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Mole Removal Claim Fraud Nets Jail and Fines

  • by Steve Nesnidal, MD, CPC, AHFI
  • Aug 3, 2023, 09:02 AM
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A suburban Chicago doctor will spend 6 months in jail and pay a $1 million fine stemming from a mole removal healthcare fraud scheme billing Blue Cross Blue Shield of Illinois and Medicare1. In a separate civil lawsuit settlement filed under the qui tam, or whistleblower, provision of the False Claims Act, the doctor will also pay more than $750,0002. The healthcare fraud scheme involved submitting false claims for mole removals that were done in one visit but billed on multiple separate dates of service. Operating this claim fraud scheme allowed the doctor to receive higher reimbursement since Medicare and the private insurer paid more for multiple visits.

At the provider’s Lombard, IL clinic, he performed cancer screenings and some mole removal procedures. The doctor went as far as storing patients’ moles on-site at his office and delayed sending them to pathologists to create separate dates of service (DOS) for these removals. To further support the factitious mole removals as distinct procedures performed on DOS separate from the actual cancer surgeries, the provider falsified medical records, documenting encounters that never existed. One key investigative discrepancy was detected by crosschecking the submitted DOS of claims with the provider’s schedule. The provider was outside the state on some of these reported encounters.

Some of the procedure codes involved in this scam were reported with CPT Codes 23077, 27049, and 140203.  These procedure codes are listed in the Global Surgery column of the Medicare Physician Fee Schedule (MPFS) as 090 or major surgery with a 1-day pre-operative period and 90-day post-operative period included in the fee schedule amount. Medicare prices these major surgery procedures to include typical pre-op and post-op evaluation and management (E/M) services as well as any/all minor procedural work related to the operative procedure that do not require return to operating room. To have achieved payment from Medicare and Blue Cross Blue Shield of Illinois for additional dates of service within 90 days, the provider likely had to modify the separate procedure as unrelated (modifier 79), staged/planned (modifier 58), or an unplanned return to the operating or procedure room, by the same physician, following an initial procedure for a related procedure during the post-operative period (modifier 78). If separate payment was achieved for any fictitious E/M service within a related global period, modifiers 24, 25 or 57 would have been required.  If modifiers were used to bypass global period denial edits, they were not actually supported due to fictitious documentation. Any additional E/M visits submitted and paid for by the payers in this fraud scheme would also net additional reimbursement for the provider, and would also be fraudulent.

These 3 CPT codes reported as involved in this scheme are also on the MPFS with an indicator 2 in the Multiple Procedure column. Medicare reduces the payment of the second and any subsequent procedures with indicator 2 that were performed on the same DOS after making full payment for the procedure with the highest fee schedule amount.  If this provider actually performed multiple valid procedures on a given DOS and separated them by DOS submission, he may have also bypassed the Multiple Procedure Payment Reduction (MPPR) for some of these procedures.

Context 4 Healthcare has edits that alert the user when there is a Global Period conflict between two services. We also have edits that alert our user when the potential for a reduction applies, based on CMS MPPR. Fraudsters can be very savvy, submitting claims that they know from experience will be compensated by Payers in first pass without denial. They often know what diagnosis codes meet medical necessity and what modifiers will bypass denials. Effective Fraud, Waste and Abuse (FWA) software should not only detect aberrant patterns of fraud in claims data, but it must also be effective in alerting the user when waste and abuse exist. Fraudsters often submit factitious claims, which have potential to raise red flags from multiple angles.  The optimal detection approach is to scour the claims data for all related technical errors as well as any current fraud patterns. The suite of software edits selected by a well defended Health Plan must be up-to-date and they absolutely must detect global period discrepancies, modifier discrepancies, as well as utilization errors, procedure-to-procedure edits, etc.

If you want more information about CONTEXT4 HEALTH PLANS SUITE™ which contains the full spectrum of technical claims edits as well as current FWA edits, view our webpage at this link: https://www.context4healthcare.com/health-industries/payers


  1. https://www.justice.gov/usao-ndil/pr/suburban-chicago-doctor-sentenced-federal-prison-and-fined-1-million-health-care-fraud
  2. https://www.justice.gov/usao-ndil/pr/suburban-chicago-doctor-and-his-surgical-center-pay-more-750000-settle-false-claims
  3. https://www.justice.gov/d9/press-releases/attachments/2022/07/12/us_v._greager_-_information_0.pdf
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