Providers and the staff often erroneously assume that if they are being paid for claims that everything is correct and they are doing everything right. Not so. Medicare and Medi-Cal pay the provider on a "good faith" basis and reserve the right to audit. Private insurers, on the other hand, often require pre-approval before payment. Thus, it is critical that your entire staff understand that the best defense against audits is good charting, documentation, proper coding, and avoiding any upcoding, billing for services not provided or documented or anything else that may be characterized as fraud or abuse. Once everyone understands that audits are part of the process it also helps them take control of the audit process and not let fear prevent them from handling it professionally.

Most Medicare and Medi-Cal audits fall into one of three broad categories: (1) an audit during the application or updating of application process where there is an on-site visit and review of business records and typically only a limited number of claims; (2) prepayment audits (most common in Medicare), in which a review of claims is conducted before Medicare pays the physician, where carriers typically want to look at only one or two claims from each physician; and (3) post-payment audits. In a comprehensive post-payment audit or review, the carrier reviews a small statistical sample of claims and uses the results to calculate a projected overpayment for a period of months or years.

2. Identify In Advance Who Is Authorized To Speak To Auditors And Any Other Person Or Investigator Who Visits The Office In An Announced Or Unannounced Visit. First impressions count and this applies to audits and other visits by regulators or investigators. You will be better prepared if you determine in advance who is permitted to speak to government auditors or regulators. For example, you do not want the receptionist interviewed about your office's policies and procedures since anything he or she says may be used in your audit. Establish a procedure that only an office manager, the provider or the health care lawyer are allowed to meet and discuss anything with the auditor or regulator. The other staff should be limited to contacts about establishing times and dates available for meeting unless and until they are instructed to do so by the designated persons in charge of the audit. There are many horror stories about staff meeting with auditors or regulators while the provider is out of the office and giving misinformation which was later used against the provider.

3. In Order To Anticipate An Audit Or Prevent An Adverse Audit, Understand Fully How The Medicare Or Medi-Cal Program Operates. Providers often assume that billers and office staff know how the Medicare and Medi-Cal programs operate when this is often not the case. Billers are used to working from superbills and entering codes without analyzing whether all the program rules are being followed. It should be understood by all that these programs will only reimburse "reasonable and necessary" services where there is the required documentation -- even if the services were provided. If the documentation is not present in the file -- it will be presumed that the service was not provided or that it was not medically reasonable and necessary.

We suggest that the providers have the billers and office managers create a thorough notebook regarding each of the procedure codes billed that contains the printed portions of any relevant manuals about what constitutes 'reasonable and necessary services' as defined by Medicare or Medi-Cal and what documentation is required for these services. It is then necessary to have the providers and anyone who sees patients or provides services read and understand these requirements. In addition, the provider needs to be aware of what your local carrier wants claims forms and patient records to contain because the requirements vary. The provider may have worked in a hospital or private setting where the documentation requirements are different and not realize they are failing to properly document the file. For example, state law and private insurers may allow a physical therapist assistant or physical therapy aide to perform certain tasks in phyical therapy while Medicare's billing and reimbursement policies and procedures may not pay for the same treatment by these assistants or aides for Medicare treated patients.

Such information typically is contained in the Medicare manual and the local carrier's local medical review policy which are all available online. Above all else, maintain complete documentation in patient records to substantiate the services billed. Record symptoms and diagnoses, details of the services and level of care provided, and complete progress notes. Medicare considers lack of corresponding documentation as evidence that billed services were not reasonable and necessary. The auditor will consider any related reimbursement as an overpayment and require the provider to refund the applicable amount. There should be periodic internal reviews of files and education to ensure that the documentation is being done properly.

Even if this billing and procedure code notebook and research was not done before the audit, prepare it at the beginning of the audit so everyone at the provider's office is prepared and knows the billing and reimburesment policies. Often during the audit, auditors will be mistaken about documentation or medical necessity requirements.

4. Have A Health Care Attorney To Whom You Can Send Any Audit Letters Or Whom You Can Contact Anytime There Is A Visit And Request For An Interview. If you receive a letter or visit from your Medicare or Medi-Cal carrier requesting a number of charts or records, contact your attorney immediately and fax him or her the letter or business cards of the visitors. Even if the attorney only needs to be minimally involved in most of the audit and file preparation, you need an objective person to ensure that the audit is handled in the best manner possible. It is often easier for the health care attorney to speak with the auditors and set up a timetable for any interviews or to ensure that there is sufficient time to respond to the request for documentation. In most cases, thirty or sixty minutes of a qualified health care attorney's time at the beginning of the audit is well worth it since it will reduce the risk of overpayment, help reduce the provider's time and help ensure that the audit goes smoothly and that a good impression is made.

Resist the temptation to think that if a health care attorney is involved that an auditor or regulator will think that something is "wrong." In fact, the opposite impression is given: the provider is sophisticated, professional and has an established method for responding to audits. This is especially important in "unannounced" visits where it is easier for a health care attorney to be objective and take control of the situation where an auditor simply shows up and demands records and interviews at that moment. The health care attorney can also address regulatory issues that may be beyond the provider's expertise.

5. Read Any Letters Or Lists Carefully And Make Sure You Understand What Is Requested And See If There Are Any Patterns. This is another reason to send an audit or similar letter to your health care attorney so you understand what is requested. For example, assume that records for specific dates of service are requested as to a certain number of patients. Make sure that you also send in any other documentation that would support the services rendered on that day. This could include laboratory results, X-ray reports, photographs, consultations from other physicians, etc.

When reviewing the audit letter, especially if the letter requests multiple charts, see if there seems to be some type of underlying pattern or theme in the chart notes. Were the requested patient charts all billed for one particular code, all referred by a certain physician, or is there some other pattern? This will assist you in better addressing the concerns of the audit -- which may not be told to you directly by the auditors.

6. Determine With Your Health Care Attorney Whether You Need An Expert Witness Or Coding Expert During The Audit Process. Your attorney and you should consider hiring a coding expert to review the charts, preferably before you submit them to the auditor or carrier. If the expert cannot complete the review before the deadline for producing the records, the attorney will ask for an extension or simply have the expert conduct his review at the same time that the carrier does. Your attorney should have the review done under the attorney work product privilege so that the results will be confidential.

One excellent preventative measure is to have a coding expert review charts periodically so that you know that your practice is in compliance with billing and record requirements. This can also be part of a compliance plan.

7. Take Control Of The Audit. Make Sure Records Are Complete. Review Charts And Records Carefully Before Copying Them Or Providing Them To Auditors. The auditors or regulators do their best to put the burden on the provider to prove that the services were properly documented and coded. Remember that the auditors are often not medical personnel even if they have some medical training. The auditors will often ask for the charts right away in unannounced visits. Take your time and ensure that all reports, notes and other information are in the chart before you produce or copy it. Look for other records such as sign in sheets that will also be relevant to the audit.

One of the most important things to do in preparing to respond to an audit is to ensure that the records are complete. One of the best ways to do this is to meticulously compare each medical record with its corresponding billing record. Remember, the billings are where the government’s investigation began. You can ensure that there are records for each of the dates billed, identify coding issues and have a better idea how to proceed in the audit.

Another important step is to make sure you produce the complete records. It is not enough to have them but you need to produce them and have records of the production. If you fail to produce records requested, you can be penalized financially or with adverse action against your provider number. If the auditor or regulator agrees you do not need to produce certain records or documentation, you or your health care attorney should document this agreement. It is important to document what is produced since you will be creating an administrative record. All records and documentation produced should be accompanied by a memorandum or letter itemizing the records produced and either delivered in person or with a return receipt or overnight service as proof of delivery.

8. Do Not Alter The Records. If you need to supplement the records, make sure you do not back date or alter the records. Altering records can cause problems much worse than overpayments -- Medical Board complaints and discipline. Seek the advice of counsel when it comes to supplementing records or there is any issue about missing records.

9. Understand What Circumstances Might Can Trigger An Audit. Audits can provide an education. They can be stressful, especially if the outcome is unfavorable. However, they can offer tremendous amounts of information and educational opportunities for your office. Try to remain positive while you go through this process. What are some common triggers of audits?

-- Excessive use of specific CPT codes. Sometimes excessive use of certain ICD-9 codes may also trigger audits. Generally, doctors who are outside the bell curve with regard to billing practices may get flagged on internal carrier audit screens.

-- If your practice tends to be more specialized (perhaps you specialize more in geriatric patients), you will, by the nature of your practice, be billing certain codes more frequently than the other doctors in the community who have a more broader-based practice pattern. You will want to explain these issues to the auditors.

-- Do not be afraid to bill for specialized services or think that you will avoid an audit by underbilling or billing at the lower code. Just be extra careful in the documentation. Do not alter proper billing protocols just to try to stay under the radar. Bill for what you did and let the chart defend you. Importantly, don't stress to the auditors how you provide services for "free" and underbill. That does not help your audit in most circumstances.

-- Are you billing for codes where you are using new technology? Did you change your practice patterns to become more specialized so that your billing patterns changed? Did you add new diagnostic or therapeutic machines to the practice? Did you purchase a practice? If so, you may flag out on a statistical basis. Explain your billing and practice changes to the auditors and the best defense is a well-documented file. Use the research notebook described above to ensure you are complying with all the documentation and medical necessity requirements.

-- Do you have an unhappy patient or patient's family? If you have an unhappy patient, review the bill if the patient had a bad outcome or received an unexpectedly large bill. Sometimes collection practices or a bad outcome can prompt a patient to launch a complaint that generated the audit. To avoid such problems in the future, make sure the patient knows upfront about the costs. Speak with the biller or collection service to alter methods of collections. Consider formulating a payment plan with the patient or allow patients to pay with a credit card. If one of the patients was unhappy, raise this with the auditors.

-- Do you have disgruntled current or former employees? All it takes is a complaint from a current or former employee to trigger a fraud audit or other review. The employee may try to get revenge and the best way to prevent this from occurring is to do the following: have a compliance plan that requires the employee to report suspected fraud and abuse during employment; conduct exit interviews where employees are asked about any suspected fraud or abuse; have written employee policies and maintain personnel files; have regular office meetings to review policies; address small issues before they escalate to large ones; make everyone in the office feel like part of the team; and educate the employees regarding billing and documentation requirements so that they do not mistakenly think that something is being done improperly. If you suspect that a current or former employee triggered the audit, bring the disgruntled employee up in the audit andy why he or she is not credible since the auditor may not identify the complainant.

-- Are You Overusing Pre-Printed Forms Or Template Shortcuts? Be careful with the use of templates especially in electronic records. Although templates are acceptable charting methods, they can look very repetitive, especially when it comes to routine care and services. Each chart note should clearly reflect the chief complaint, history, examination and treatment you rendered on that date for that patient. Cutting and pasting templates/macros from previous dates of service and simply using that language again in subsequent chart notes does not necessarily indicate what happened on that specific date of service. It makes for a bigger charts but once it looks repetitive or like filler, it can cause an issue with the audit where your office might be characterized as a "mill" or you are questioned about the amount of time spent with the patient.

Look for these triggers and others as they will help you defend the audit. Do not be afraid of negative facts or problems that you have found. If there are weaknesses or mistakes, discuss with your health care attorney whether you should concede certain issues at the audit level for credibility reasons. Do not assume that if you admit certain problems that the auditors will be fair to you or not seek overpayment. You need to have a strategy and having an outside objective person such as a health care attorney can be useful so you do not make a tactical mistake that could cause later problems or result in an overpayment.

10. Be Professional. Treat the auditors with respect even when you disagree with them or their position. This is another reason to have an objective health care attorney for you to rely upon. It is easy to get emotional and defensive when your medical services seem like they are under attack and you already feel underpaid by the carriers.

11. Maintain A Notebook Of Administrative And Professional Records. In advance of the audit, have a notebook or file with all the key documents you need for an audit. You will be prepared and then update these on an annual basis at the beginning of the year. These records include but are not limited to the following:

--All Medicare and Medi-Cal applications and supplemental applications (see if there is an issue with failure to update these applications);

--Malpractice insurance, workers' compensation insurance; liability insurance and any other insurance required by the programs;

--Copies of all licenses held by providers and staff;

--Other business documentation required by the programs such as office leases, contracts with laboratories, contracts with suppliers, etc. (this will depend upon the type of provider);

--Equipment lists where the equipment is diagnostic or used for billing; and

--Any other documentation required by the program and its manuals.

12. Request An Exit Conference Or Meeting Upon The Conclusion Of The Audit. Depending on the type of audit or visit, you want to have an exit conference or meeting where you can address any outstanding issues in the audit. You also may want to or submit a letter that is reviewed or drafted by your health care attorney showing that you have fully complied with all record requests and documenting any positions regarding coding, billing, medical necessity or other issues that have arisen. Having an excellent record of your submissions will be important to obaining a favorable result and creating a good record if there is a subsequent hearing.

13. Conclusion. Audits happen to all providers. It does not necessarily mean you are a bad provider or that you should immediately leave the Medicare or Medi-Cal programs. With increasing financial pressures on health programs and practices, it is important to be forward thinking and create compliance plans and self-audit so your practice does not get assessed an overpayment. During the audit, do your best to turn a potentially negative situation into a positive learning experience to correct any legitimate problems that the audit may uncover as well as to minimize the chance of future audits. Being stubborn and continuing to bill improperly will not help your practice. The carrier may still monitor your subsequent claims to see if your billing practices have actually changed and comply with the program's rules and regulations. Be proactive, anticipate audits in advance and handle audits intelligently and you will prevail to the greatest extent possible!

Posted by Tracy Green, Esq. Any questions or comments should be directed to: tgreen@greenassoc.com. The firm website is http://www.greenassoc.com.  Office phone is 213-233-2260/

Tracy Green is very experienced  Medicare, Medi-Cal, and private insurer audit attorney in Los Angeles, California. The firm focuses its practice on the representation of professionals, particularly health care professionals including individual physicians, corporate providers and group practices.

Board Complaints And Investigations: FAQ

I have received a request for a patient or client file from my licensing board. What should I do?

This is the time to be the most proactive. The earlier you can prevent an investigation from going forward by responding to it intelligently and fully, the better. Once an Accusation or disciplinary charge is filed, it is difficult to unwind it. We find that often charges were filed because the professional did not adequately address the investigation at an early stage.

Each case is different and varies upon the facts. No one strategy works for each case. However, an experienced, objective attorney can help you prevent a complaint from turning into disciplinary charges by mitigating the problem.

One important piece of advice: do not simply produce the file and nothing else. Here are 7 things, among many, that can be done at this early stage:

1. Take the opportunity to ensure the board has full access to all relevant information that will help you.

2. If there were problems with this particular client or patient, a letter or memorandum summarizing the history, facts and issues will help the investigator evaluate the case. Have an experienced administrative and licensing attorney or other objective party review any submissions since you will have to live with them for several years if the case is investigated further and/or is the subject of disciplinary proceedings. Remember that everything you do is evidence.

3. If there is significant handwriting in the file, dictate the notes so the handwriting is easy to read. Have your attorney or other objective party ensure that the records are easy to understand.

4. If this case had a bad or poor outcome (even if that is part of the risk that was disclosed to the client or patient), it may be useful to have your attorney hire an expert and evaluate the file in order to help prepare a thorough response explaining the case or matter.

5. The board can be contacted to determine what stage the investigation is at so that the appropriate response. This is often easier for your attorney to do since the investigator may be open with him or her. In addition, anything you say is evidence and even impromptu comments like "I didn't do anything wrong" or "I don't remember this person" can be used against you later in ways that are difficult to anticipate when they are said.

6. Do not alter, backdate, falsify or create any records unless such records are properly created and dated.

7. Once you hire an attorney, have him or her send a letter of representation so the board contacts the attorney and does not show up at your office for a surprise interview.


My licensing board is accusing me of misconduct. What should I do?

A governing board will often state that it is investigating suspected fraud, abuse or other misconduct, but not tell you specifically why. You need to find out the facts supporting the board's complaint or accusation. An experienced attorney can help you immeasurably with this process. Once the board is notified that you have hired an attorney, it is not permitted to contact you directly. The attorney can speak with the agency's investigators to learn the factual basis of the allegations. The attorney can then direct you to take specific steps to protect your license.


Why can't I (or shouldn't I) talk to the licensing board myself?
You do not need an attorney to communicate with your licensing board, but it is an excellent idea. An attorney can speak on your behalf and obtain information without making any admissions that might hurt you. Anything you say to a board, even though it may seem innocent, might be used against you later. In addition, it is difficult for you to be objective and create an intelligent and forward thinking strategy. Everything you say is evidence and investigators can catch you off guard before you are fully prepared and then later use those statements against you if you testify differently at a hearing or during a formal interview.


I already spoke to the licensing board. Is it too late to hire an attorney?
No. Licensing boards do not always act quickly. An attorney can help you find out what the board is intending to do. The attorney may be able to help you submit additional information or documents for the board to consider. The attorney may also be able to negotiate a settlement that would allow you to keep your license.


The licensing board has presented me with a proposed disciplinary order. Do I have to sign it?

No. You can reject it and try to negotiate other terms. If you and the licensing board cannot agree on terms, the board will likely bring formal disciplinary proceedings.

Having an attorney advise you is important. Attorneys who specialize in administrative law understand both the board's concerns and the nature of your profession. This insight often enables them to negotiate settlements that satisfy the board's need for oversight as well as your need to maintain profitability.

A settlement enables you to avoid formal disciplinary proceedings. When a settlement is not possible, you want representation by an attorney who is familiar with procedural rules as well as the laws and regulations governing your profession.


I have an administrative hearing scheduled before a licensing board or regulatory agency. Do I need an attorney?

You are not required to have legal counsel, but it is an excellent idea. The agency will be represented by an attorney and, in fact, you will be at a disadvantage without one.

Many procedural and evidentiary rules must be followed in presenting a defense. Even if you feel you have a good defense, you might not be permitted to present it if you don't follow the rules. An attorney who specializes in administrative proceedings will be able to present your defense in the proper manner.


I have been charged with or convicted of a crime. Will this affect my license?
There is a BIG difference between being charged and being convicted.  If you are arrested and the case is dismissed due to lack of evidence, it is less likely to affect your license. If you are convicted of a crime, it will depend on the type of charge, how long ago it was and other factors. Your rehabilitation will also be a factor.

Many regulatory agencies require that you report a criminal charge or conviction, even if it seems unrelated to your practice. Certain charges or convictions may result in the suspension or revocation of your license. This is one reason why it is critical to coordinate any criminal defense with an attorney specializing in administrative law and board defense at the earliest possible stage.

An attorney specializing in administrative law will help you determine the reporting requirements relevant to your profession. If reporting is required, the attorney will help you present the facts in the best light possible. If you fail to report, this can be considered unprofessional conduct and can be used against you later. Honesty is the hallmark of professionalism and a subsequent dishonesty (or even lack of forthrightness) while you are defending your criminal charge can harm your professional license. If you have negative facts in your criminal case, you can win your criminal case and still face discipline from your board in many circumstances. We advise a global strategy that looks forward to the next several years and includes all criminal, civil, and administrative consequences.

Can I apply for a license if I have a criminal record?

Yes, you can.  The factors will be the nature of the charge, how long ago the conviction was and the proof of your rehabilitation which we help establish with records, letters and other documentary proof.

An attorney skilled in licensing law can help you submit evidence of your character and rehabilitation, so as to present your application in the best light possible. In short, you will need to have a thorough application, numerous support letters, and significant documentation to explain the charges and why you have changed and what you have done to warrant you being granted a professional license. It helps to have an objective attorney who can help you build the best administrative record possible.


I want to avoid problems with my licensing board. How can I make sure I operate my business in compliance with the law?


Many professionals retain a law firm to review their business structure and office policies to ensure they are in compliance with the laws and regulations governing their business. An attorney skilled in administrative law will have knowledge of the common pitfalls for your particular business and can show you where your practice might be vulnerable to administrative scrutiny. The attorney can assist in educating your staff about the law relevant to your practice through in-office presentations or the preparation of formal office policy and procedure handbooks. It is also common for professionals to retain a law firm on an ongoing basis for a monthly fee to have access to an attorney to questions as they arise.

Posted by Tracy Green, Esq.
Any questions or comments should be directed to tgreen@greenassoc.com.


Tracy Green is a principal at Green and Associates and they focus their practice on the representation of professionals, particularly health care professionals including individual physicians, corporate providers and group practices.  Green and Associates'  website is: http://www.greenassoc.com/