Complacency Creates Compliance Concerns

Buying the Right Books is Good Protection

by Julie E. Chicoine, JD, RN, CPC

Health care providers operate under an increasingly scrutinized regulatory environment for fraud and abuse involving federal health care programs including Medicare and Medicaid. Recent statements by Senator Patrick Leahy (D-VT) at a Feb. 27 hearing on “The False Claims Act Correction Act of 2008” note the current Federal False Claims Act’s enforcement actions led to the United States Treasury recovering more than $20 billion from fraud and abuse cases involving various industries, including health care, since 1986.

Be Up-to-Date

Given the financial risks of coding and billing for health care services, it is important for coding professionals to use up-to-date references and materials when submitting claims for health care providers.

The False Claims Act (“Act”) is an effective government enforcement tool against fraud and abuse in the health care sector. Currently under the False Claims Act, it is unlawful for a person (individuals or organizations) to knowingly submit or cause to be submitted, a fraudulent claim to an officer or United States government employee for payment or approval. The Act defines “knowingly” as presenting a claim with “actual knowledge” that the information is false and/or acting in “reckless disregard” or “deliberate ignorance” of a claim’s truthfulness or accuracy. In other words, the government’s position on health care fraud and abuse is that with the wide variety of coding references and resources available, coding professionals and/or providers should know their conduct departed from accepted business practices.

Liability under the False Claims Act can lead to civil monetary penalties ranging from $5,000 to $10,000 for every claim filed. With the busy demands placed upon coding professionals, fines can quickly add up to significant financial government settlements.

Besides the success of government enforcement activities against fraudulent health care providers, two other initiatives raise scrutiny and financial liability to a higher level. The first initiative is the proposed “False Claims Correction Act of 2008” (S. 2041), which is a response to recent interpretation of the False Claims Act by various federal courts. The False Claims Correction Act of 2008 expands the current law to increase its effectiveness in targeting fraud and abuse practices.

In addition to legislative changes, the Office of Inspector General (OIG), who oversees the integrity of federal health care programs, recently issued a press release of an “Open Letter to Health Care Providers” which discusses clarifications the OIG believes will increase use of its Provider Self-Disclosure Protocol. The Provider Self-Disclosure Protocol was released in 1998 to enable the government and the provider to jointly resolve program abuses, correct problems leading to program abuse, and further participation integrity of federal health care programs such as Medicare and Medicaid.

The OIG’s open letter indicates initial disclosure should include the following:

  • A complete description of the disclosed conduct;
  • A description of the provider’s internal investigation or a completion commitment;
  • An estimate of damages (i.e., overpayments) to federal health care programs and the method used to calculate the damages or a commitment as to when the provider will complete the estimate; and
  • A statement of laws potentially violated by the conduct.

In addition, the open letter indicates providers must be in a position to complete an investigation and damages assessment within three months after entering into the OIG’s disclosure process. This process allows a provider to preemptively disclose serious billing problems and minimize significant penalties for billing misconduct. However, any investigation revealing a lack of compliance by using outdated coding and billing materials may lead to further problems for the provider.

Minimize Risk

In light of these new initiatives, it behooves coding professionals and health care providers to minimize the risk of fraudulent activity by adopting proactive practices such as using up-to-date coding resources and materials, including the latest Current Procedural Terminology (CPT®) manuals.

The CPT® code set was developed in 1969 by the American Medical Association (AMA) to establish an accurate and consistent description of medical, surgical, and diagnostic physician services and is the primary source for coding and billing information for coding professionals. In 1983, CMS adopted the CPT® coding system to ensure accurate coding and billing for Medicare services. The Health Insurance Portability and Accountability Act (HIPAA) of 1996 included CPT® as part of the Health Care Common Procedure Code Set (HCPCS) as the national standard for health care electronic transactions for physician and other outpatient services.

The AMA holds copyright to the CPT® manual and updates the manual on a regular basis. The AMA’s CPT® editorial panel, a team of physicians and other professionals, evaluates requests for new codes and identifies the necessary code modifications based on evolving technologies and new services.

The revised manual is published annually in late fall and takes effect at the beginning of the new calendar year. Coding professionals should order this manual every year and review it for changes. You should devote special attention to the deletion of existing codes and the addition of modifiers and codes. Reviewing the CPT® helps the coder and other billing professionals update transaction forms such as charge tickets, fee schedules, and related documents for accurate and compliant billing. CPT® manuals should be shelved and maintained for reference as a business record in the unlikely event of a payer audit or investigative government action.

In addition to CPT® manuals, coding professionals should follow similar practices with other coding resources, including the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM). ICD-9-CM is the coding reference for disease classification, diagnoses, and injury causes. The World Health Organization (WHO) developed ICD-9 for monitoring and tracking morbidity and mortality internationally. The ICD-9-CM is updated and maintained by the United States National Center for Health Statistics (NCHS) and is the official code set for diagnoses and procedures in the United States. Both NCHS and CMS oversee all changes and modifications to the ICD-9-CM manual, which are published annually with new changes effective in October of each year. As with CPT® manuals, coding professionals must obtain updated materials annually and review them for changes to ensure compliant coding, documentation, and reimbursement for health care services.

The evolving regulatory arena of fraud and abuse enforcement leaves no room for business as usual. It is imperative that coding professionals update their knowledge base and skills with current reference materials used in their daily activities. In doing so, one is reminded of the old adage “an ounce of prevention is worth a pound of cure,” which are wise words given today’s enforcement standards.



The Social Security Act at Section 1128B(f)defines “Federal Health Care Programs” includes any plan or program that provides health benefits, whether directly or through insurance, which is funded in whole or in part by the United States government.

S. 2041, sponsored by Senator Charles Grassley (R-IA) is available at:

31 U.S.C. § 3729

Senator Leahy’s statements can be read in their entirety at

31 U.S.C. § 3729(b)



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