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Compliance Reports Identify 7 Billing Issues to Monitor for Fraud Risk

  • by Cindy Gallee, JD, RHIA, CHC
  • Apr 8, 2015, 12:06 PM

Compliance Reports with 7 Billing Issues with Potential for FraudIn a significant compliance report by the Office of Inspector General (OIG), published in March 2015, a large Midwestern academic medical center was found to owe Medicare over $6 million, extrapolated from alleged billing errors in a sample taken for the years 2011 and 2012. OIG identifies seven billing issues as putting hospitals at risk for noncompliance, based on their review at this hospital and other facilities it has reviewed as part of its work plan for this year. It is imperative that payers and providers pay close attention to these billing issues as raising the potential for non-compliant and fraudulent claims.

The problematic billing issues are:

  • Claims incorrectly billed as inpatient
  • Manufacturer credits for replaced medical devices
  • Incorrect discharge status
  • Outpatient claims using modifier 59 incorrectly
  • Incorrectly billed number of units
  • Observation services incorrectly billed
  • Insufficiently documented services

 See the OIG report at

Payers and providers should be putting safeguards in place to guard against errors in these problematic areas, ideally before the claim is adjudicated. For example, a length of stay indicator on inpatient claims can identify short inpatient stays and flag them for review of appropriate level of care. Also, using Medicare’s published National Correct Coding Initiative (NCCI) edit tables can determine code pairs that cannot be billed together or for which a modifier 59 is appropriate. Similarly, the NCCI tables contain Medically Unlikely Edits (MUEs), or values assigned to CPT/HCPCS codes which indicate the maximum units of service that a provider would report under most circumstances for a single beneficiary on a single date of service. In addition, running statistical reports on a certain discharge status, or on CPT/HCPCS codes for observation services, for example, would identify claims that should be reviewed for accuracy.

Context 4 Healthcare, Inc. has compliance solutions to these and other billing problems to alert the user to inaccuracies before the claim is submitted or paid.   Context’s FirstPassTM for Payers and ClaimsEditor® for Providers and Hospitals use clinical editing technology to help ensure coding compliance. Both these systems include the NCCI edits, MUE edits, and edits detecting a variety of other regulatory issues. In addition, Context’s FWAHawkTM solution provides real-time analysis to identify potential fraudulent claims, and also statistical analysis of multiple indicators including length of stay and discharge status so that variances can be further investigated for full compliance.

For more on this topic: To Avoid Potential Fraud, Payers Should Monitor the LEIE Regularly

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