In December, the Centers for Medicare and Medicaid Services (“CMS”) released its “Supplementary Appendices for the Medicare Fee-for-Service 2015 Improper Payments Report,”[1] an annual compilation of statistics from investigations into overpayments and other instances of fraud, waste and abuse in Medicare payments. What should shock Kentucky providers is that Kentucky has the seventh highest percentage of projected overpayments at 15.4%, or $897.7 million.[2] More than one out of every seven Medicare fee-for-service payments made in the Commonwealth is projected to be an overpayment in 2015, yet many of these problems could have been avoided by following one simple rule: document claims properly.

In the face of such alarming statistics, what should truly give practitioners pause is that the great majority of these overpayments – 65.4% – occur due to, according to the report, “insufficient documentation.”[1] In other words, it’s not that the claim is fraudulent or not provided, necessarily, it’s that the claim is not fully supported by documentation. With increasing focus on documentation, the use of electronic medical records is important, but must be carefully reviewed to make sure that providers are not simply cutting and pasting from a patient’s previous record, which is sometimes called “cloning.” Providers must create a medical record that accurately reflects an assessment of the individual patient’s condition.

Overpayments, if not corrected and repaid in a timely fashion, can lead to substantial and potentially catastrophic penalties. Under provisions of the Affordable Care Act and now a final “60-day rule” from CMS, providers have a 60-day window after identifying potential overpayments in which to repay them. This applies to both potential overpayments known to the provider and potential overpayments about which the provider should have known. After that window closes, overpayments become potential violations of the False Claims Act (“FCA”).[2] FCA violations carry significant penalties, with treble damages and a penalty ranging from $5,500 to $11,000 for each violation. The Final Rule on when overpayments become False Claims Act violations gives a three-year “lookback” period for investigators to find identified but unreported overpayments, which creates additional liability for practitioners.

With increasing oversight of the many different entities now involved in policing health care providers, practitioners must make renewed efforts to implement effective compliance with a specific goal of reviewing the documentation that supports Medicare billing. Staff training may play a crucial role in this process. Complete and proper documentation is potentially the easiest route to compliance with Medicare billing practices, yet it accounts for the highest proportion of improper payment errors. Physicians and providers must take effective steps to create “healthy billing practices.”