Self-policing called cure for health care

Jeffrey Libby

Wednesday, Nov. 1, 2000 | 11:10 a.m.

The cure for health care fraud -- estimated to cost American taxpayers more than $25 billion annually -- may be to allow physicians and pharmaceutical companies to police themselves.

That was the unlikely consensus at a conference on health care fraud and fraud enforcement held at Caesars Palace on Tuesday and attended by about 50 health care consultants and providers.

But with record numbers of health care providers voluntarily contacting state and federal investigators to confess violations and pay hefty fines, panelists including both state prosecutors and defense attorneys insisted that the integrity of the roughly $1 trillion-a-year health care industry is on the mend.

By offering companies that turn themselves in what amounts to a standing plea bargain from government investigators, both sides agreed that independent auditing groups -- such as Deloitte & Touche, the sponsor of the conference -- can help standardize the labyrinthine system for documenting health care and help eliminate fraud.

Patients -- particularly those poorer groups that depend on federally subsidized programs -- should be the primary beneficiaries of the reform.

"Medicaid, Medicare, these programs are all funded from tax dollars designed to help those people considered medically indigent," said L. Timothy Terry, the state's senior deputy attorney general and head of the Medicaid fraud control unit. "So when a fraudulent claim is filed, those tax dollars are going into some doctor's pocket rather than treating a needy youngster.

"And it's a limited pie, so if part of the pie is going into someone else's pocket, it's not going to people who need the service."

As of September, 471 physicians groups, hospitals and drug companies nationwide have voluntarily contacted federal investigators, agreeing to establish regular independent audits and set standardized procedures for documenting medical services they have provided.

In Nevada seven companies have made similar agreements, paying fines worth $1.5 million since the fraud unit was established two years ago, Terry said.

"Obviously we would like to see more," Terry said. But in Nevada alone, more than 6,000 providers handled $550 million in Medicaid funding last year, and Terry has a staff of just six investigators.

That practical consideration is in large part responsible for the government's willingness to waive criminal charges against companies that volunteer for independent audits and overhaul their systems for reporting care.

Medical care providers have another incentive to establish a so-called medical compliance program beyond the reduction of charges from criminal to civil.

If a company is shown to have filed false claims, it can be banned from practicing health care for as many as five years. That exclusion "is like a death penalty," Terry said.

Under the False Claims Act, a prosecutor has to show at least a pattern of improper billing to prove medical fraud.

Kenneth Blickenstaff, a consultant for Deloitte & Touche, said many companies could fall into that category simply because of an error in computerized billing systems.

According to Dennis Warren, a defense attorney for medical providers and a panelist, given a national error rate of 7 percent on all claims filed, "you almost have a risk of exposure just sitting here."

Compliance programs are almost mandatory at this point, Warren said, and "if you don't have one, you're asking for a problem."

Tina Landskroener, a local health care consultant, agreed. Like the panelists, she suggested that most doctors and other health care providers usually are not violating the law intentionally, and more often are trying to keep up with new regulations.

"The rules for documentation are constantly changing, so it's difficult for doctors to keep up with them," she said. Much of her day is spent keeping up with legal initiatives and "sending out coding alerts" to ensure that the physicians she works for stay within regulations.

Setting up a compliance program, Warren said, "is not a pleasant experience. But the ultimate impact is that your company ends up with a higher level of production and in the long run it ends up being a very positive thing."

Warren, who has defended medical providers in many fraud suits, said he prefers working with investigators in a less adversarial setting, which means he needs to call investigators before they contact him.

As for the health care providers, the lawyer advised, "Call me first. Don't call them (investigators) first."