Audits for Medicare fraud put doctors on defensive


After 18 months, three levels of appeals and $150,000 in legal expenses, doctors with Premier Medical Group in Clarksville can breathe a sigh of relief after an administrative law judge ruled in their favor in a dispute with Medicare last month.

Barring another appeal, the decision ends a process that began when two employees of a Medicare contractor that searches for billing errors and overpayments showed up unannounced to review 120 claims filed over two years.

“We felt like we had moved to a foreign country or something where we had no rights,” said Bob McCorkle, chief administrator with Premier. “We were guilty until we proved ourselves innocent.”

Premier officials say the inquiry was costly, confrontational and marred by poor communication with the Medicare contractor, AdvanceMed Corp. Other doctors question whether federal contractors hired to review billing information apply medical codes fairly when deciding if doctors have collected too much for their services.

Doctors say such ugly scenarios are playing out more often as the U.S. government steps up its effort to detect fraud and financial waste draining funds from Medicare, the federal insurance program for the elderly and disabled.

Federal officials defend the crackdown as a necessary step to protect taxpayers’ dollars, and medical experts warn that physicians should expect even more audits in the near future.

“That’s the easiest step — to go after those improperly providing (services) not medically necessary or fraudulent services vs. making wholesale cuts,” said John Cousins, senior vice president for health-care intelligence with CIT Healthcare in New York.

Leslie Paige, a spokeswoman for taxpayer watchdog Citizens Against Government Waste in Washington, D.C., sympathizes with doctors who feel inconvenienced by audits but said Medicare must be aggressive to root out overpayments, fraud and waste.

“All of that money goes back into the Medicare trust fund, and that prolongs the life of a trust fund that’s destined to fail,” she said of money recovered through audits.

As a so-called program safeguard contractor, Advance Med analyzes Medicare claims data for trends that might signal inappropriate payments. The company also receives alerts from processors of Medicare claims and screens calls to a telephone hot line set up to field fraud tips.

“Our work is all about red flags, looking for things outside of the norm,” said Curtis Watkins, program director for AdvanceMed’s Nashville office.

Watkins said statistics show that 10 percent to 12 percent of Medicare billings involve potential fraud, waste or abuse.

Common problems include a patient’s visiting a doctor for just five or 10 minutes, but Medicare gets billed as if the doctor saw the person for an hour, he said. Or, an ambulance service might bill as though a patient received a higher level of service called advanced life support when the company actually only provided basic-level support, Watkins said.

Other instances of abuse are easier to spot. For instance, a hospital shouldn’t bill for services more than 24 hours after a Medicare beneficiary has died.

Usually no intent exists

In most cases, there isn’t an intention to commit fraud, Watkins said.

“It might be a situation where there’s a new billing person who billed the incorrect codes — it could be an honest mistake,” Watkins said. “That’s why (program contractors) exist — to review those situations … and determine what exactly has taken place. The vast majority of what we do here is as educational opportunity.”

The doctors at Premier Medical Group, however, said their experiences with AdvanceMed were far from pleasant and could have cost the practice well over $1 million. Here’s what happened:

After the practice turned in requested claims documents, the doctors were told that they had been overpaid $7,500 on 71 audited claims. But AdvanceMed also said that the doctors owed Medicare $1.6 million by extrapolating, which is assuming that many other claims were similarly “overpaid” over a two-year period.

Payments were withheld

To make matters worse for Premier, payments for new services provided to Medicare beneficiaries were withheld for eight months, even though the group had not completed its appeals.

At least six of the bills questioned involved concerns by auditors that there weren’t any orders in patients’ charts for blood tests, making them ineligible for a so-called “draw fee.” McCorkle said the blood tests ordered by the doctors involved should have been proof enough of the need to draw blood, and the practice had evidence of the test results.

There were also questions about payments for reading and interpreting several EKG tests for hospitals or other doctors. The auditors said that Premier shouldn’t have billed for the interpretations because it didn’t have the related patient records. But McCorkle said the records were in the possession of the hospitals or doctors who had asked for the tests.

Ultimately, an administrative law judge ruled in Premier’s favor and the group got back roughly $630,000 of payments that had been withheld by Medicare.

David Steed, a Nashville attorney for physicians, has handled other audit cases similar to Premier’s case. He said one troubling aspect of the audit process is that Medicare can withhold other payments owed to physicians while a review is under way but before physicians can vindicate themselves on appeal.

“These usually are not fraud cases, they are usually allegations of failure to comply with complicated billing and documentation requirements that are constantly changing and often vague,” Steed said. “I am concerned that good physicians will be bankrupted or driven to refuse to care for Medicare patients.”

Dr. Vernon M. Carrigan, Premier’s medical director, said doctors are aware that fraud exists in Medicare and that they don’t mind a fair and accurate audit. Still, he was disappointed with the lengthy process that his group practice had to endure.

“I’ve not learned anything in this process that I can change that would prevent this from happening again, because we didn’t do anything wrong,” he said.

Getahn Ward can be reached at 726-5968 or at

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