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Dermatologists can protect themselves against medical fraud audits by being proactive


At first, dermatologists seemed unlikely to be the subject of audits, but that is no longer the case. And it’s not only Medicare and Medicaid trying to recoup funds and find fraud - commercial carriers are as well. It’s a perfect storm for increasing medical audits at all types of physician practices - including dermatology.


National report - At first, dermatologists seemed unlikely to be the subject of audits, but that is no longer the case. And it’s not only Medicare and Medicaid trying to recoup funds and find fraud - commercial carriers are as well.

It’s a perfect storm for increasing medical audits at all types of physician practices - including dermatology. One of President Obama's long-standing priorities has been fighting Medicare fraud, and the fiscally malnourished U.S. government needs to find money. Uncovering healthcare fraud is a proven moneymaker.

The efforts are well-intentioned, but they cause financial and administrative hardships for dermatologists who become embroiled in audits, according to Jack Resneck Jr., M.D., associate professor and dermatology vice chairman, University of California, San Francisco, School of Medicine.

“At a time when there is little bipartisan agreement in Washington on healthcare issues, both parties seem to have decided that going after fraud and abuse in Medicare is a panacea that will help solve our budgetary issues. While doctors, of course, want those who steal from the Medicare program to be caught … we also want enforcement to be done in a way that doesn’t burden the overwhelming majority of doctors who are practicing honestly and working to comply with all of Medicare’s complex billing rules,” Dr. Resneck says.

Defendants with fraud charges against them. Total numbers per fiscal year, including non-Medicare healthcare fraud crimes.

What’s more, commission payments for investigation of individual physicians - such as those payments made to recovery audit contractors (RACs) - creates perverse incentives to sometimes act not only boldly but also badly, Dr. Resneck says.

“I’ve seen RAC audits based on false premises and demand letters for claims on patients a particular physician never even saw,” he says.

Dr. Resneck

Big business

To be sure, there’s big money in uncovering fraud. The Obama administration’s anti-fraud efforts recovered $4.1 billion in taxpayer money last year, according to www.whitehouse.gov. Total recoveries over the past three years were $10.7 billion.

Prosecutions are way up, too: The number of individuals charged with Medicare fraud increased from 797 in fiscal year 2008 to 1,430 in fiscal year 2011 - a more than 75 percent increase (source: http://www.whitehouse.gov/blog/2012/05/08/fighting-fraud-and-making-medicare-stronger).

“The healthcare system is in such a financial quagmire that they’re going to have to come up with the money some way,” says Inga Ellzey, president and owner of the Inga Ellzey Practice Group, Casselberry, Fla.

The government goes after false claims cases in a variety of contexts, says Alice G. Gosfield, Esq., of the health law boutique practice Alice G. Gosfield & Associates, Philadelphia.

Ms. Ellzey

“The Office of Inspector General does it. The Department of Justice does it. But increasingly, over the last 10 years I’d say, whistle-blowers who are typically disgruntled ex-employees, ex-spouses and lovers going through breakups or disgruntled competitors, bring a case to the government,” Ms. Gosfield says. “So there is an entire industry that now exists of plaintiff whistle-blower lawyers. There are enormous amounts of money at issue here.”

Commercial carriers

The government’s recouping efforts might be in the news, but dermatologists also face increasing audits from commercial carriers, Ms. Ellzey says.

“Everybody thinks it’s Medicare. It’s Blue Cross/Blue Shield, it’s United Healthcare, it’s the commercial carriers that have seen a humongous drop in their profits because they’ve lost so many subscribers, with all the unemployed people who are no longer paying premiums. So, they have to get their money back from somewhere. … They’ve hired private companies that are headhunters,” Ms. Ellzey says.

And for those who think electronic health records (EHRs) might help with documentation and other issues, think again. The very EHR systems that the government is offering physicians incentives to purchase are causing problems with overbilling, some say.

“The EHRs have the capacity to drive documentation to a higher level of code. I could imagine where dermatologists could have this issue with macros, where the documentation is identical, patient to patient to patient,” Ms. Gosfield says.

Focus on derms

Ms. Ellzey, who recently added a fully staffed compliance department to her company’s services, says she has seen dermatology practice audit requests surge during the 18 years her company has provided billing services.

“We have about 100 practices that we bill for in almost 30 states,” she says. During most of her years in business, “I could count on my hands how many times those clients would get audit requests. In the last 18 months, I get audit requests every single week. It may just be a single chart request or a full-blown audit with 100 charts.”

Dermatologist Cheryl M. Burgess, M.D., who practices in Washington, says Mohs surgeons in the tri-state area have been increasingly investigated for potential fraud. Dr. Burgess does not perform Mohs surgery, but she says that’s an area that seems most targeted for fraud in dermatology.

According to Allan Wirtzer, M.D., a dermatologist in Sherman Oaks, Calif., aside from the -25 modifier, auditors are looking at use of Mohs services “because they’re expensive services,” he says. “I think that anything that is a high-volume, high-expense service for the government is being evaluated.”

Ms. Gosfield says dermatologists also are getting into trouble for “incident to” situations, where the dermatologist is not on premises in the office suite when ancillary personnel render services to Medicare patients. Another vulnerable area: failure to document the scope of a biopsy.

“Depending on the size of the sample you’re taking from somebody, if you don’t document that effectively and what comes back from the pathology laboratory isn’t consistent with your medical records, you’ll have problems,” Ms. Gosfield says. “You also have to effectively document the extent of the exam you are doing, whether it’s a level one or level five.”

The bigger picture

Physician organizations are working to curb bullying by RACs and others. According to Dr. Resneck, the American Academy of Dermatology and the American Medical Association have urged that the Centers for Medicare and Medicaid Services should also measure the number of reversed audit findings and the burden of inaccurate accusations. 

“If physicians are going to successfully help the government fight true fraud, they need an enforcement system that they can trust to work properly, rather than one that they fear even when they are practicing with honesty and integrity,” Dr. Resneck says.

For now, dermatologists’ best defense is a good offense, says James A. Zalla, M.D., a dermatologist and dermatopathologist practicing in Florence, Ky., and the dermatology representative to the Kentucky Medicare Carrier Advisory Committee.

“It’s important for dermatologists to be familiar with proper coding so that they don’t undercode out of ignorance, or overcode without justification,” Dr. Zalla says. “I never worry about audits. We are a patient-focused practice, so the question with every patient encounter is: What does this patient need? If the patient comes in wanting something removed because they think it’s ugly and there’s no medical necessity to treat it, we say we’re happy to help them and remove it, but ugly does not equate with medical necessity. If the patient has a lesion that needs treatment, then I’ll strongly advocate for the patient’s right to have that treated.” DT

Disclosures: Ms. Ellzey owns a company that provides a service to help dermatologists through audits. Dr. Zalla is past-chairman of the American Academy of Dermatology’s Health Care Finance Committee and DERMCAC, and continues as the dermatology representative to the Kentucky Medicare Carrier Advisory Committee. He also represented dermatology as a member of the American Medical Association’s CPT Editorial Panel and the AMA Correct Coding Policy Committee. Ms. Gosfield is in the business of health law. Drs. Resneck, Burgess and Wirtzer report no relevant financial interests.

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