US consultants coach doctors in insurance fraud

The US Senate Committee on Finance chaired by Democratic senator Max Baucus of Montana held hearings last month on how self styled consultants run seminars teaching doctors how to boost their Medicare and insurance payments.

Dr Kathryn Locatell, a private practitioner from Sacramento, California, testified: “While employed as a faculty member of the University of California, Davis School of Medicine, in early 1998, I attended a ‘mandatory’ seminar about coding and billing for faculty outpatient medical care presented by consultants to the medical centre.

“The seminar was arranged in anticipation of a government audit of billing practices in academic institutions… What I and other faculty members with whom I discussed the seminar afterward took away from this was that we were to ‘game the system’—that is, bill at a higher level.”

She agreed to go undercover to help federal investigators from the General Accounting Office, who secretly taped two private workshops. Consultants were heard coaching doctors to conduct tests and procedures that were not medically necessary. The doctors would then submit bills for managing problems ostensibly more complex than those presented by patients during office visits.

Rationing care to patients with low paying insurance, billing at a doctor's rate for a nurse's services, and failing to refund overpayments were among the suggestions that doctors may be getting from unethical consultants.

Lewis Morris, assistant inspector general for legal affairs from the Department of Health and Human Services told the committee: “Notwithstanding the benefits that can be derived from the use of consultants, a small minority of consultants engage in improper practices and encourage abuse of the Medicare and Medicaid programmes.”

He said that in one case, two consultants advised more than 100 hospitals improperly to unbundle clinical laboratory tests into their component parts and bill higher rates for the individual components.

The consultants first sent letters to hospitals claiming they had methods of increasing Medicare revenues for laboratory services. If a hospital engaged their services, the consultants visited the hospital, assessed the hospital's coding and billing procedures, and then advised on “reimbursement maximisation” techniques. Although some of the advice was legitimate, some resulted in hospitals submitting false claims for unnecessary tests and for services that were not provided as claimed.

Facing civil charges, the two consultants agreed to pay $30000 (£21000) and to be excluded from the Medicare and Medicaid programmes for three years.

For the financial year 2000, the Office of Inspector General reported that an estimated $11.9bn in improper payments were made for Medicare alone.