It’s an old and shady practice that has been in the forefront of Medicare and Medicaid fraud for years. Upcoding can hit taxpayers hard and drive emergency room bills to the thousands.
What is Upcoding?
Sometimes upcoding can also masquerade as “facility fees.” Emergency room facility fees are coded on a scale of 1 to 5. This coding system is supposed to reflect the complexity of care for the individual patient. There are two basic parts of the structure of coding: the physician’s fee and the facility fee. The physician’s fee is actually very regulated and not usually misleading. The faculty fee however is highly confusing and often misunderstood.
Facility fees cover the basic cost of running a hospital. Think utilities and maintenance. These fees are calculated with a complicated formula that also factors in the level of care provided. That formula can vary from hospital to hospital and to make matters more complicated the level of care changes from situation to situation. A massive heart attack will be treated differently than a broken nose and so on.
Basically, how a hospital chooses to code its facility fee could range from one hundred dollars to hundreds of thousands charged to insurance and Medicare/Medicare.
It’s not hard to see why hospitals would be tempted to use false upcoding. A recent study cited in Emergency Medical News, showed that emergency rooms across the country increasingly used higher codes. To that end, emergency room fees rose twice as fast as the price of outpatient health care – and four times as fast as overall health care spending.
Overall, in the last decade, emergency room charges have jumped by as much as 85%. It’s worrying because people are not necessarily sicker than they were just a few years ago, so it could mean that misleading upcodes are at play.
All in all, it’s a pretty familiar medical scam that can come to a head in the form of fraud lawsuits.
Here are a few notable examples:
- Columbia Hospital Corporation admitted filing false claims to Medicare and other federal health programs. The company paid $1.7 billion in criminal fines, civil damages, and penalties in settlements with the U.S. Department of Justice in 2000 and 2002. The lawsuit alleged that the hospital companies billed Medicare and Medicaid for unnecessary tests or tests not ordered by a physician, attached false diagnosis codes to patient records to increase reimbursement, claimed marketing and advertising costs as community education, and billed home health care visits for patients who were not qualified to receive them.
- A Kentucky regional home health care provider, MD2U, agreed to pay damages of $21.5 million in 2016 to the federal government. The Department of Justice said that nurse practitioners were required by the service to perform medically unnecessary visits and billed them at the highest level of the evaluation and management code required, aka upcoding. The company’s electronic medical record systems allowed the nurse practitioners to electronically cut and paste medical notes from prior visits, creating the impression that they were doing more work at each visit than they were.
- Prime Healthcare Services’ upcoding scam was brought to light by a whistleblower. A lawsuit alleged the company was admitting patients with Medicare or private insurance from the ER and “upcoding by falsifying information concerning the complications and comorbidities associated with patients’ diagnoses.” The Department of Justice intervened in the suit in 2017.
What Can You Do?
It’s intimidating to receive an ER bill that bears little relationship to what was actually preformed or contains outlandish costs like $200 for aspirin or $600 for bandages. Don’t be afraid to look closely at the bill and get some help if the charges seem questionable.
And if you suspect your employer of upcoding you have protection in reporting it. The practice of upcoding is a violation of Medicare laws and falls under the umbrella of the False Claims Act, commonly referred to as the “whistleblower” law.
There are actually places online that can help you report upcoding abuses. The Medicare website provides instructions on how to report suspected Medicare fraud.