The Obama administration's statements ratchet up the pressure on health systems to enhance case management and to prepare to defend against the rising wave of FCA investigations.

Recent news out of the Obama administration and the U.S. Department of Justice points toward new initiatives that will target health systems by requiring more billing and coding audits to identify Medicare overpayments for services rendered to patients. These audits, in turn, may prompt increased False Claims Act (FCA) exposure.

The media, including the Wall Street Journal, reported on March 10, 2010, President Obama’s statement that the government would be pursuing more aggressive auditing of providers in order to recover overpayments. The recovery of overpayments is intended to trim health care costs and to counter critics of the health care reform effort. “President Orders Expanded Audits,” Wall Street Journal, March 10, 2010. The president made specific reference to auditors (presumably the recovery audit contractors RACs)) who steadily have been making their presence felt in Utilization Review Committees for health systems around the United States.

The Obama administration’s statements ratchet up the pressure on health systems to enhance case management and to prepare to defend against the rising wave of FCA investigations targeting short stay procedures that whistleblowers allege lead to medically unnecessary inpatient admissions. The nationwide kyphoplasty-related investigation of dozens of health systems spearheaded by the U.S. Attorney’s Office in the Western District of New York is a prime current example of this type of targeted inquiry into the effectiveness of health system utilization review. Reports confirm that, even in 2010, the U.S. Attorney’s Office is adding new health systems to its investigation.

Last week, Report on Medicare Compliance published an article disclosing that this same U.S. Attorney’s Office has also turned its attention to a RAC referral-inspired investigation of at least 24 health systems’ Medicare billing for diagnosis-related groups for the treatment and evaluation of chest pain. “U.S. Attorney Takes Same Path as RAC, MAC; May Foreshadow New National Strategy,” Report on Medicare Compliance, Vol.19, No. 9, March 9, 2010.

Health systems should take proactive steps to address any known concerns that may exist in these case management–related areas. The 2009 amendments to the FCA provide further incentive to take action to mitigate these risks. One of the amendments enacted in the Fraud Enforcement Recovery Act of 2009 makes the failure to refund (i.e., “the retention of an overpayment”) a potential false claim independent of the original cause of the overpayment. 31 U.S.C. § 3729(b)(3).

The enforcement environment has been sharpened by the Obama administration’s new anti-fraud focus, and by the kyphoplasty and chest pain investigations. Identification of a possible overpayment should trigger an expedited assessment of whether the claim represents an overpayment that should be refunded to the government.