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Are You a Fraud?

     As a lawyer, one of the most important issues I deal with is fraud and abuse in ambulance billing. I have just concluded representing an ambulance service in a four-week-long criminal Medicare fraud trial, which will be discussed in more detail below. From this and from my experiences in representing ambulance services in audits and administrative appeals, I can shed some light on an area that many services do not like to think about or do not think applies to them.

Medically Necessary Transports
     When investigating fraud and overpayment cases, Medicare and Medicaid continue to focus on the requirement that patient transports be "medically necessary." This can be a gray area because medical necessity is hard to define and is a matter of opinion that even physicians may disagree on. Medical necessity is generally not a difficult standard to meet in emergent trips; the difficulty usually comes in claims for routine, nonemergent transports.

     As an attorney, audits and investigations often come to my attention well after they are underway, leaving me trying to put together an appropriate response and defense on behalf of my client. There are two important issues at play here:

  1. Knowing and abiding by the laws and regulations that govern the ambulance industry, and
  2. Proving that you have done so.

     An attorney's chance of making an effective defense to an audit or investigation depends on how well your service deals with these two issues, especially the latter.

     As part of proving that you have followed the requirements of the laws and regulations, I cannot overemphasize the importance of good documentation. Not just for recordkeeping purposes or training purposes (for which good documentation is no doubt helpful), not just for liability purposes (in case of negligence claims and malpractice litigation), not just for billing purposes (to meet requirements of the insurance companies) and not even just to ensure proper patient care (which is always the ultimate goal), but also because good documentation can keep you and your company out of jail and out of financial ruin.

     Think this isn't a problem for you? Please read on.

Documenting The Call
     In 1996, Medicare published an Unrestricted National Medicare Fraud Alert (UMFA 9604, issued June 14, 1996): Billing for Medically Unnecessary and Non-Covered Ambulance Services. The Alert states that: "Ambulance companies billed nonemergency transport for hospital discharges and nonemergency round trip transport for beneficiaries to hospitals for ongoing outpatient services such as chemotherapy and end-stage renal disease (ESRD) treatments. Many of the trips did not meet medical necessity criteria, and other modes of transport would have been safe and appropriate. The ambulance companies billed for transportation of dialysis patients who were ambulatory and/or did not require ambulance transport. The patients did require thrice-weekly dialysis treatments as certified by a physician. The ambulance company transported patients from nursing home facilities and used modifiers for 'bedridden,' 'transported by stretcher' and/or 'hospital lacks facility.' The nursing facility did not arrange for other means of transportation and relied on the ambulance companies to transport the patients." ( See www.cms.hhs.gov/providers/fraud/9604a.asp.)

     Of course, this Alert was posted long before the new Condition Codes were published. However, while the Condition Codes certainly seem to affirm the longstanding Medicare policy that bed-confinement is not the sole criteria for determining medical necessity, the Office of the Inspector General (OIG) and other auditing entities seem to continue to focus on bed-confinement criteria. The Condition Codes specifically address coverage for patients who require monitoring, who might be a flight risk, or who might be a fall risk; however, the Condition Codes are guidelines and do not guarantee payment. If you are basing your claim on any of the above conditions for nonemergent ambulance (stretcher) coverage, then your documentation of the patient's condition should specifically outline why these conditions necessitate ambulance transportation.

     Several recent examples show that ambulance services still have not paid proper attention to the inherent risks of filing claims for government money:

  • In January 2005, a medical billing company in Rhode Island agreed to pay $454,800 to the United States to settle allegations of Medicare fraud in regard to medically unnecessary ambulance transportation of patients to dialysis treatments. That sum was twice the actual amount the government claimed it had lost. The government often requires at least two times the amount of money actually received in settling these types of cases.
  • In October 2004, a Connecticut-based ambulance service pled guilty to federal criminal charges arising out of making Medicare claims for patients the government felt did not meet "medical necessity." Most of the patients were receiving routine transports for dialysis or other scheduled services. Prosecutors also said the company would be required to pay more than $1.5 million in civil penalties to the federal government to settle allegations it violated the civil False Claims Act.
  • In 2003, a Vermont-based service agreed to pay $225,000 to resolve similar allegations.
  • In 2002, an Illinois service faced allegations of Medicare fraud brought by former employees regarding medical necessity and kickbacks. The complaint against them alleged almost $9 million in damages. That company subsequently filed for bankruptcy.
  • By 2003, after years of fighting legal battles, a suit against Hennepin County Medical Center, a Minnesota hospital that ran an ambulance service, was dismissed. This suit, which was brought by a former employee alleging medically unnecessary ambulance trips, did not result in a judgment or force a settlement; however, it took years of defending the case to result in a victory.

Case In Point
     The case mentioned at the beginning of this article--the four-week-long trial where I represented a North Carolina-based ambulance service-is perhaps the most recent example of the government's position regarding nonemergent ambulance transports. There are several lessons in this case that all ambulance services can learn from.

     The 350-count indictment was basically for Medicare/Medicaid fraud in regard to nonemergent ambulance transportation of ESRD patients from their nursing home to dialysis. Counts 1-203 were for Medicare claims for 12 specific patients on specific dates of service. Counts 204-347 were Medicaid crossover claims (the Medicaid co-pay claims). Count 348 was for conspiracy to commit healthcare fraud. Counts 349 and 350 were for obstruction of justice, alleging failure to fully comply with a criminal subpoena for documents.

     The theories of the case (and the lessons to be learned) were:

  1. Patients who were not "bed-confined" were being transported. The government's expert medical witness was a doctor and former Medicare contract administrator for several western states. He and an employee from AdvanceMed, a fraud investigation subcontractor for CIGNA Medicare, also testified that the criteria for bed-confinement were key in making the overall determination of medical necessity, regardless of whether there were other issues that could indicate that the patient needed a stretcher. Basically, their analysis was that if a patient was "stable" and could sit in a chair or wheelchair, there was no justification for non-emergent ambulance transportation. Neither amputations, weakness, dementia, brittle diabetes, blindness, nor numerous other conditions were sufficient to support a claim for an ambulance. Their position left little room for nonemergent ambulance transportation.
  2. The government also claimed that the case was about "trips from the patient's residence to dialysis," even though the claims at trial and the damages that were calculated actually included both legs of the trip (NJ and JN). But in making that claim, the government avoided discussing dialysis and its effect on patients. The doctor testifying for the government admitted that he was not asked to consider the patients' needs for a return trip from dialysis, and therefore his opinion was based on the trip to dialysis only. While the North Carolina provider manual states round trip transport to and from dialysis is covered, and the Code of Federal Regulations says that transport to dialysis is covered-"including the return trip"-the government took the position that these trips could be done by wheelchair van going and maybe the patient would need an ambulance coming back. Of course, with scheduled nonemergent trips, that begs the question, how are ambulance services supposed to know day-to-day how a patient will be when they get there? If they send a wheelchair van, there will not be an EMT to assess the patient, but the service has a duty to assess on its own. They cannot rely on a nurse's phone call or even a physician's certificate of medical necessity. (In fact, due to billing and coverage issues, nursing homes may have motivation to ask for an ambulance where one is actually not needed in order to avoid incurring transportation costs themselves.) The result seems to leave scheduled, nonemergent transports ripe for claims of fraud.

     The government argued that the company had billed for "bed-confined" patients who did not meet all three parts of the bed-confined definition, that bed-confinement was a key factor in making the medical necessity decision, and that because the company said the patients were bed-confined in the yes/no section, the claims were automatically paid without reviewing the narrative section. Other issues also came out at trial that may have played a role in the jury's decision. A manager who was a defendant in the case was found not guilty, but the company and its owner were found guilty on all counts and face up to 10 years in prison, as well as fines and restitution in excess of a half-million dollars.

     For every case that makes the news or is reported in legal texts, there are dozens of other cases where private and municipally owned ambulance services are required to repay thousands of dollars. And, in some cases, individuals who are involved in the fraud end up in jail, or at the very least are excluded from participation in the Medicare and Medicaid programs.

Proof Is Key
     Knowing the law is not enough; proof that you have done the right thing is also required. I am not talking solely about good documentation on a patient's care report. This documentation is often necessary to defend a medical necessity case, but good documentation goes back into the office, too. HIPAA requires documentation of many things involving a patient's protected health information; however, there are many things you should document even though they are not required. You should document your service's training programs and materials given to medical care staff regarding all aspects of patient care and documentation. You should document your service's policy regarding transporting patients whom the staff feels may not be proper candidates for ambulance transportation (e.g., if an employee believes that a patient being transported does not meet the medical necessity guidelines, there is a process for that employee to bring this to the attention of a manager, who will investigate the matter and who has the authority to recommend that the trip not be billed [or billed as medically unnecessary just for the purpose of getting a denial from the insurance carrier]). You should document any conversations with or information received from a patient's doctors and nurses. And, you should document your response to any issues that are brought to your attention.

     By now, your service has a HIPAA policy and a HIPAA compliance officer. But do you have a general compliance program? You are not required to, but the point of this article is that you need to. A compliance program is the best way to ensure that your service is not a target for fraud allegations. Now, I know some of you are still thinking that your service will never be accused of fraud, but an additional benefit of a compliance program is that it is also a great way to ensure that you get paid for your transports and are not on the losing end of an overpayment audit. As the old saying goes, an ounce of prevention is worth a pound of cure.

     The cost of a compliance program is minimal compared with what a solid compliance program can save you. If you don't have one in place, consider the benefits. If you aren't convinced the benefits are worth the effort (or are not sure what the benefits are), then talk to an EMS attorney who can discuss with you the benefits and how you can set up a compliance program for your service. Ambulance regulations and billing are different creatures from what many healthcare consultants and attorneys deal with, which is why I suggest you speak with an EMS attorney who knows the legal issues that most often face the ambulance industry.

G. Christopher Kelly is an attorney practicing in Atlanta, GA. Chris focuses on federal laws and regulations as they relate to the healthcare industry and specifically to the ambulance industry. He lectures and advises EMS service clients across the U.S. This article is not intended to be legal advice. For information regarding how your service can implement a compliance plan, Chris can be reached at chris@emscltd.com or (800) 342-5460. An archive of his articles can be found at www.emscltd.com.

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