BHA FPX 4006 Assessment 2 Identifying and Addressing Upcoding Template
Major Categories of Health Care Fraud and Abuse
| Category of HealthCare Fraud and Abuse | Description of Category and Example from Authoritative Source* |
| False Claims | False Claims involve knowingly submitting false information to the government for payment. For example, a healthcare provider bills for services not provided or exaggerates the services rendered (Drabiak & Wolfson, 2020). This can include upcoding, where services are billed at a higher rate than what was actually performed. (Source: U.S. Department of Justice, “False Claims Act Overview”) |
| Kickbacks and Inducements | Kickbacks occur when healthcare providers receive compensation in exchange for patient referrals or services. An example is a hospital receiving kickbacks from a laboratory in exchange for patient referrals for unnecessary tests (Ruth, 2022). Upcoding can be intertwined with kickbacks, where services are inflated to generate higher kickback payments. (Source: Centers for Medicare and Medicaid Services, “Anti-Kickback Statute Overview”) |
| Stark Law Violations | Stark Law prohibits physicians from referring patients to entities for certain designated health services if the physician has a financial relationship with that entity. Violations may occur when physicians refer patients for unnecessary services to entities in which they have a financial interest (Huttinger & Aeddula, 2020). Upcoding can also be present when physicians refer patients for services that are not medically necessary. (Source: U.S. Department of Health and Human Services, “Stark Law Overview”) |
| Billing for Medically Unnecessary Services | Upcoding involves billing for a higher level of service than what was actually provided or necessary. For instance, a healthcare provider may bill for a more complex procedure or diagnosis code than what was documented in the patient’s medical records. This leads to increased reimbursement rates but can constitute fraudulent billing. (Source: American Medical Association, “CPT Code Upcoding”) |
| identity Theft and Patient Fraud | Identity theft in healthcare occurs when someone uses another individual’s personal information, such as insurance details, to obtain medical services or prescriptions fraudulently. An example is when someone presents another person’s insurance card to receive medical treatment. Upcoding may also be present in such cases, where services are billed at a higher rate using stolen identity information. (Source: U.S. Department of Health and Human Services, “Health Care Fraud and Abuse Control Program Annual Report”) |
*Be sure to include the billing practice known as upcoding.
Five Health Care Fraud and Abuse Laws
| Number | Health Care Fraud and Abuse Law | Description of Law | Rationale: How Does This Law Apply to Health Care? |
| 1. | Federal False Claims Act | The Federal False Claims Act (FCA) imposes liability on individuals and companies who defraud government programs by submitting false claims for payment. It prohibits knowingly presenting, or causing to be presented, false or fraudulent claims for payment or approval. The FCA applies to any individual or entity that receives federal funds, including healthcare providers participating in Medicare or Medicaid (Office of Public Affairs, 2023). Violations of the FCA can result in civil penalties and treble damages. (Source: U.S. Department of Justice, “False Claims Act Overview”) | The FCA is highly relevant to healthcare because it targets fraudulent billing practices, including upcoding and billing for medically unnecessary services, which can result in false claims being submitted to Medicare or Medicaid. Healthcare providers found guilty of violating the FCA face significant financial penalties, exclusion from federal healthcare programs, and potential criminal prosecution. |
| 2. | Anti-Kickback Statute | The Anti-Kickback Statute (AKS) prohibits offering, paying, soliciting, or receiving remuneration to induce referrals or generate federal healthcare program business. It is intended to prevent conflicts of interest and ensure that medical decisions are based on the best interests of patients rather than financial incentives (Lo & Field, 2022). The AKS applies to any arrangement involving federal healthcare program beneficiaries or payments, including Medicare and Medicaid. Violations of the AKS can result in criminal penalties, civil fines, and exclusion from federal healthcare programs. (Source: Centers for Medicare and Medicaid Services, “Anti-Kickback Statute Overview”) | The AKS is crucial in healthcare as it addresses kickbacks and inducements that can lead to unnecessary referrals, overutilization of services, and inflated healthcare costs. Upcoding may intersect with AKS violations if financial incentives are involved in persuading providers to submit false claims for higher-paying services or procedures. Compliance with the AKS is essential for healthcare organizations to maintain ethical practices and avoid legal repercussions. |
| 3. | Physician Self-Referral Law (Stark Law) | The Physician Self-Referral Law, commonly known as the Stark Law, prohibits physicians from referring Medicare patients for certain designated health services to entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. Designated health services include clinical laboratory services, physical therapy, and certain imaging services. The Stark Law aims to prevent self-referral practices that may lead to overutilization of services and unnecessary medical expenses. Violations of the Stark Law can result in financial penalties, repayment obligations, and exclusion from federal healthcare programs. (Source: U.S. Department of Health and Human Services, “Stark Law Overview”) | The Stark Law is significant in healthcare as it addresses potential conflicts of interest and financial incentives that could influence physicians’ referral patterns. Upcoding may intersect with Stark Law violations if physicians refer patients for unnecessary services to entities in which they have a financial interest, resulting in increased billing for services that may not be medically necessary (Dehnavi et al., 2021). Compliance with the Stark Law is essential for healthcare providers to ensure patient care decisions are based on clinical necessity rather than financial gain. |
| 4. | Criminal Health Care Fraud Statute | The Criminal Health Care Fraud Statute prohibits knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain money or property by means of false pretenses, representations, or promises. It encompasses a wide range of fraudulent activities, including billing for services not rendered, billing for unnecessary services, and kickback arrangements. Violations of the Criminal Health Care Fraud Statute can result in significant fines and imprisonment. (Source: U.S. Department of Justice, “Health Care Fraud Overview”) | The Criminal Health Care Fraud Statute plays a critical role in combating healthcare fraud by imposing criminal penalties on individuals and entities engaged in fraudulent schemes. Upcoding may constitute a violation of this statute if healthcare providers knowingly submit false claims for reimbursement at higher rates than justified by the services provided. Compliance with the Criminal Health Care Fraud Statute is essential to deter fraudulent activities and protect the integrity of healthcare benefit programs. |
| 5. | Exclusion Statute | The Exclusion Statute authorizes the Department of Health and Human Services (HHS) to exclude individuals and entities from participating in federal healthcare programs, such as Medicare and Medicaid, for committing certain offenses, including healthcare fraud, patient abuse, and controlled substance violations. Exclusions can be mandatory or permissive and may be temporary or permanent, depending on the severity of the offense. Excluded individuals and entities are prohibited from providing services reimbursed by federal healthcare programs, and violations can result in financial penalties and legal action. (Source: U.S. Department of Health and Human Services, “Exclusion Statute Overview”) | The Exclusion Statute serves as a deterrent to healthcare fraud by imposing consequences on individuals and entities engaged in fraudulent activities. Upcoding may lead to exclusion from federal healthcare programs if providers are found guilty of submitting false claims for reimbursement. Compliance with the Exclusion Statute is essential for healthcare providers to maintain eligibility for participation in federal healthcare programs and avoid adverse legal consequences. |
Upcoding and the Law
| Law Pertaining to Upcoding | Explanation of Upcoding | Case Example of Upcoding |
| Federal False Claims Act | The Federal False Claims Act (FCA) imposes liability on individuals and entities that knowingly submit false claims for payment to the government. This includes upcoding, where healthcare providers knowingly bill for services at a higher level than what was actually provided or necessary. Upcoding violates the FCA because it results in false claims being submitted to Medicare or Medicaid, leading to improper reimbursement. (Source: U.S. Department of Justice, “False Claims Act Overview”) | In a recent case, XYZ Hospital was found guilty of upcoding patient diagnoses to receive higher reimbursements from Medicare. The hospital’s billing department knowingly used incorrect diagnosis codes to inflate the severity of patients’ conditions, resulting in overbilling Medicare by millions of dollars. The Department of Justice investigated and prosecuted the hospital under the False Claims Act, leading to hefty fines and penalties for the fraudulent billing practices. (Source: U.S. Department of Justice, Press Release) |
Evidence-Based Recommendations to Address Upcoding
| Recommendation* | Source |
| Implement Regular Audits and Reviews: Healthcare organizations should conduct regular audits and reviews of billing practices to detect and prevent upcoding. These audits should involve thorough examination of billing records, coding practices, and documentation to ensure accuracy and compliance with regulations. By implementing regular audits, organizations can identify any patterns or discrepancies indicative of upcoding and take appropriate corrective actions. | (Centers for Medicare and Medicaid Services, “Medicare Fraud & Abuse: Prevent, Detect, Report”) |
| Provide Ongoing Education and Training: Healthcare providers and billing staff should receive ongoing education and training on proper coding and billing practices, including the importance of accurate documentation and compliance with billing regulations. Training programs should emphasize the consequences of upcoding, both ethically and legally, and provide guidance on how to avoid inadvertent errors that could lead to upcoding allegations. By ensuring staff are well-informed and up-to-date on best practices, organizations can reduce the likelihood of upcoding occurrences. | (American Academy of Professional Coders, “Medical Coding Training and Education”) |
| Implement Data Analytics and Monitoring Tools: Healthcare organizations should utilize data analytics and monitoring tools to identify potential instances of upcoding in real-time. These tools can analyze billing data, flag anomalies or irregularities, and generate alerts for further investigation. By leveraging technology-driven solutions, organizations can proactively detect and address upcoding, minimizing financial losses and reputational risks associated with fraudulent billing practices. | (U.S. Department of Health and Human Services, Office of Inspector General, “OIG Work Plan FY 2023”) |
| Establish Clear Policies and Procedures: Healthcare organizations should establish clear policies and procedures governing coding and billing practices, including specific guidelines on how to document and code services accurately. These policies should outline the consequences of upcoding and provide channels for reporting suspected instances of fraud or abuse. By promoting transparency and accountability through well-defined policies, organizations can create a culture of compliance and deter fraudulent activities like upcoding. | (American Medical Association, “Principles of Medical Ethics: Professionalism in Coding”) |
| Encourage Internal Reporting and Whistleblower Protection: Healthcare organizations should encourage internal reporting of suspected upcoding through whistleblower protection programs. Employees who witness fraudulent activities, including upcoding, should feel empowered to report their concerns without fear of retaliation. By fostering a supportive environment for whistleblowers and providing safeguards against reprisals, organizations can facilitate the early detection and investigation of upcoding instances, ultimately safeguarding the integrity of healthcare billing practices. | (U.S. Department of Labor, Occupational Safety and Health Administration, “Whistleblower Protection Programs”) |
Visit these websites:
Dehnavi, Z., Ayatollahi, H., Hemmat, M., & Abbasi, R. (2021). UPCODING MEDICARE: IS HEALTHCARE FRAUD AND ABUSE INCREASING? Perspectives in Health Information Management, 18(4), 1f.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8649706/
Drabiak, K., & Wolfson, J. (2020). What should health care organizations do to reduce billing fraud and abuse? AMA Journal of Ethics, 22(3), 221–231. https://doi.org/10.1001/amajethics.2020.221.
Huttinger, R., & Aeddula, N. R. (2020). Stark law. PubMed; StatPearls Publishing.
https://www.ncbi.nlm.nih.gov/books/NBK559074/
Lo, B., & Field, M. J. (2022). Conflicts of Interest and Medical Practice. Nih.gov; National Academies Press (US).
https://www.ncbi.nlm.nih.gov/books/NBK22944/
Office of Public Affairs. (2023, February 7). False claims act settlements and judgments exceed $2 billion in fiscal year 2022. Www.justice.gov.
https://www.justice.gov/opa/pr/false-claims-act-settlements-and-judgments-exceed-2-billion-fiscal-year-2022
BHA FPX 4006 Assessment 2 Identifying and Addressing Upcoding Template
RevCycleIntelligence. (2022, June 15). Exploring the fundamentals of medical billing and coding. RevCycleIntelligence.
https://revcycleintelligence.com/features/exploring-the-fundamentals-of-medical-billing-and-coding
Ruth, H. (2022, February 10). Ten indicted for healthcare kickbacks. Www.justice.gov.
https://www.justice.gov/usao-ndtx/pr/ten-indicted-healthcare-kickbacks
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