Beyond the Code: Understanding the Value and Responsibility of Certification

By Michael D. Miscoe, CPC, CHCC

Fundamentally, coding is a process of representing services in a manner that will allow a third-party payer to understand what was done. Professional coders are individuals specifically trained and tested to ensure that this process is performed correctly and the importance of this task cannot be understated. When a carrier misunderstands what service was performed, they may make a payment decision that they otherwise would not have made had they known the true facts. From a coding perspective, misrepresentation of the service can involve use of the wrong code, a misstatement of the circumstances of performance based on the modifiers used or not used, or a misstatement of the reason for the service as described by the diagnosis codes reported. When this occurs and the misrepresentation results in payment, this can generate post payment liability (the obligation to return the money) for the provider at a minimum. To the extent that coder error causes the improper payment, where the statutory elements are met (as we’ll discuss in a moment), the coder can be liable under the False Claims Act.

Unfortunately, in some cases, “correct representation” of the service results in a denial of payment and a shift of the payment burden to the patient. Nonetheless, correct code selection is not always cut and dry. Herein lies the concern that all coders likely share. The problem is derived from a lack of universal standards. While the transaction and code set component of the Health Insurance Portability and Accountability Act (HIPAA) standardized the CPT® codes, modifiers and descriptions for all covered entities such as providers and carriers, they did not standardize the rules for how codes should be used. As a result, how do you ensure that you are coding services correctly when the code choice is not entirely clear? What references are controlling or persuasive? Can you take any solace in the fact that the carrier paid for the service or that you have “always done it that way?” What happens if you are wrong?

This article is the first of a series that will address post payment liability issues that may arise under the False Claims Act. We will begin by identifying what constitutes a “false claim” under Medicare and Medicaid. Before we begin, it is important to remember that mistakes do not give rise to False Claims Act liability.Rather than cause panic, it is hoped that with a better understanding of False Claims Act liability coders can better understand their obligation to code correctly. Coders should also be better able to appreciate the importance of certification and the need to continually improve their professional competence not only to avoid personal liability, but to avoid liability for the physicians for whom they work.

False Claims Act Liability Defined

An action for making a false or fraudulent claim for Medicare and Medicaid reimbursement can be brought under the False Claims Act where there is a showing of four things: 1) a false claim (or statement in support of a claim), 2) that was presented or caused to be presented to the United States, 3) with the knowledge that the claim or statement was false, and 4) that the false claim caused damage to the government. Such actions can be brought by the government directly, or by a private plaintiff who brings an action on behalf of the government. To better understand the elements of the False Claims Act (Act) and how liability arises, we must define a number of its key terms:

Claim: A claim is defined by the Act as any claim or demand for money or property of the government, and includes claims where the government provides any portion of the reimbursement. A claim has also been defined as knowing retention of monies erroneously paid by the government.

Falsity: Because “false claim” is not defined under the Act, the “falsity” of the claim is left to the discretion of the court. While not an issue in most cases, courts require at a minimum that the claim be proved false under any reasonable interpretation. A claim can be false even where the services billed were actually provided, but where the purported provider did not actually render or supervise the service. In addition to being false, the “falsity” must be material. Materiality requires a showing that the government relied on the false claim or statement in making its payment determination. Where the false statement did not affect the payment decision, it is immaterial and irrelevant and does not give rise to liability.

Presented/Cause to be Presented: The U.S. Supreme Court has held that liability may attach to “any person who knowingly assisted in causing the government to pay claims which were grounded in fraud, without regard to whether that person had direct contractual relations with the government.” It is this element where coder liability exists as it is coders who are usually responsible for code selection, claim creation and claim submission.

Knowledge of Falsity: The Act defines “knowing” or “knowingly” to mean that a person has 1) actual knowledge, 2) acts in deliberate ignorance of the truth or falsity of the information; or 3) acts in reckless disregard of the truth or falsity of the information. No specific intent to defraud is required. The key here is that neither actual knowledge nor specific intent is required for liability. Deliberate ignorance is akin to sticking your head in the sand and purposefully avoiding knowledge of an error. The recklessness element is the most interesting and must be distinguished from mere negligence. Negligence will not create liability where recklessness will. The difference is determined on a case-by-case basis and often turns on the clarity of the coding rule, whether the practice received conflicting guidance or whether the code selected was reasonable under the circumstances.

Damages: Most courts hold that there does not need to be a showing of damages in order to state a claim under the Act; however, the existence of provable damages can affect the overall amount of liability.

Notwithstanding the damages element, all elements must be proven in order to sustain liability. Despite this apparently heavy burden, a substantial number of False Claims Act cases have gone forward. The number of these cases, however, is significantly overshadowed by the number of cases brought and ultimately settled.

Learning Points

The process of obtaining certification is designed to provide the structure necessary to educate coders on the process of code selection. Beyond certification, continuing education is designed to ensure that coders remain competent at the process of selecting the proper code. As a result, coders should be ever mindful of their obligation to ensure that they understand the coding rules that apply to the carrier they are billing. Coders must also remain vigilant regarding their education as things in the world of coding change constantly. The rationale here is simple: If a claim is not “false,” there can be no liability for the coder or the physician. Appropriate continuing education diminishes the potential for failing the knowledge element of the False Claims Act, although the converse is also true. As certified coders, we are expected to know more; thereby making a showing of a “knowing” error more possible. This realization adds emphasis to the current theme of the American Academy of Professional Coders to “Upholding a Higher Standard.” Where the coder acts recklessly with respect to code selection—not meeting this standard—False Claims Act liability is possible.Future articles in this series will highlight cases where errors in code selection have led to False Claims Act liability, and will detail the issues that determined the outcome.

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